In a monumental shift, India brought back 100 tonnes of gold from England, symbolising a significant change in its economic strategy. The Reserve Bank of India (RBI) facilitated the return of this massive gold reserve, marking a departure from past practices where the country’s gold was held abroad, primarily in London vaults.
Renowned economist Sanjeev Sanyal remarked on the significance of this development, stating that it represents a pivotal moment for India. “While the world remained unaware, the RBI has repatriated its gold reserves, shifting them from abroad to domestic vaults. Most countries store their gold in London or similar locations, often incurring fees for storage. India has chosen to retain the majority of its gold within its borders. This marks a significant departure from 1991 when the country’s gold was swiftly moved overseas,” he said.
According to reports, India’s current gold reserve stands at 822 tonnes, with 100.3 tonnes now securely stored within the country. Additionally, 413.8 tonnes remain held abroad, while 308 tonnes are reserved for issuing currency notes within India.
According to the report of the RBI, presently, India is holding 308 metric tonnes of gold as backing for notes that have been issued and 514.1 metric tonnes as assets of banking department out of which 413.8 tonnes is held abroad, while 100.3 tonnes is held in India.
The value of gold (including gold deposits) held as an asset of the Banking Department increased by 19.06 per cent from Rs 2,30,733.95 crore as of March 31, 2023, to Rs 2,74,714.27 crore as of March 31, 2024. This increase is on account of the addition of gold, the increase in the price of gold and the depreciation of the rupee versus the US dollar.
In the past five years, that is, from 2019 onwards, the Reserve Bank of India has added gold to its assets every year. In 2019, 618.2 tonnes was added, in 2020 it rose to 661.4 tonnes, in 2021 695.3 tonnes, in 2022 it was 760.4 tonnes, in 2023 it is 794.6 tonnes while in 2024 it is 822.1 tonne.
The repatriation process involved special arrangements by the RBI, including the coordination of a dedicated aircraft for transporting the gold and the waiver of customs duties upon its arrival in India.
Before understanding how, in the last five years, India has been aggressively buying gold, it is important to know that gold is the only real currency in the world, while others are all agreed. Secondly, most of the central banks of the world do not keep the gold with them; they keep it at the Bank of England (Rothschild owned) in London or Bank for International Settlement (Rothschild controlled) in Basel, Switzerland.
In 1991, during a period of economic turmoil, the Indian government pledged its gold reserves to raise funds, entrusting them to foreign banks, including the Bank of England and the Bank of Japan. However, in a reversal of fortune, India has reclaimed its gold reserves, signalling a renewed era of economic sovereignty and self-reliance.
Going back to the 1990s, with foreign exchange reserves having depleted to an extent that can only cover a few weeks of imports, reportedly, in August 1990, the then RBI Governor had suggested keeping 15 per cent of gold reserves abroad so that it could be utilised at a time of emergency.
By March 1991, against the country’s foreign debt of about USD 72 billion, its forex reserves had dropped to USD 5.8 billion and were virtually in a free fall. There was a desperate need to raise funds, to avert a possible sovereign debt default.
India at that time had substantial reserves of gold in its banks, including with the RBI. State Bank of India, in January 1991, decided to raise forex by leasing some gold.
After the government’s approval, 20 tonnes of confiscated gold was sent abroad to raise foreign exchange, reportedly to the tune of USD 234 million.
But it was too little to avert the crisis. Later, nearly 47 tonnes of gold was shipped off to destinations abroad in various tranches, helping raise about USD 400 million for the government. After economic liberalisation that same year, when India opened its economy to other markets, it had paid off the loans for which the gold had been pledged.
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