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India’s gold import bill could reach $88 billion to $90 billion this fiscal year, increasing pressure on the current account, veteran banker Uday Kotak said Friday. Speaking at the Conference on Financing India’s Journey Towards Viksit Bharat, the Kotak Mahindra Bank founder linked gold purchases with India’s external balance. He also proposed considering a committee to examine how household gold wealth could support productive economic activity.
Kotak said India recorded a current account deficit of about $25 billion in FY26. During the same period, gross gold imports reached roughly $72 billion. He said India would have recorded a current account surplus without those gold purchases.
He also outlined a more difficult scenario for the current fiscal year. If global crude oil prices average about $90, Kotak said India’s current account deficit could reach around $60 billion. Meanwhile, gold imports could rise to between $88 billion and $90 billion.
Recent trade data show a sharp monthly drop in bullion purchases. Commerce ministry data show India’s gold imports fell 57.75% in August to $2.3 billion. Still, Kotak focused on the larger annual import burden and its effect on the external account.
Kotak said a committee could study ways to balance household preferences with India’s capital and current account needs. The proposal would focus on putting existing gold wealth to productive use rather than only examining future imports.
The issue creates a pivotal policy question: how can India use household gold wealth more productively while meeting the needs of people who continue to hold and buy gold?
Beyond gold, Kotak identified six areas that he said require attention as India pursues long-term development. These included fiscal consolidation, financial system strength, domestic production, regulatory balance, reforms during global crises, and creative destruction in business.
On fiscal policy, Kotak said India needs tighter management because the combined fiscal deficit remains above 7%. He compared that figure with a US fiscal deficit of about 6%. At the same time, he acknowledged the fiscal pressures facing the central government and states.
Kotak also warned against allowing financial activity to move too far away from capital formation. He said India should remain cautious about excessive financialisation during the early stages of development.
He said financial markets should continue supporting investment and productive economic activity rather than focusing mainly on markets, trading volumes, and transactions. Capital formation, he said, remains a central purpose of financial markets.
Kotak also called for lower dependence on imports. He said India needs to produce more goods and services that attract global demand. He cited products such as flowers as one area where India could expand its export opportunities.
Kotak said stronger coordination between the central government and states could help India respond to external pressures. He linked greater national coordination with India’s ability to withstand broader challenges affecting the global economy.
He also argued that periods of global disruption can create opportunities for faster reforms and investment. Rather than allowing uncertainty to delay policy action, he called for faster implementation when changing global conditions create opportunities.
On financial regulation, Kotak called for a balance between stability and development. He said regulators should protect the financial system without restricting economic growth or the development of financial institutions.
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Where wrongdoing occurs, Kotak said authorities should act against the individuals responsible. At the same time, he said authorities should protect financial institutions when individual misconduct harms those organizations.
Kotak also urged traditional businesses to adapt to technological and competitive change. He pointed to artificial intelligence as one area that established companies need to address as the economy changes.
He said creative destruction remains necessary for transforming India’s economy. He also called for stronger domestic production, tighter fiscal management, financial stability, and faster reforms during periods of global uncertainty.
Kotak linked India’s gold demand with pressure on the current account as annual imports could approach $90 billion. He also called for tighter fiscal discipline, stronger domestic production, balanced financial regulation, and faster reforms while proposing ways to put household gold wealth into productive economic use.
