'Gold is a dead asset': PM-EAC member Shamika Ravi explains Modi's appeal

Economist Shamika Ravi on Thursday defended Prime Minister Narendra Modi's appeal to delay gold purchases, saying India's heavy retail demand for gold was locking away capital and putting pressure on foreign exchange reserves.

"Gold is a trapped asset," Ravi said in an interview with India Today, adding that economists often describe such holdings as "dead assets".

"We do consume a lot of gold, and it is a trapped asset. And of course, we spend a lot of foreign exchange reserves when we buy gold," she said.

Don't Miss: Should families consider gold insurance for high-value jewellery holdings?

Ravi's remarks came days after Modi urged Indians to postpone non-essential gold purchases, reduce fuel consumption, and cut avoidable foreign exchange outflows amid rising global uncertainty and surging crude oil prices linked to the Iran war.

India imports nearly 85% of its crude oil requirements, making the economy vulnerable to oil price spikes.

Ravi acknowledged that gems and jewellery remained a major export sector but said the prime minister's appeal was aimed mainly at retail consumers. 

"It (Modi's appeal) is for common people, it's for the rest of us to really just stop buying gold for some time because we do consume a lot of gold," she said.

Must Read: ₹6.77 lakh crore import hit: Why PM Modi wants Indians to delay buying gold

She added that gold held by households often remained outside the productive financial system. "This is not an asset that is going into an investment. These are assets that are kept away. They're not very liquid," Ravi said. "So, we are also thinking of ways in which you can make it more liquid and bring it into the financial system for investments."

Her comments came as India's gold import bill hit record levels.

According to Commerce Ministry data, India's gold imports rose 24% to an all-time high of $71.98 billion in 2025-26, compared with $58 billion in the previous year. However, the quantity of gold imported fell 4.76% to 721.03 tonnes from 757.09 tonnes a year earlier, indicating the impact of rising global gold prices.

Responding to concerns that lower fuel consumption and higher energy costs could hurt economic activity, Ravi said policymakers were trying to prepare for the risks created by the global oil shock. "It's a worthwhile fear to plan against," she said. "What you have to remember is that our demand for petrol and diesel is relatively price elastic, which means we have to increase prices a lot to really reduce consumption."

On the rupee's depreciation against the dollar, Ravi said a weaker currency should not be viewed only negatively because it also benefits exporters. "Please try not to look at the reduction in the value of the rupee vis-a-vis the dollar as the only measure of strength of the currency," she said.

Ravi added that the Reserve Bank of India was allowing the rupee to become more market-driven instead of spending heavily to defend a fixed level. "RBI spending money to keep it at a certain value doesn't seem like a very smart policy, and hence we're letting it discover its true value," she said.