I think you have to keep in mind its saying that 500grams is ok for a married woman. 500g is worth like, what, ~20k$? I doubt too many indian people have that much to put in gold since they're pretty poor usually...
Actually there are lots of politician and businessman who try to hide their illegal money in golds so most of them have more than 500 gram gold for sure and in a single marriage indian used to spend more than kilos to make jwellery items for bride.
However this limitation may make more indians to move towards bitcoin as best and safe alternative.