India's Gold Stash Dwarfs Fort Knox Hoard and Modi Wants It

They are actually right -- the bullion that is simply hoarded cannot do much to actively build the economy; it needs to, at minimum, be "monetized" to make loans (e.g., small business loans). This is the function of savings, in a healthy economy and banking system. There are two big problems though: (1) to do this the "right way", the monetary system itself should be founded upon gold, yet the state is actively hostile to that possibility (to wit, if it backed the rupee with gold, the trade deficit problem would be obviated) , and (2) the problem is not just lack of technical options to deposit and mobilize gold, but lack of trust in institutions. The latter cannot simply be solved with a government push. We aren't claiming there is no way to make a legitimate gold-deposit-and-lending scheme, but it would have to be done very well (transparently, and with many checks and balances) to get families to part with even some of their generational heirlooms (a third problem might be that these heirlooms are themselves special, as unique objects; people don't want to have them basically replaced with generic rights to units of gold).