What does this event mean for the country?

Gold has always had a special place in the history of India, not only symbolizing material wealth, but also being an important part of the country’s cultural heritage. The precious metal participates in many aspects of Indian life — from family events to national holidays. Therefore, the news that more than 100 tons of gold was moved from the Bank of England to the vaults of the Reserve Bank of India was received extremely positively by the citizens of the country.

The role of gold in the Indian economy

In 1991, India faced an economic crisis. The government was forced to pledge part of the country’s gold reserves as collateral for an emergency loan from the IMF. 47 tons of the precious metal were exported to the Bank of England, and 20 tons — to the Swiss National Bank. These actions allowed India to obtain a loan of US$2.2 billion. Although this was a temporary solution, it later became the starting point for carrying out internal reforms and getting the country out of the crisis.

India brings back gold reserves to the country

The lessons of the past were not in vain for India: over the past 3 decades, the Central Bank continued to buy the precious metal. As a result, the country’s gold reserves increased from 350 to 822 tons.

Since 1991, more than half of India’s gold reserves were stored abroad but the government decided to change strategy and began the process of repatriating the precious metal. Just recently, the Reserve Bank of India returned to the country more than 100 tons of gold that had previously been deposited in the UK. And, according to the Times of India, the amount could double in the coming months.

The country’s authorities carried out a complex operation to bring back the huge cargo. This required months of preparation and the use of special aircraft with an enhanced level of security.

What does the return of gold mean for India’s economy?

Experts from ETBFSI believe that this step is aimed at protecting the country’s economic interests. Repatriating gold reduces dependence on foreign storage and eliminates the associated costs.

In other words, the Indian government intends to improve the stability of the financial system. During times of global instability, it is better to have at your disposal as many assets as possible that are resistant to economic shocks. And in this regard, there is hardly anything more reliable than gold. Especially considering that the price of the precious metal may break new records. Read more about this in the article: The price of gold has set a new historical record