Budget 2026 Needs To Monetise India's Gold Stash, Make Room For 8th Pay Commission: Nilesh Shah

The large quantity of gold and silver lying idle with Indian households could be monetised to spur investment, consumption and raise public funds to meet the fiscal deficit target, according to veteran fund manager Nilesh Shah. Such a plan will require "out-of-the-box thinking" in the government that is set to present its budget in about two months.

In the subsequent budget—to be released in 2027—the government may have to prepare for fatter pay cheques on account of the implementation of 8th Pay Commission. The panel, formally setup last month, has been given an 18-month deadline to submit its report on revision of central government employees' salaries.

"There is a commitment on fiscal prudence on one side and 8th Pay Commission on other. Should the budget provides for it this time, it means higher deficit than promised. It means mobilise more resources," Shah, the managing director and CEO of Kotak Mahindra AMC, told NDTV Profit in a televised interview.

Shah said the periods of stock market boom in India triggers a visible wealth effect in real estate and consumption. But in 2025, the sharp rise in gold and silver prices, that have outperformed equities, hasn't moved the metal of house safes and bank vaults. "The wealth effect is not visible because they are lying in tijoris in the parallel economy."

"Can the budget think out-of-box to bring that gold and silver out of tijoris and into the main economy. It will raise revenue for the government, put money in the pockets of consumers, people can invest and spend, and the whole economy can get a boost," Shah said.

"I hope the budget does out-of-the-box thinking in defreezing gold and silver, maintaining fiscal prudence, and yet providing for 8th Pay Commission," he added.