Asset vs consumable: Sridhar Vembu explains why gold imports shouldn't be counted like oil purchases in debt calculations

Zoho founder Sridhar Vembu urges excluding gold imports from India’s external debt (Representational image/AI)

Sridhar Vembu on Gold: Zoho founder Sridhar Vembu has called for a rethink of how India accounts for gold imports, arguing that the country's external debt and current account deficit may not accurately reflect its true national wealth.

In a post on X, Vembu said India imports large quantities of both oil and gold, but the two should not be treated alike. While oil is a consumable commodity, he said, gold is a long-term asset that retains value and forms part of household wealth.

According to Vembu, the cost of imported gold is recorded as an outflow in India's balance of payments, adding to the country's foreign debt. However, the gold itself remains an asset held by households and is not reflected in the national balance sheet.

He argued that this creates an accounting mismatch where liabilities are visible, but the corresponding assets remain hidden. "India's assets remain hidden but the liability is plainly visible," Vembu wrote, adding that the issue is "kind of a metaphor for India in general."

To present what he described as a more accurate picture of the economy, Vembu suggested reporting India's current account deficit excluding annual gold imports. He also proposed deducting the value of imported gold, at its purchase price, from the country's net external debt to provide what he called a "truer picture" of India's national balance sheet.

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