A nation hypnotised by gold is a nation uneasy within. The surge of gold-buying this Diwali may have brightened showcases and balance sheets, but it has dimmed the country’s economic logic. Record-breaking sales of over ₹60,000 crore on Dhanteras reflect not prosperity, but panic, a collective retreat into the safety of yellow metal as the world’s uncertainties grow.

From soaring advertisements to midnight sales pitches, India’s jewellery market is on a golden high. Yet beneath this glitter lies a sobering truth: gold is an unproductive asset. It yields no interest, creates no factories, and builds no roads.

Read in Hindi: सोने की शक्ल में लॉकर में कैद हुआ हमारा अर्थ तंत्र

The nation sits on an estimated 25,000 tonnes of idle gold, worth nearly $3 trillion, about 90 per cent of the country’s GDP. Locked in vaults and temple treasuries, this wealth could have powered jobs, industries, and innovation had it been mobilised into the productive stream of the economy. The irony is glaring. What glows in our lockers could have illuminated our foundries. 

This present wave of hoarding reflects a deeper insecurity. Global economic tremors, from US-China trade tensions to Middle Eastern unrest, have made gold the symbol of trust once again.

But this trust is born not out of confidence but fear: fear of inflation, a falling rupee, or personal crises. Gold, for many, stands for permanence amid financial instability. Weddings and dowries sustain its demand, social prestige fuels it further, and uncertainty cements it. Worse, a significant portion of India’s gold is bought with unaccounted money, making it a loophole that perpetuates opacity in the economy. 

Every income-tax raid reveals stashes of cash and gold tucked away, immune to morality. Bullion doubles as corruption’s safest refuge. Remember, Transparency International’s 2024 report pegged India’s corruption index at a worrying 39, unchanged in years.

Every major project is believed to leak around 30 per cent of its funds into the black market, sustaining a parallel economy that whispers louder than official statistics. Elections feed it, bureaucracy shields it, and society normalises it. This cycle of mistrust keeps citizens clinging to private stores of wealth rather than investing in public institutions or markets. 

To break the spell, India must reimagine what real wealth means. The government must move beyond rhetoric and initiate policies that transform savings habits. Encouraging financial literacy is just part of it; reshaping fiscal policy to favour productive investment is vital.

A liberal tax regime could be the turning point. Lower long-term capital gains tax on equities, wider exemptions for small investors, and tax credits connected to industrial bonds can nudge citizens toward formal markets.

If the government reduces transaction costs, simplifies compliance, and guarantees policy stability for at least a decade, trust will shift from metal to markets. Tax-free dividends for small shareholders and enhanced deductions under equity-linked savings schemes could make stocks culturally appealing like gold.

Imagine a Diwali when IPOs, not bangles, capture public imagination—a symbolic but profound shift in defining prosperity. Such incentives could channel vast domestic savings into productive ventures, startups, infrastructure, and manufacturing. Every rupee invested in equity multiplies through job creation, research, and industrial growth. In contrast, every rupee spent on gold lies dormant, waiting only to change hands at another wedding.

Taxation as an instrument of trust, rather than fear, nurtures a transparent, participatory capital market, a vital step toward self-reliant growth. India’s gold craze is about trust, not wealth. That trust has shifted from institutions to metal. The challenge is psychological as much as economic: restoring faith in systems that create, not hoard, value.

A rational tax structure, predictable regulation, and safety nets for investors can build that confidence. The glow of progress must come from innovation and production, not from yellow metal asleep in vaults. 

The day India frees itself from this golden illusion will be the day the ‘Golden Bird’ finally takes flight, fueled by enterprise, not ornament.