Narendra Modi has asked Indians to curb gold purchases, fuel use and foreign travel as higher oil costs strain the rupee and India’s foreign balances.
Prime Minister Narendra Modi is asking Indians to buy less gold, use less fuel, work from home where possible and avoid unnecessary foreign travel as the war in Iran drives up energy costs and intensifies pressure on the rupee.
The appeal, made at a public event in Hyderabad on Sunday, is a direct call for households to help conserve dollars at a time when India’s import bill is rising and capital inflows are weakening. It does not signal an imminent default risk: India has about $690 billion in foreign exchange reserves, enough to cover roughly 11 months of goods imports. But the pressure is real and growing.
India imports roughly 90% of its crude oil and about half of its gas needs. With the Strait of Hormuz shut for more than two months amid the conflict, the country’s import bill has swelled by billions of dollars. Foreign exchange reserves have fallen by $38 billion since the Iran war began, according to the BBC’s reporting from official and market data.
The strain is already reaching consumers. Air fares have climbed as airlines pass on fuel costs, overseas holidays are becoming more expensive, and gold imports — long a major source of dollar demand — have become a fresh target. The government has sharply raised import duties on gold and silver to 15%.
Petroleum minister Hardeep Singh Puri has sought to reassure the public that there is no fuel shortage. Still, oil near $100 a barrel is testing government finances after months in which officials absorbed much of the shock. On Friday, India raised petrol and diesel prices for the first time in four years, with Delhi retailers increasing rates by three rupees a litre, or more than 3%, to offset higher global crude costs.
Economists and market analysts say the government is trying to manage a difficult balance: limit dollar demand, contain inflation, protect poorer households and avoid a sharper fall in the rupee. Uday Kotak, a veteran Indian banker, warned industry leaders this week that the full effect of the energy shock had not yet reached consumers. “We must prepare for the worst,” he said.
Nomura economists Aurodeep Nandi and Sonal Varma said Modi’s comments suggest pressure on public finances is nearing a tipping point, with less tolerance for further rupee depreciation and a greater likelihood that consumers will share more of the adjustment. Nomura projects India’s fiscal deficit will widen to 4.6% of gross domestic product by March 2027, above the government’s 4.3% target, while the balance of payments gap has crossed $70 billion.
The rupee’s weakness is not solely a result of the war. Foreign investors have pulled about $22 billion from Indian equities in recent months, while net foreign direct investment has stagnated. Concerns over slowing global trade, U.S. tariff threats and India’s position in emerging industries such as artificial intelligence, batteries and electric vehicles have also weighed on investor sentiment.
India’s chief economic adviser, V Anantha Nageswaran, has said keeping external balances under control while preventing further rupee weakness will be the country’s key macroeconomic challenge this year. Some economists argue that broad fuel subsidies are unsustainable and that any relief should be more targeted, especially for poorer households that depend on cooking gas.
For now, Modi’s message is that voluntary restraint can help reduce demand for dollars before market forces impose a harsher adjustment. The next test will be whether fuel prices, inflation and the rupee can be stabilized without forcing a broader squeeze on Indian consumers.
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