Austerity measures as West Asia conflict fuels economic strain

Prime Minister Narendra Modi on Sunday evening invoked austerity measures to be followed by the people in the face of crude-driven inflation due to the ongoing West Asia conflict. On the list are key measures targeted at reducing the usage of private vehicles to conserve fuel, as well as conserving foreign exchange outflows.Calling it a national duty in the face of a global crisis, the Prime Minister said that bringing back Covid-era measures such as working from home and returning to online conferences should be considered to save fuel.Here is a list of measures suggested and what they mean for people and the macro-economy. 1. Conserving FuelCarpooling, using public transport, using electric vehicles and switching to railway transport for moving goods were recommended to conserve petrol and diesel. Photo by Money Sharma / AFP India imports nearly 90 percent of its crude oil requirements, of which roughly 35 to 50 percent passes via the Strait of Hormuz. Nearly 90 percent of the LPG imports follow a similar route.The rising cost of crude oil is being absorbed by government-owned Oil Marketing Companies (OMCs) to keep retail prices stable. Part of it is also being borne by the government due to reduced excise duty. Photo by Arun Sankar / AFP The Prime Minister also suggested that Covid-era measures of work from home and turning to virtual conferences and meetings be adopted, calling it the “need of the hour”. Photo: Shutterstock 2. Avoid Buying GoldThe resolve to avoid buying gold to protect forex reserves is one of the measures suggested. India’s gold imports soared to nearly $72 billion in FY26. Gold makes up nearly 10 percent of India's total imports. The country is the second-largest consumer of the precious metal in the world, despite rising prices. Photo by Indranil Mukherjee / AFP Since the reliance on imports pressures the Current Account Deficit, the Prime Minister has suggested not buying gold despite weddings and festivities as a measure to conserve India’s foreign exchange. Photo by Krishnendu Halder / Reuters 3. Reduce Use of Chemical FertilisersThe PM has urged farmers to cut down their use of chemical fertilisers by half to conserve forex.India is the world’s largest importer of urea, which faces major supply-chain bottlenecks as 70 percent of the imports pass via the Strait of Hormuz. The domestic production of urea requires LNG, which is also constrained due to the blockage. As a result, experts warn of a 3 million-tonne gap for the Kharif sowing season. Photo by Narinder Nanu / AFP 4. Curb International Travel, Buy LocalCurbing international travel and destination weddings, and buying Indian-made goods, have been suggested as part of the austerity measures.This measure is aimed at conserving forex too, to prevent the outflow of domestic capital. The West Asia conflict has already had an impact on outbound travel by Indians, affecting travel agents and the tourism sector. Photo by Athit Perawongmetha / Reuters 5. Lowering Edible Oil ConsumptionThe Prime Minister said that lowering edible oil consumption will benefit both public health and the exchequer.Reducing import dependence on edible oil is a key measure to reduce India’s forex bill. The country imports nearly 60 percent of its edible oil requirements, especially palm oil from Indonesia and Malaysia, soybean oil from Argentina and Brazil, and sunflower oil from Russia and Ukraine. Photo by Amit Dave / Reuters

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