Last month, Modi appealed to citizens to stop gold purchases and instead choose gold recycling to stop buying gold from overseas. The reason is that Indian households have more than 32,000 tonnes of unused gold, locked in lockers and cupboards.
India imports a large share of gold as it is considered the safest investment, but in turn this is affecting foreign exchange and putting pressure on the country's current trade balance sheet. This means that every gram of recycled gold is one less gram that should be imported. This is the real reason why policymakers are considering gold as an untapped domestic resource.
Through PM Modi's public urging to delay gold purchases, the government aims to ease forex pressure and reduce the current account deficit, according to commodity analyst Kaveri More. For generations, gold has been stored as wealth and safety in case of emergencies. Families accumulate gold that remains untouched for years, and yet its value remains intact. This is the reason why Modiji is pushing the gold recycling policy and asking Indians to stop gold purchases and choose gold recycling.
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