NEW DELHI — The Indian government is quietly intensifying a campaign to discourage two of its citizens’ most cherished financial habits — purchasing gold and spending on overseas tourism — as Prime Minister Narendra Modi’s administration grapples with a current account deficit that widened sharply in the first quarter of 2026, raising fresh concerns among central bank officials about the resilience of the rupee. The effort, relayed through a combination of tax policy adjustments, banking advisories, and a subtle shift in public messaging, reflects growing anxiety in South Block about the foreign exchange implications of consumer behaviour that, taken in aggregate, drains billions of dollars from India’s reserves each year.
India is the world’s second-largest consumer of gold, importing an estimated 850 tonnes of the metal annually at a cost exceeding $55 billion. Gold purchases are deeply embedded in the cultural fabric of the country, tied to weddings, religious festivals, and a generational habit of treating the metal as the most reliable store of value available to ordinary households. Foreign tourism, meanwhile, surged dramatically in the post-pandemic period, with Indians making a record 28 million outbound trips in 2025, spending an estimated $22 billion abroad. Together, gold imports and outbound tourism account for a substantial share of the country’s current account gap, which the Reserve Bank of India estimated at approximately 2.8 percent of gross domestic product in the first quarter — a level that analysts describe as uncomfortable but not yet alarming.
“The government is not going to ban gold buying or tell people they cannot travel,” said Suresh Krishnamurti, a former senior official at the finance ministry who now advises investment funds. “But they are trying to nudge behaviour at the margins, and even a 10 to 15 percent reduction in gold import volumes would be meaningful from a balance-of-payments perspective.” The nudges include a revised tax treatment for gold purchased through certain unregulated channels, an increase in the tax collected at source on international credit and debit card transactions, and a sustained push to promote domestic tourism destinations as alternatives to overseas travel. The government’s tourism ministry recently launched a campaign under the slogan “Discover Incredible India First,” offering subsidised rail packages to heritage sites in Rajasthan, Tamil Nadu, and the northeastern states.
Economists are divided on whether demand-side nudges can meaningfully move the needle on a structural issue. Dr. Ananya Kapoor, a macroeconomist at the Centre for Advanced Policy Studies in Delhi, argued that gold demand in India is relatively price-inelastic and that tax measures tend to shift purchasing into informal channels rather than suppress overall consumption. “Every time the government raises duties on gold imports, the smuggling networks get more active,” she said. “The real solution is to give households credible alternative savings instruments that match gold’s perceived attributes: liquidity, durability, and inflation protection.” She pointed to the government’s sovereign gold bond scheme, which allows investors to take price exposure to gold without holding the physical metal, as a step in the right direction, though take-up remains a fraction of physical demand.
The outbound tourism question is similarly complex. India’s growing middle class has developed a strong appetite for travel to Southeast Asia, the Gulf, and Europe, and constraining that demand through punitive taxation risks a political backlash from urban voters who see foreign travel as an earned aspiration. Senior government officials acknowledge the sensitivity. One person involved in the policy discussions, speaking on condition of anonymity, said the administration was focused primarily on encouraging rupee-denominated spending and on working with Gulf tourism authorities to promote experiences that keep more of the spending within currency arrangements favourable to India rather than on outright suppression of overseas trips. The Reserve Bank of India is expected to present its quarterly assessment of the current account position to government officials later this month, and the findings are likely to shape how aggressively the campaign is pursued in the run-up to the monsoon season.
For now, many Indians appear unpersuaded. At a gold jewellery market in South Delhi, traders reported no discernible slowdown in foot traffic ahead of the upcoming wedding season. “People have been saving for these weddings for years,” said one vendor who asked not to be named. “A few percent change in tax is not going to change that.” The Modi government’s challenge is to find a formulation that satisfies the finance ministry’s balance-of-payments concerns without being seen to lecture citizens on how they spend their hard-earned money — a balance that, economists note, no Indian administration has yet managed to strike convincingly.