economy
Modi says Iran war poses severe risks to India, urges cuts in fuel use and gold purchases
Modi appealed to Indians to cut fuel use, overseas travel and gold purchases as the Middle East conflict exposes India’s heavy reliance on imported energy.
TL;DR
- Prime Minister Narendra Modi urged Indians to reduce fuel consumption, overseas travel, and gold purchases due to the economic impact of the Iran war.
- India imports nearly 85% of its fuel needs and relies on the Strait of Hormuz for significant portions of its crude oil, LNG, and LPG supplies.
- Rising energy costs are expected to widen India's trade and current account deficits and weaken the rupee.
- Modi appealed for conservation measures such as using public transport, working from home, and carpooling to save fuel.
- Reduced foreign travel and gold imports are also suggested to conserve foreign currency reserves.
- Shares of Indian jewelry and airline companies saw declines following the PM's remarks.
- Global brokerage UBS Securities lowered its forecast for India's economic growth due to the energy shock.
- Former Indian ambassador Nirupama Rao noted that the country faces difficult times unless the Middle East crisis is resolved.
- Despite pressure, the government has kept retail fuel prices stable by cutting taxes, with demand remaining unaffected.
- Analysts are waiting for tougher economic measures from the government, which have yet to emerge after recent state elections.