India GDP grows 7.8%, but PM Modi urges less gold purchase, foreign travel

Foreign trips, if you are going for leisure, you should not go. If you are getting married abroad, you should not do so.

The strong performance came despite external pressures, including oil price volatility and disruptions to global supply chains. The latest figures have also brought renewed attention to the composition of India's economic activity and the way household spending contributes to growth.

What Happened

Gold has a distinctive role in the Indian economy. It is widely held as jewellery, savings and an investment, making it an important component of household wealth.

• Prime Minister Narendra Modi made the appeal on September 1 in a video posted on Instagram from the Shanghai Cooperation Organisation summit in Bishkek, linking domestic spending choices with India's goal of becoming a.

• Data from the Ministry of Statistics and Programme Implementation showed that real GDP stood at ₹81.36 lakh crore in Q1 FY27, compared with ₹75.46 lakh crore a year earlier.

• The 7.8% expansion exceeded the Reserve Bank of India's projection of around 7% and followed revised growth of 8.6% in the previous quarter.

Key Details

At the same time, India imports most of the gold it consumes. Strong demand therefore results in an outflow of foreign exchange and can affect the country's external balance.

• In 2015, for instance, estimates suggested that India's growth rate would have been 6.34% rather than 7.4% if spending on valuables and discrepancies were excluded.

• Gold-related expenditure had risen 45% year on year during that quarter.

• Oil imports and volatile capital flows remain bigger swing factors for India's external balance — foreign portfolio investors have pulled nearly $30 billion out of Indian equities in 2026.

Why It Matters

This is why policymakers have periodically encouraged households to avoid unnecessary gold purchases and instead consider domestic financial assets and other forms of investment. But gold has another connection to GDP that makes the issue more complicated.

• The backdrop: forex reserves slipped from about $728 billion in February 2026 to around $691 billion by May, as an Iran-linked oil spike pushed Brent toward $105 a barrel, with the current account deficit.

• India imported roughly 721 tonnes of gold worth nearly $72 billion in FY26, a record value driven by prices, not volumes.

What Reports Say

Coverage of the story so far points to:

• Travel adds another large bill: with airfares included, Dr Hajra puts the total at $47-50 billion ( ₹4-4.5 lakh crore) for about 33 million outbound travellers in 2025.

• Redirected into deposits, mutual funds, equities or bonds, "national saving doesn't decline — its composition changes," with money once idle as $72 billion of gold instead financing businesses, housing and infrastructure.

• Continued reporting by Livemint as more details emerge