Parsa Venkateshwar Rao Jr | PM’s Austerity Call Timely, Govt Should Also Follow It

Prime Minister Narendra Modi’s advice at a BJP public meeting held in Hyderabad on Sunday to use less petrol and diesel by traveling less, carpooling, working from home, switching to electric vehicles (EVs), not traveling abroad and buying less gold can be interpreted as a positive advice, even though it was two months after the war broke out in West Asia on February 28. The expectation that the war would end in a few days or a few weeks turned out to be completely unrealistic. Two sides, the United States and Iran, are pursuing it despite the realization that the conflict cannot last very long. But the April 7 ceasefire did not lead to the certainty of a peace that would stabilize the fragmented economies of the Asian region stretching from west to east. Mr Modi appears to have felt the need to tighten the economic belt because trade disruptions due to oil supply impacts and the blockage in the Strait of Hormuz continue and could last at least a year longer. The Ministry of Finance’s monthly report for April pointed out that there would be economic stress in India, even if there were no problems. Mr Modi’s first public statement that economic sails must be cut is a clear sign that the country will have to endure the pain of a decline in economic growth as a result of the war.

It will always be debated whether the Prime Minister should have mentioned the impending economic hardship earlier. The government will say that the war had no impact in March and even most of April, but now the “no peace, no war” situation is starting to affect economic prospects and the Prime Minister has spoken at the right time. But the government will still need to set an example by reducing its own conspicuous consumption patterns. The movement needs to start from the top; The prime minister, his cabinet colleagues and senior government officials are traveling less within the country and abroad. Public rallies, a sign of political pomp and pageantry that became a necessity for the ruling BJP during the last state Assembly elections, will have to end to prove that the government is willing to implement what the chief minister wants the people at large to do. It would be a good example for senior ministers and officials to use public transportation and, if available, the metro to go to their workplaces. Since digitalization in the government is not as complete as it should be, it may seem unrealistic to expect government administrative staff to resort to working from home. At the same time, there is also the question of whether the public transport system that exists in urban India today can withstand the pressure that will be created if people using two-wheelers and cars take to the bus and metro networks. Crises are always an opportunity, and the current crisis in oil supply should help change the behavioral patterns of commuters. It’s time for more people to switch to public transportation. This is again a suggestion hinted at in the finance ministry’s April report.

Mr Modi’s advice to the public to buy less gold is quite interesting. The government has the option of imposing restrictions on gold imports, but Mr Modi is likely aware that any government intervention would be pushing the panic button. For this reason, he wants the restriction on gold transactions to be voluntary. It’s a really tough choice. The question is whether the Prime Minister is preaching or whether there is concrete evidence that gold consumption hinders economic activity. This is not clear yet.

Mr Modi is understood to be making major public announcements based on expert analysis within the government. This was evident when Mr Modi announced lockdowns during the first phase of Covid-19 in April-May 2020, with inadequate preparations being made to move towards a complete lockdown.

The government must take appropriate steps for the austerity measures hinted at by the Prime Minister in his public speech to be effective. The Prime Minister’s warning is the slowdown of economic and daily life and the decrease in energy consumption, especially consumption based on fossil fuels. This means oil and gas supplies are under pressure for the next six months and more. This will require accelerating the production of electricity from renewable energy sources. Of the 533 GW installed electricity capacity, 150.26 GW (28.21%) comes from solar energy and 228.56 GW (42.90%) comes from coal. Solar provides 21.5 percent of peak demand, with 66.9 percent coming from thermal (coal)-based generation. India has made tremendous progress in increasing electricity generation from renewable sources to more than 50 percent of installed capacity. However, there is still a long way to go to further reduce dependence on fossil fuels.

There is also the fact that India remained a silent spectator to the West Asian crisis. India has a direct stake in peace in the region as nine million Indian workers live and work in Gulf Arab states and have contributed 38-40 per cent of the record remittances of $135.4 billion in 2025. India should have played an active role in pressing for a ceasefire between the US and Iran.

The Narendra Modi government has shown a strange reluctance to make its voice heard in resolving the conflict. India has a huge economic interest in peace in West Asia, and its refusal to weigh in on talks between the warrs remains a conundrum. The claim that India does not have sufficient influence over either the USA, Iran or Israel is almost a declaration of desperation. India needs to actively strive for peace in West Asia because its own national interests are at stake. India’s refusal to say or do anything on this issue diminishes India’s legitimate weight in global affairs as a major economy and an attractive major market for investments that can spur global economic growth. India may not be a flashy “Vishwa Guru” but it is still a major player on the global stage and needs to do its bit.