Why is RBI buying gold if India has world's 7th highest gold reserves? Know reason here
Why is RBI buying gold if India has world's 7th highest gold reserves? Know reason here
Today is Akshaya Tritiya, a day that is thought to be very lucky for buying gold in Indian culture. But gold is not only important for families and individuals. It is also a smart and trusted investment for central banks around the world. This is why gold is called a 'safe haven asset', it keeps its value even when the world is going through tough times.
In the last few years, the world has faced many big problems. From the Covid-19 pandemic to the Russia-Ukraine war, and trade fights that started during Donald Trump's time, many countries have seen economic trouble. Because of this, central banks, including India's Reserve Bank (RBI), have started buying more gold. As more countries buy gold, its price has reached all-time highs.
The RBI has been actively increasing its gold collection. In the financial year 2024–2025, it bought 57.5 tonnes of gold. This was the second-largest amount of gold India has bought in one year since 2017. This step shows that India wants to make its economy stronger and prepare well for any future risk.
India is now the world's fifth-largest economy and holds the seventh-largest gold reserves. Back in 2015, India was at the 10th position. So, this is a big jump. According to the World Gold Council, gold as a share of India's total foreign exchange reserves has gone up from 6.86 percent in 2021 to 11.35 percent by the end of 2024. This shows how gold has become more important in India's financial planning.
Foreign exchange reserves are like the savings account of a country. They include foreign money, gold, and other important assets. These reserves help the country during tough times, like when prices rise too fast or when the rupee becomes weak. They also help keep the country's economy stable. Gold is a very important part of these reserves because its value stays strong, even when the value of money goes down.
India's gold stock has increased from 653 tonnes in 2020 to 880 tonnes by March 2025. That's a 35 percent jump in just five years. Not only has the RBI been buying more gold, but it has also started bringing some of it back to India. Since September 2022, the RBI has shifted about 214 tonnes of gold from foreign banks to Indian storage. This step reflects the belief that in today's uncertain world, it is better to store gold at home.
Sachchidanand Shukla, Chief Economist at Larsen & Toubro, says that by increasing its gold holdings and bringing a large part back to India, the RBI has made India's foreign exchange reserves stronger and more secure. It also protects India from global risks and from falling trust in assets linked to the US dollar.
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