Modi Urges Indians to Cut Gold, Travel and Fuel Use as $690 Billion Reserves Face Pressure
Updated
Updated · BBC.com · May 14
Modi Urges Indians to Cut Gold, Travel and Fuel Use as $690 Billion Reserves Face Pressure
4 articles · Updated · BBC.com · May 14
Hyderabad remarks from Narendra Modi urged Indians to buy less gold, avoid unnecessary foreign travel, work from home where possible and use less fuel to conserve foreign exchange as the Iran war enters a third month.
India imports about 90% of its crude and half its gas, and the Strait of Hormuz shutdown has inflated oil, gas, fertiliser and gold import costs while forex reserves have fallen $38 billion since the war began.
The pressure is widening macro strains: Nomura sees the fiscal deficit at 4.6% of GDP by March 2027 versus a 4.3% budget target, while the balance-of-payments gap has crossed $70 billion.
Markets are also contending with weaker capital inflows — roughly $22 billion has left Indian equities in recent months — leaving the rupee down about 6-7% this year and adding to Delhi's reluctance to allow sharper depreciation.
Economists say voluntary austerity may only delay the adjustment, arguing India will likely need higher fuel prices and targeted support for poorer households rather than broad subsidies if the war-driven energy shock persists.
With the rupee falling, is the 'Make in India' dream too slow to solve the current crisis?
As global powers meet over the crisis, is India becoming the biggest economic victim of the Iran war?
Can patriotic austerity save India's economy, or are deeper structural reforms the only real answer?
India Under Pressure: Modi’s Austerity Drive and Policy Response to the Iran War Oil Shock
Overview
India is facing serious economic challenges due to the ongoing Iran war, which began with U.S. and Israeli bombings and led to a blockade of the Strait of Hormuz. This conflict has triggered an oil shock, disrupted crucial supplies, and heightened concerns over the dominance of the dollar. As a result, Prime Minister Narendra Modi has urgently appealed to citizens to embrace austerity and reduce imports, outlining specific measures to conserve foreign exchange and protect the rupee. These actions highlight the direct impact of global turmoil on India's stability and the government's push for collective national resilience.