Prime Minister Narendra Modi’s seven-point action call for the citizens of India came soon after the state assembly elections had concluded, and it became clear that the Bharatiya Janata Party would win at least two of the four states and one Union Territory. While it lays bare the severity of the impact of the West Asia crisis, it raises questions over the timing and content. Also, political observers feel that the move is intriguing, as it is rare for Modi to admit that there is trouble on the horizon.
Pre-election, one saw several ministers heaping praise on the PM for not raising petrol and diesel prices, as such a decision would burden the common man. There were daily reassurances by his government’s officials that there was nothing to worry about and the situation was under control. There was no word on the need to curtail consumption.
Post-election, Modi himself took a different tack. A key part of his message was to urge people to work from home and reduce their fuel usage. A more effective approach might have been to lead by example. Politicians across the divide flew all over the country, hired transport to ferry the people to meetings and organised roadshows to campaign for the recent elections. The PM’s speech also coincided with a similar call to action for Indian corporates by the Confederation of Indian Industry. Observers feel that this kind of coordinated messaging points to a dire situation and creates panic.
Several of the suggestions mooted by the government also have other negative impacts that could be more serious than the problems they are trying to address. Some others might simply not be as effective as he hopes. For instance, if farmers stop using chemical fertilisers, as it has been urged, the immediate impact will be on the crop output at a time when El Niño is already set to hurt it. It is common knowledge that below-average rainfall and reduced soil moisture directly stress critical kharif crops (such as rice, cotton and soyabeans) and can inhibit rabi crop sowing (like wheat and rapeseed). Decreased farm yields, in turn, can strain rural incomes, which subsequently hurts rural demand for consumer and auto goods, while elevating overall food inflation. To secure the domestic food supply, the government often resorts to export restrictions on certain staples or increases imports of essential commodities like edible oils. This eats into our foreign exchange reserves. High-frequency indicators are already revealing the economic damage of the West Asia crisis. This will only exacerbate the situation.
Foreign travel burden
The suggestion to stop foreign travel is meant to conserve foreign exchange. It is common knowledge that the real pressure on the rupee and India’s foreign exchange is triggered by foreign institutional investors pulling out, while the Reserve Bank of India is using valuable dollars to shore up the falling currency – and not because people are going to travel abroad for their summer holidays! Even the RBI data up to February 2026 shows that Indians’ foreign travel spending in 2025-26 was already down by 3 per cent. After the Iran war broke out, foreign travel has seen an even sharper decline. There were rumours of a cess or tax on foreign travel. In a rare rebuttal from the Prime Minister himself, the report was rubbished. “This is totally false,” the Prime Minister wrote on X. “Not an iota of truth in this. There is no question of putting such restrictions on foreign travel. We remain committed to improving ‘Ease of Doing Business’ and ‘Ease of Living’ for our people”.
Urging Indians to buy local is another way of asking them to consume less, since purely domestic supply is not nearly enough to cater to the demand. Asking them to buy less gold is also likely to be futile. True, gold imports are a drain on our foreign exchange reserves. Gold remains one of the country’s biggest import items. Economists often argue that heavy spending on imported gold increases pressure on foreign exchange reserves, because the metal does not directly contribute to manufacturing or exports in the short term. But the jewellery sector (which employs millions) and wedding/investment demand will take a hit. Instead, the government could have promoted Sovereign Gold Bonds and gold ETFs instead of physical gold purchases. Households should be encouraged to recycle idle gold already lying at home, rather than importing more metal from abroad.
Critics say that all this means that the economy is in for a hard time over the next few months – a warning the government should have delivered much earlier, elections or no elections. Where, they wonder, are the acche din?