Uday Kotak’s reform call for India, says ‘break the gold puzzle, never waste a crisis’

India could be running a current account surplus but for its appetite for gold, Uday Kotak said on Friday, September 18, warning that gold imports could rise to as much as $90 billion in FY27 and put further pressure on the country’s external balance.Speaking at the Viksit Bharat FinMin-States Conference, the veteran banker said India needs to “break the gold puzzle” as it seeks to build a more resilient economy in an increasingly fragile global environment.“We have to solve gold,” Kotak said, estimating that India’s current account deficit (CAD) could be around $60 billion in FY27, while gold imports may reach $88-90 billion.“We can be current account surplus without gold imports; we need to break the gold puzzle,” he said.The comments come as gold prices have surged globally, raising the value of India’s gold import bill even when volumes do not rise proportionately. A sustained increase in imports could make it harder for India to contain the external deficit, particularly if higher gold prices persist. ‘No room for complacency’ Kotak said India had made considerable progress but warned against treating recent economic gains as a reason to ease up on reforms.“We are doing admirably but there is a long way for us to go,” he said, adding that India must think about Viksit Bharat against the backdrop of a rapidly changing global order.“There is no room for complacency. This is not a time for us to declare victory. We need to sit together in paranoia as it’s a very fragile world today,” Kotak said.He also pointed to the scale of China’s trade surplus and said the global economic rules had changed, with the world now having “two super powers”.“China trade surplus is mind blowing,” he said.Kotak also cautioned that technological shifts are changing the balance between governments and businesses, with private companies increasingly posing challenges to sovereigns.He noted that powerful leaders globally are now discussing the sharing of revenues, underscoring the pressures governments face in a changing economic landscape. Fiscal deficit, financialisation need attention Kotak called for greater fiscal discipline, saying India needs to tighten its finances despite pressure from states.“At 7% plus fiscal deficits we need to get tighter despite pressures from states,” he said, adding that even the US was gearing up to manage its fiscal deficit.He also warned against excessive financialisation of the Indian economy as India increasingly relies on market-based financing.“Markets model runs the risk of excessive financialisation of the Indian economy,” Kotak said, stressing the need to remain cautious about the trend.Kotak said India’s financing models also need to evolve and the country must build greater leverage around the goods and services that the rest of the world wants to buy from India.“This is our challenge,” he said.Calling the current environment an opportunity for faster reform, Kotak invoked the phrase “Never waste a crisis” and urged India to act with speed. He cited Canada’s rapid reform push as an example of countries competing aggressively for global capital.“For India we have lots to do at speed; as a country we should not waste this crisis,” he said.He also called for stronger reforms at the state level, saying India’s development strategy needs a better balance between the Centre and states.“Get your balance between Brahma, Vishnu and Mahesh right,” Kotak said.

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