PRIME Minister Narendra Modi’s post-poll austerity push has an ominous ring to it. Apparently, all’s not well on India’s economic front. Global headwinds, particularly the war in West Asia, are taking their toll on an economy that remained resilient even during the Covid-19 pandemic. The PM has asked citizens to work from home, use public transport, avoid unnecessary foreign travel and postpone the purchase of gold. Citing the habits adopted during the disruptive pandemic, he has stressed the need to reduce fuel consumption and save foreign exchange. His call for a “civic Satyagraha” is a politically astute move, considering that the majority of the states are ruled by the BJP on its own or in alliance with other parties. Yet, it seems that the Modi government is preparing the people for a crisis that it failed to anticipate.
India heavily imports crude oil and gold, both of which strain foreign exchange reserves when global prices surge. Encouraging fuel conservation, domestic tourism and reduced dependence on imports are sensible responses to a volatile international environment. However, the fact is that the government largely remained occupied with the Assembly elections over the past month and a half. Economic management took a back seat during this period. Now, efforts are afoot to deal with the challenges.
Asking families to put off weddings abroad or avoid buying gold reflects anxiety over the rupee’s alarming depreciation. A government that has repeatedly projected economic strength is now urging behavioural restraint on a nationwide scale. Some steps may have unintended consequences. India’s jewellery sector supports millions of livelihoods, and a big drop in gold purchases could hurt workers far more than wealthy investors. Also, the work-from-home policy is not practical for large sections of the workforce. Indeed, civic responsibility matters, but it is no substitute for contingency planning. The government must urgently do course correction.