Why are gold and silver prices rising in India? Govt explains in Lok Sabha

Raising the issue in the Lok Sabha, DMK MPs Thiru Arun Nehru and Sudha R asked whether the government had assessed the reasons behind the significant increase in gold and silver prices, including the impact of global markets, import costs and exchange rate movements.

The MPs also sought to know whether the Centre had taken cognisance of the financial strain faced by families, especially during festive and wedding seasons, in states such as Tamil Nadu, where gold has strong cultural and traditional significance.

They further asked what steps the government had taken or proposed to stabilise prices and reduce volatility in precious metals, and whether any relief measures such as reduction in import duties, tax rationalisation, subsidies or welfare schemes were being considered to make gold and silver more affordable.

Replying on behalf of the Finance Ministry, Minister of State Pankaj Chaudhary said domestic prices of gold and silver are primarily determined by prevailing international prices in US dollar terms, the rupee–dollar exchange rate and applicable taxes and tariffs.

On the impact on households, the minister said price movements may have different effects across States and population groups depending on socio-cultural and economic reliance on precious metals. He pointed out that gold and silver serve both as consumption items and investment assets, and that rising prices increase the notional value of existing household holdings.

The government reiterated that it does not fix the prices of precious metals. However, as a consumer relief measure, customs duty on gold imports was reduced from 15 per cent to 6 per cent in July 2024.

The government clarified that there is no proposal to intervene in or regulate retail prices of gold and silver, as these are determined by market forces.