July 05, 2026

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THE PRICE WE PAY

THE RECENTLY RELEASED provisional estimates of national accounts pegged India's economic growth at a higher-than-anticipated 7.7% in FY26. This comes as a welcome surprise to policymakers and market participants alike at a time of deep global uncertainty, heightened by the war in West Asia.Private final consumption expenditure registered 7.7% growth, indicating robust domestic demand, and strong manufacturing sector expansion of 10.7% were reminders of the Indian economy's resilience in recent years.Yet, look beyond the headline numbers and a more sobering picture emerges. In the same fiscal year, India's import bill rose to $776 billion on the back of higher shipments of not just crude oil, gold and silver but also a plethora of products used by end consumers and by companies as inputs and intermediate goods for manufacturing. Officials and analysts say this points to India's growing manufacturing capabilities and needs a burgeoning economy. A quick scan of top imports by HSN code, the universal categorisation of products, for FY26 indicates that is indeed the case. Some of India's top purchases from abroad include items such as electronic components, like digital integrated circuits, microprocessors and semiconductor chips, laptops and computers, aircraft, crude palm oil, soyabean oil, lithium ion and photovoltaic batteries.However, since the beginning of the West Asia conflict on February 28, the increase in prices of several of these items is making India pay a heavy price for its import dependence.As the war escalated, hitting critical production facilities and leading to closure of the Strait of Hormuz, prices and supplies of not just crude oil but also crucial petrochemicals and raw materials that India imports also got hit.The continuing surge in prices has widened India's trade deficit and that is exerting pressure on the current account deficit. As a result, the dependence on imports has come under close scrutiny.It even occasioned a rare exhortation by Prime Minister Narendra Modi for Indians to cut down on imports that result in an outgo of precious foreign exchange, postpone plans for for-

CHAINED TO GOLD

AKSHAYA TRITIYA IS considered one of the most auspicious days to buy gold and jewellery in India. Millions throng to jewellery stores and make purchases, even if small. This year, as people celebrated Akshaya Tritiya on April 19, compared with last year, gold prices had soared close to 60% from around `94,000 to `1.51 lakh. That had some impact on volumes, say jewellers, although in value terms sales were still higher because of heightened prices.The Confederation of All India Traders reported business exceeding `20,000 crore in gold and silver this year, compared with `16,000 crore the previous year.Gold has been passed down generations as a family tradition; some see it as a financial asset others see it as a store of value--an emergency backup. India on average consumes around 700-800 tonnes of gold each year. Across states and cultures, gold has a huge significance.According to estimates, Indian households hold over 32,000 tonnes of gold. And yet each year more gold is bought. The problem is the lack of domestic gold mines. Therefore, close to 85-90% of the gold is imported. According to Statista, India imported close to `5 lakh crore worth of gold in just FY25.Such massive amounts of imports put pressure on the rupee against the US dollar. This is because when gold imports rise, demand for dollars increases.This, in turn, leads to a wider trade deficit and depletes the foreign exchange reserves. In a year, where the rupee has already been under immense pressure amid a surge in oil prices due to the conflict in West Asia and heavy selling in the equity market by foreign portfolio investors, continued gold imports only amplify the pressures.Not surprising that Prime Minister Narendra Modi urged Indians to not buy gold for a year. Soon after, the import duty on gold was raised to 15% from 6% in May 2026 in the hope that the resultant high prices will curb demand.In 2025, gold prices climbed over 70% last year amid geopolitical tensions and US tariff-