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Veteran banker and Kotak Mahindra Bank founder Uday Kotak on Friday called for India to find a solution to its high gold imports, saying the country's gross gold import bill could reach USD 88-90 billion in FY27, and suggested setting up a committee to examine the issue.
Speaking at the Conference on Financing India's Journey Towards Viksit Bharat in the presence of Union Finance Minister Nirmala Sitharaman and state and Union Territory finance ministers, Kotak said gold held by Indian households had created significant individual wealth but was not being put to productive use in the economy. "For FY26, the current account deficit of India was 25 billion dollars. So we had our current account deficit very controlled. Gold imports gross in one year is 72 billion. Therefore, if you exclude gold, India had a current account surplus," Kotak said. Referring to estimates available to him for the current financial year, Kotak said India's current account deficit could be around USD 60 billion, assuming oil prices at about USD 90, while gold imports could reach USD 88-90 billion. "Indians and their gold - that is a puzzle we have to find a way to solve," he said, adding that a committee could be considered to find a solution that balances people's requirements with the country's capital and current account challenges. Kotak also called for further fiscal consolidation, saying India's consolidated fiscal deficit remained above 7 per cent. "At 7 plus percent consolidated fiscal deficits, we need to get tighter," he said, while acknowledging the fiscal pressures faced by both the Centre and states. On financing India's growth, Kotak said the country had made significant progress in moving beyond the traditional saver-to-borrower model towards an investor-to-issuer model through capital markets. However, he cautioned against excessive financialisation, saying capital markets should ultimately support capital formation rather than become focused mainly on trading volumes and market activity. "At times when the objective of capital formation gets lost and we focus on just markets, volumes and trading, we at times run the risk of missing the key reason why we have financial markets," he said. Kotak said India should also use the current global uncertainty as an opportunity to push reforms and investment at greater speed. "There is a global crisis and the principle of a global crisis is never waste a crisis. We must make full use of the crisis and implement measures at speed and alacrity," he said. He said India needed to produce more goods and services that the world wanted, while reducing dependence on critical goods and services from other countries. "Our dependence on goods and services from others exposes us. The more we can produce and create goods and services which the world wants from us will make us competitive," Kotak said. He also called for a balance between regulation and development in the financial sector, saying regulators should ensure the system remains safe without slowing its growth. Kotak said action should be taken against individuals where wrongdoing occurs, while financial institutions themselves should be protected where they are victims of such actions. Against the backdrop of global trade, geopolitical and financial tensions, Kotak said India should avoid complacency and strengthen coordination between the Centre and states. "The more we get together and make ourselves as a single nation, the more we will be able to withstand the challenges which face the world at large," he said. (ANI)
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