• Thu. Jun 20th, 2024

Shaping India’s Economic Future: The Balance Between Traditional Investments and Newer Avenues

BySamantha Jones

Mar 27, 2024
Larry Fink comments on how India’s affinity for gold has had minimal impact on its economy

In India, gold holds significant cultural importance and is widely used as a symbol of wealth and prosperity. It is considered auspicious to buy gold during weddings and festivals, and is also seen as a safe investment option. Despite its cultural significance, recent record highs in gold prices have impacted demand for the precious metal in the country. While gold remains popular among Indian investors, the country’s stock markets have experienced significant growth in recent years. Major institutional investors have shown confidence in Indian stocks, which have reached record highs multiple times this year.

Larry Fink, CEO of BlackRock, highlighted the importance of capital markets in driving economic growth. He pointed out how U.S. capital markets played a crucial role in boosting the American economy as an example of how investment can lead to prosperity. Fink emphasized that capitalism is a key driver of economic development and financial freedom.

Investing money in gold does not contribute to economic growth in the same way as other investments such as buying jewelry or investing in stocks. The multiplier effect generated by keeping money in a bank or invested in real estate leads to economic activity, whereas gold simply sits without generating any economic benefits.

There are various ways to invest in gold including buying jewelry, exchange-traded funds (ETFs), and sovereign gold bond schemes like India’s Gold Monetisation Scheme (GMS). The GMS aims to monetise India’s surplus gold by converting it into cash at market rates through government-guaranteed bonds issued by banks on behalf of the government.

Despite its cultural significance, recent record highs in gold prices have impacted demand for the precious metal in India. The Reserve Bank of India purchased 4.7 tons of gold in February 2021, bringing its total reserves to an all-time high of 369 tons.

Kavita Chacko from World Gold Council noted that while demand for physical gold may not increase significantly due to upcoming general elections and close monitoring of cash movements, there could be an increase in demand for digital or paper-based forms of currency such as e-gold or electronic banking systems.

Overall, while traditional investments like gold remain popular among Indian investors, newer avenues like stocks will continue to shape India’s economic landscape with their potential for higher returns on investment and greater liquidity options compared to physical commodities like gold.

The balance between traditional investments like gold and newer avenues like stocks will continue to shape India’s economic landscape as major institutional investors show confidence

By Samantha Jones

As a dedicated content writer at newszxcv.com, I bring a passion for storytelling and a keen eye for detail to every piece I create. With a background in journalism and a love for crafting engaging narratives, I strive to deliver informative and captivating content that resonates with our readers. Whether I'm covering breaking news or delving into in-depth features, my goal is to inform, entertain, and inspire through the power of words. Join me on this journey as we explore the ever-evolving world of news together.

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