Over the millennia, gold has been an instrument of choice that has served as money or as an anchor for money. In the twentieth century, confidence placed in physical gold was gradually replaced by confidence in abstract constructs such as institutions (for example, central banks), rules (for example, IMF Articles of Agreement) and global regimes (for example, exchange rate regimes to maintain stability) as the idea of money transited from the real to the symbolic and the imaginary.

Contemporary money is essentially an abstract unit of account. It is typically issued as a central bank liability (Kumhof et al. 2020) and derives its value from government fiat (authoritative order). Today, money is once again being reimagined. Technology and private initiatives are contesting the idea of money as a central bank liability. Geopolitics is eroding the certainties of a rule-based order, impacting established institutions and regimes that govern international monetary relations. Furthermore, the overhang of excess liquidity arising from easy monetary policies initiated during the global financial crisis and pursued during the Covid pandemic portends inflationary pressures. In this context, gold is once again assuming a new significance.

In this chapter we seek to examine the Indian evidence for the increased attraction for gold from the perspective of the central bank and of individuals as an alternative to fiat money. To do so, we attempt a long view of gold in India's quest for monetary stability, delving into her monetary history. We try to locate the Indian experience in the global story of monetary gold and its evolving significance in a country that is home to the largest private holdings of gold in the world, estimated variously at about 23,000–25,000 tonnes (Government of India 2018: 84; WGC 2016b). We also focus on the use of gold as an anchor for money in India.