New Delhi : Prime Minister Narendra Modi’s ‘seven appeals’ to Indians, which included cutting back on fuel, gold, and postponing foreign travel, were unusually direct. The language stood out as seldom have governments asked citizens to curb consumption, the anchor of India’s growth story. There is a fine line between “appeal” and “austerity”. The catalyst behind the appeals is the prolonged closure of the Strait of Hormuz, a critical trade waterway, due to the Iran war.
“PM Modi’s appeal is not about spending less. It is about spending more wisely,” government sources said. This is essentially what PM Modi wanted to convey – don’t stop spending, but spend smartly to avoid pressure on foreign exchange reserves. He termed it “economic patriotism”. Thus, when the Prime Minister urged the citizens to skip foreign destination weddings and postpone gold purchases, the underlying message was about foreign exchange reserves. The country remains heavily dependent on imports of energy, gold, edible oil and fertilisers. All of these become more expensive when oil prices spike.
Now, let’s take the example of foreign travel or destination weddings. When people spend money abroad on luxury weddings, dollars flow out of India. India pays for many of its crude oil and gold imports in dollars. So, every dollar spent outside the country is one less dollar available for the RBI to manage external economic pressures. This is essentially behind PM Modi’s “Wed in India” push, which also adds to the country’s wedding economy.
Even small reductions in fuel consumption by Indians can help lower import bills and thus reduce pressure on forex. The suggestion to adopt WFH or take to carpooling should be seen in this respect – a broader effort to cut unnecessary fuel usage. A day after PM Modi’s appeal, Union Minister Hardeep Puri asserted that there was no shortage of fuel. At the same time, he underlined that oil companies were losing Rs 1,000 crore a day as they were absorbing the losses at present due to the rise in energy prices.
It is similar for gold. India imports almost all of its precious yellow metal. Now, consumer demand for imported gold leads to a direct increase in dollar outflows from the economy. “If we make a few small changes for a year, we can save substantial foreign exchange,” PM Modi said while urging people to put off buying gold for a year.
Read Also : Amul Raises Milk Prices By Rs 2 Per Litre Across India, New Rates Effective From May 14
