Prime Minister Narendra Modi urged Indian citizens to reduce discretionary spending on gold, fuel, and foreign travel starting May 11 [1].
The appeal comes as India seeks to protect its foreign-exchange reserves during a period of global instability and economic pressure resulting from the war in Iran [1, 2, 3].
Modi said Indians should cut fuel use, delay the purchase of gold, and avoid traveling abroad [2]. While some reports describe the move as a push for austerity, other accounts suggest the appeals are voluntary measures intended to bolster the national economy [1, 2].
Gourav Vallabh, a member of the Prime Minister's Economic Advisory Council (PMEAC), said the effort is an act of "quiet patriotism" [3]. He said the government is not asking citizens to stop spending entirely, but rather to spend more wisely [2].
Vallabh said that an optimization of dollar-dependent spending could reduce current outflows by about 10% [3]. This reduction in spending would help preserve the country's foreign-exchange reserves and maintain economic stability during the current geopolitical crisis [1, 3].
The focus on gold and foreign travel is significant because these transactions often require foreign currency, which puts direct pressure on the national reserve. By curbing these specific habits, the government aims to create a financial buffer against external shocks [1, 3].
Vallabh said the strategy focuses on optimizing outflows rather than implementing rigid state-mandated austerity [3].
“"quiet patriotism"”
This move signals that the Indian government views the war in Iran as a significant threat to its currency stability. By appealing to voluntary behavioral changes in gold and travel spending, the administration is attempting to reduce the demand for U.S. dollars without implementing formal capital controls, which could otherwise spook foreign investors.
