Gold Price increasing and effect on GDP of India

Abstract

Gold holds a unique and deeply entrenched position within the economic, social, and cultural fabric of India. As one of the world's largest consumers and importers of gold, India's  economy is profoundly susceptible to fluctuations in its price. This research paper undertakes a qualitative analysis to explore the multifaceted impacts of gold price movements on various sectors of the Indian economy. Employing a qualitative research design, the study synthesizes insights from extensive secondary data, including academic literature, government reports, central bank publications, and financial analyses. The analysis reveals significant qualitative impacts across households (savings, consumption, cultural practices), the external sector (current account deficit, foreign exchange reserves, smuggling), the financial system (gold-backed loans, financial instruments), government policy (revenue, regulatory challenges, monetization schemes), and the rural economy (store of value, credit access). The paper argues that understanding these intricate
qualitative dimensions is crucial for effective policy formulation, as mere quantitative metrics often fail to capture the deep-seated cultural and behavioral drivers of gold demand and its economic repercussions. The findings underscore the need for a nuanced approach that acknowledges gold's dual role as both an economic commodity and a cultural phenomenon in India.