PRIME Minister Narendra Modi’s review of the economy with the Economic Advisory Council comes at a time when the global economic landscape is increasingly uncertain. Geopolitical tensions in West Asia, volatile energy prices, disrupted trade routes and weakening global demand are posing fresh challenges for economies worldwide. For India, the task is not merely to sustain growth but to protect ordinary citizens from the fallout of these external shocks. The impact is already visible. The Rs 29 hike in domestic LPG prices, following an earlier increase last month, has added to the burden on households grappling with rising costs of living. For millions of families, cooking gas is an essential expense, and higher fuel prices inevitably squeeze disposable incomes. Such increases also risk fuelling broader inflationary pressures across the economy.
However, India enters this period of turbulence from a position of relative strength. Strong domestic demand, robust infrastructure investment and a growing digital economy have helped maintain momentum despite global headwinds. But this resilience cannot be taken for granted. Rising crude oil prices continue to strain the import bill and exert pressure on the rupee. The Reserve Bank of India’s recent measures to attract foreign institutional investment reflect a proactive response to these challenges. By easing investment norms and encouraging capital inflows, the RBI aims to strengthen external stability, support the rupee and ensure adequate liquidity in the financial system. These initiatives complement its broader effort to maintain macroeconomic stability without compromising growth.
The challenge before policymakers remains a delicate balancing act. Inflation must be contained to protect consumers, but growth and employment cannot be sacrificed in the process. Fiscal prudence, targeted support for vulnerable households and continued structural reforms will be essential.
