Subject title is bullshit. India did not outlaw gold. As always was the case, gold can be purchased with after-tax money.
The new thing is that the gov is now demanding that all gold be shown to be purchased with after-tax money. And, apparently, resorting to draconian measures to determine if each person's gold above some threshold has been purchased accordingly.
But it has not made gold illegal.
If it happened in Europe we'd have panic and people digging holes in their yards to hide wealth. If Indians are normal people, which I don't doubt, they'll look for alternatives like platinum, gems and electronic goods, bitcoin included.