India's Gold Reserves: Shield Against Global Turmoil, Game-Changer for Economy
Notably, the Indian government stores gold as a strategic reserve with the Reserve Bank of India (RBI) currently holding approximately 900 tonnes in its vaults in India.
Last year, the RBI moved around 100 tonnes of its gold stored in the United Kingdom to India. India's gold reserves are estimated to be roughly worth $87.4 billion.
India's gold policy is a prudent policy because INR isn't an international currency yet, making it extremely difficult to exchange. Barring Nepal and some banks in Moscow, the INR has very few takers in the international market, Dr Anuradha Chenoy, a former dean of the School of International Studies at Jawaharlal Nehru University (JNU), told Sputnik India.
Until the Indian currency becomes tradable on the international market, the Indian government will continue to maintain gold as a strategic reserve, and the reserves discovered in Odisha will only help expand this base, she added.
"More than $300 billion worth of Russian assets remain frozen in Europe, and India would like to avoid a similar fate in case of a Western embargo against the country. After all, the US and its allies did impose sanctions on India following the nuclear tests in 1998. This makes gold reserves all the more vital for India," Chenoy stressed.
More importantly, this isn't a recent phenomenon as keeping gold in safety lockers at home, has been happening since pre-colonial times, she noted.
"In the present context, globally there have been financial fluctuations. For instance, the US dollar has been allowed to get weaker in some places. But at the same time, currencies like the Chinese Renminbi and the Indian Rupee (INR) have seen their value decrease against the greenback much more than it happened earlier," Chenoy highlighted.
Only once in its history in 1991, India faced such a situation when it was forced to keep 67 tonnes of its gold as collateral to secure an emergency loan from the International Monetary Fund (IMF). This is the main reason behind RBI's endeavour to increase its gold reserves, he pointed out in a conversation with Sputnik India.
"Therefore, the discovery of gold in Odisha is a strategic resource, which can be utilised in the future to spur economic development as well as to deal with financial stress. Plus, it would decrease India's gold imports from abroad, resulting in the reduction of the country's overall import bill, which is crucial for the financial health of India," Nanda concluded.
