New Delhi. Addressing a rally organized here by the Telangana unit of the Bharatiya Janata Party (BJP), Prime Minister Narendra Modi appealed not to buy gold for a year to save foreign exchange. During this address, the PM has also given a clear message to the industrial world of the country. PM Modi has appealed to save India’s real strength ‘Forex’ and use it strategically. In his address, the Prime Minister expressed concern over the fact that a large part of India’s hard-earned money goes abroad to import resources like gold, crude oil and copper. He has called for a ‘business model’ and ‘economic patriotism’ to stop this.
The Prime Minister made a bold appeal from an economic perspective, saying that Indians’ fascination with gold is taking a toll on the country’s balance sheet. India is one of the world’s top gold importers, whose payments have to be made in precious dollars. The PM suggested that if the countrymen postpone huge purchases of gold for at least a year, then the foreign exchange saved can be used to develop the country’s infrastructure and technology. This move will directly help in strengthening the rupee and reducing the current account deficit (CAD).
India is one of the largest importers of gold in the world. PM Modi said that the gold we buy has to be paid in dollars, which puts a huge burden on our foreign exchange reserves. Making an emotional and strategic appeal to the public, he said, “Can’t we postpone gold purchases for at least a year? If we reduce gold purchases a little on weddings and festivals, we can save billions of dollars of foreign exchange.”
PM described ‘copper’ as ‘gold of the future’. He said that copper is essential for today’s digital age, solar panels and electric vehicles (EV). India imports a major part of its needs. The PM indicated to industrialists that huge investment is needed in copper recycling and indigenous mining. He called it as important as the Semiconductor Mission, so that dependence on imports ends and ‘Make in India’ takes new heights.
Talking about energy security, PM Modi said that we are dependent on Gulf countries for petrol and diesel. The largest part of foreign exchange goes into this. He introduced ethanol blending and green hydrogen as new business opportunities. The PM clarified that by making fuel from agricultural waste, we are not only increasing the income of farmers, but also saving billions of dollars of foreign exchange.
Foreign exchange reserves are the collection of foreign currency, gold and other international financial assets held by a country. It is also called the emergency fund of the country, which is used in times of economic crisis or needs like import payment. India’s foreign exchange reserves are mainly held with the Reserve Bank of India (RBI). Many things are involved in this.
Foreign currencies like US Dollar, Euro, Pound
Gold Reserves
Special Deposit Rights (SDR) in IMF
Reserve position in International Monetary Fund (IMF)
Why are foreign exchange reserves necessary?
to pay for imports
India buys crude oil, gas and many essential commodities from abroad. Foreign currency like dollars is required for its payment.
To keep the rupee strong
If the dollar starts becoming too expensive then the RBI tries to support the rupee by selling foreign currency.
protection from economic crisis
In a situation like war, oil crisis or global recession, this reserve becomes the biggest strength of the country.
For the confidence of foreign investors
Having high foreign exchange reserves makes the world feel that the country is economically strong.
The Prime Minister’s vision is clear, the money we spend on importing gold or oil will have to be saved and invested in modern technology and industry. He urged the business community to develop such technology which could become a substitute for imports. This is not just a speech, but a big indication of the direction of India’s economic policies and budget in the coming years.
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