$5 Trillion in Gold, Yet India Isn’t Getting Richer — Here’s Why
$5 Trillion in Gold, Yet India Isn’t Getting Richer — Here’s Why
Gold has always been India’s favourite asset but a new report by Kotak Institutional Equities suggests that high prices of gold would make indian households rich, but it will not be beneficial for the long term wealth creation or economy.
In fact, Indian households now hold gold worth nearly $5 trillion (₹400+ lakh crore)—equivalent to about 125% of India’s GDP.
Why Indians are not spending more money?
With gold prices increasing in recent months, the value of gold held by indian households has jumped significantly. If this is the case, then people should feel wealthier and started spending more. But the data shows something different.
If we go on with the data, it shows that there is a correlation between rising gold prices and increased consumption, which means people are not necessarily spending more just because their gold becomes more valuable.
People consider gold as wealth but not a productive wealth which means people should use gold in a way so that it can be beneficial for financial growth and should contribute to the economy of the country.
Gold plays multiple roles in indian households:
- Store of value
- Store of wealth
- Jewellery
Gold vs Other assets:
The report shows that gold makes up about
65% of non-property household wealth. It is larger than combined financial savings in some cases
Are gold loans rising in India?
Yes, gold loans are rising in india. Gold is becoming useful in this area.
Gold loan assets under management (AUM) have grown rapidly:
From around ₹2–3 lakh crore a decade ago
To about ₹12 lakh crore by FY2025
but despite this growth, gold loans remain a small part of the financial system.