India’s purchase of 200 tonnes of gold from the International Monetary Fund displayed the economic strength of the world’s two fastest growing large economies, New Delhi said on Tuesday night.

Pranab Mukherjee, India’s finance minister, said the $6.7bn (€4.57bn, £4.10bn) bullion buy reflected the power of an economy that laid claim to the fifth largest foreign reserves in the world and that had the resilience to reach 9 per cent economic growth in a year’s time.

India and China had been adding to global output despite turmoil in the world economy “when Europe collapsed and North America collapsed”, he said.

India’s most experienced cabinet minister described the return to building up gold stocks as soothing the “outrage” that Indians had felt “when we had to pledge gold to the Bank of England just for borrowing dollars to support our imports”.

With the latest central bank purchase of gold, Asia’s third largest economy has joined the move by a group of large economies to diversify foreign exchange reserves and rebalance their holdings of dollar-denominated assets. It reflects concerns about the long-term health of the US dollar against the background of a large fiscal deficit and the US Federal Reserve’s quantitative easing policy. The transaction, at near record bullion prices, boosted the Reserve Bank of India’s gold holdings to 6.2 per cent of its foreign exchange reserves.

“India is following the well-trodden footsteps of countries like Russia, China and Mexico in buying up gold. The purchase is in the context of what other central banks are doing in the search to find assets with an inverse relationship to the US dollar,” said Robert Prior-Wandesforde, senior economist at HSBC, the banking group, in Singapore. “It’s not just central banks [buying gold], it’s also hedge funds and institutional investors.”

India’s gold holdings as a percentage of foreign reserves are now higher than China’s. Beijing holds about 1,054 tonnes of gold, only about 2 per cent of total foreign exchange reserves. But China has been accumulating gold at lower prices over the past five years.

India, the world’s largest consumer of gold, had allowed its official gold holdings to fall unusually low in recent years. Fifteen years ago, the RBI’s gold reserves peaked at 20 per cent of foreign exchange reserves. But since 2004, they have dropped to 3.6 per cent of an estimated $285.5bn foreign exchange reserves.

“I would have advised the governor of RBI to buy gold as our forex reserve is comfortable. The RBI has done just that. That doesn't mean we don't prefer dollar any more or like gold any better,” said Mr Mukherjee.

Earlier in the day, Mr Mukherjee had left the door open to India buying more gold.

“Our Reserve Bank decided to buy some gold. I think about 400 tonnes. That’s normally something we do from time to time. The IMF wanted to sell gold and we wanted to buy gold,” he told the Financial Times.

Tuesday’s sale to India was the first by the IMF to a central bank for nearly a decade.