‘Indian love for gold is difficult to understand’ NITI Aayog VC Dr. Ashok Lahiri | India Today Exclusive

In an exclusive interview with India Today Group’s Marya Shakil, Dr. Ashok Lahiri, the Vice Chairperson of NITI Aayog, spoke on a wide range of economic topics. In his first interview since taking charge, Dr. Lahiri addressed the West Asia crisis, the gold import duty hike, investments, savings, forex reserves, consumption, and national growth.

On the West Asia crisis and appeal by PM Modi

Responding to Prime Minister Narendra Modi’s appeal for citizens to conserve foreign exchange by watching their expenditures, Dr. Lahiri explained the reason behind the call for financial caution:

“I’m surprised that some people are questioning this national austerity. National austerity is simply another term for national savings, and avoiding unnecessary spending is always a good thing. Take avoiding gold imports, for example. We import more when we spend more than what we earn. That is just natural arithmetic.”

On Consumption vs. Growth

When asked if a drop in consumption would negatively impact economic growth, Dr. Lahiri explained the balance between consumption and investment using the Asian economic model:

• The Demand Equation: Consumption is only one source of demand; the other is investment. Total demand equals consumption plus investment.

• The Balance of Savings: A problem arises if people stop both consuming and investing. However, investments must be funded from somewhere—specifically, from domestic savings borrowed through banks.

• When Under-Consumption is a Problem: Under-consumption is only an issue if investment is slow. If investment is stagnant, you encourage people to consume. But if investment picks up, it drives the economy.

• The Global Models: The US developed using a high-consumption model, financing investments through foreign savings. Conversely, the “Asian model” seen in East Asia and China relies on financing investment through domestic savings.

Dr. Lahiri concluded this point by stating, “So, are we suffering from an under-consumption problem? I doubt it.”

On the Gold Import Duty Hike

Addressing the recent hike in gold import duties and India’s cultural relationship with the precious metal, Dr. Lahiri noted:

“If you do not buy gold, you will spend that money on something else, or, hopefully, save it in the bank where it can be reinvested by someone else. Personally, I don’t quite understand gold—though perhaps it’s in my blood, too. Our love for gold, the Indian love for gold, is absolutely difficult to understand.”

WATCH Full Interview of Dr. Ashok Lahiri here:-