As India moves closer to its long-term goal of Viksit Bharat 2047, voices from the gold and financial services sectors are urging the government to rethink how household gold is used in the economy. Ahead of Union Budget 2026, industry leaders say
India is one of the world’s largest holders of household gold, but much of it remains locked away in homes and lockers,
Mahendra Luniya, Chairman, Vighnharata Gold Ltd., believes the government must actively promote digital gold to bring idle household savings into the formal economy.
“If we look at the goal of Viksit Bharat 2047 from a logical and economic standpoint, it becomes clear that India must unlock the vast amount of gold lying idle in households and integrate it into the digital economy,” Luniya says.
He says that the expectations from Budget 2026 go beyond individual industry players and reflect a wider public hope that the government will encourage awareness and adoption of digital gold.
According to Luniya, converting physical gold into digital form would allow it to be used productively by the government, helping accelerate economic growth. “At such a scale, achieving a USD 5 trillion economy would become much easier,” he said, adding that the Viksit Bharat goal could even be achieved ahead of schedule.
“With gold prices touching nearly Rs 1.5 lakh per tola, traditional jewellery purchases have slowed considerably. Consumers are increasingly opting for smaller quantities, such as one-gram gold, or buying gold purely as an investment and storing it at home,” says Luniya.
“This effectively locks a massive amount of liquidity within private vaults instead of circulating within the Indian economy,” he says.
To address this, he says that digital gold offers a practical alternative that can unlock economic value without changing people’s cultural attachment to gold.
Luniya states earlier by the government to shift behaviour.
“A very positive step in this direction was the introduction of Sovereign Gold Bonds. Public awareness increased, and behavioural change began to take place,” he says.
Luniya urges the government to reconsider its decision to discontinue the scheme, noting that SGBs helped the government access capital without financial loss while productively using household gold savings.
“I urge the government to review the long-term benefits and reintroduce the Sovereign Gold Bond scheme,” he adds.
Alongside digital gold, the
Umesh Mohanan, ED and CEO of Indel Money, says gold loans are often misunderstood as consumption loans, while in reality they act as emergency credit lines.
“Gold loans act as a safe and quick source of funds for small traders, farmers and micro-entrepreneurs,” Mohanan said. “Yet there is no favourable tax treatment.”
He states that while interest payments are exempt from GST, borrowers still pay 18% GST on processing fees, prepayment charges and loan extensions.
Mohanan cited studies showing that gold loans play a vital role in financial inclusion, especially for rural households and MSMEs that are new to formal credit.
“For many borrowers, gold loans are used for agriculture, education, house construction or medical emergencies,” he says. “A large number of these loans go towards creating productive or capital assets.”
Given this impact, he states that the sector deserves a more supportive tax framework that benefits borrowers and encourages formal credit growth.
“Industry data suggest that the organised gold loan market, which stands at around Rs 12 lakh crore as of March 2025, is expected to grow to Rs 18 lakh crore by FY27. A recent Morgan Stanley report estimates that Indian households own about 34,600 tonnes of gold. Notably, much of it is unmonetised,” says Mohanan.
“This shows the huge potential of the sector,” he says. “It deserves strategic thinking, prudent regulation and favourable tax treatment.”
As Budget 2026 approaches, both digital gold and gold loans are emerging as key themes. Industry leaders hope targeted policy support will help bring household gold into the mainstream economy, strengthen the financial system and move India closer to its long-term development goals.