One war in the Middle East, a thousand problems for the Indian economy

On Sunday, 10 May 2026, in a public address in Hyderabad, the Prime Minister of India did something Indian Prime Ministers do every few decades when the foreign exchange numbers start looking the wrong way. He asked the country, in plain language, to spend less of it.

Cut your fuel use. Carpool. Go back to working from home, as we did during COVID. Don’t buy gold for a year. Don’t take that foreign trip unless you really have to. If you’re a farmer, halve your fertiliser. If you cook, use less oil; it’s healthier anyway, and right now it is, in his words, patriotic.

The phrase he used was striking. Patriotism, he said, is not only about the willingness to sacrifice one’s life on the border; in these times, it is about living responsibly and fulfilling our duties to the nation in our daily lives.

It is the kind of sentence that sounds, in the moment, like leadership.

It is also a sentence that deserves to be unpacked, because the question of what those daily duties actually cost and to whom is not the same for every household it lands in.

Why did he say it

The immediate reason is the war with Iran.

Global crude oil prices have, in recent weeks, climbed from around $70 a barrel to nearly $126. India imports about 85% of its crude. In the financial year ended March 2026, the country spent $174.9 billion on crude and petroleum-related products, which is roughly 22% of its total import bill. Every additional dollar a barrel costs is a dollar more leaving India’s forex reserves to keep cars on the road and stoves alight in kitchens.

Those reserves are already moving. They stood at $728.5 billion in late February. As of 1 May, they were at $690.69 billion, a drop of nearly $38 billion in two months. The International Monetary Fund has projected India’s current account deficit will be $84 billion this year.

The Strait of Hormuz, through which roughly a fifth of the world’s oil and nearly half of the world’s traded urea moves, is in the middle of a war. India is the world’s largest importer of urea. It is also the world’s second-largest gold importer after China, at $72 billion in 2025-26. Take crude, gold, fertiliser, and the airfares of 32.7 million Indians who travelled abroad in 2025, and you have a fair description of where the country’s foreign currency is going. PM Modi’s Hyderabad speech was, in essence, a list of all of those things.

The six asks

Stripped down, here is what the speech asked of the country.

Fuel. Use public transport. Carpool. Work from home where you can. Hold meetings on Zoom instead of flying to them.

Gold. Don’t buy any for at least a year.

Foreign travel. Skip non-essential trips abroad for at least a year.

Fertiliser. If you’re a farmer, cut your use by as much as half.

Cooking oil. Use less. It’s better for the body anyway.

Online over physical. Move meetings, gatherings, and, where possible, work itself, online.

It is, on its face, a coherent list. Every line item maps to a category that is actively bleeding foreign exchange.

But reasonable and evenly distributed are not the same thing.

Whose sacrifice

Read the list a second time, slowly, and you start to notice that it does not land the same way on every Indian household.

“Skip the foreign trip” is an ask aimed at people who were going to take foreign trips. That is a real and significant group; more than 14 million of those 32.7 million travellers in 2025 were on leisure, not business, but it is, by any honest reading, a middle and upper-middle class group. The bottom half of India was not in question to begin with.

“Don’t buy gold for a year” is a more complicated ask. For the wealthy, gold is a portfolio. For the wedding-season family, gold is an obligation for many communities, an irreducible part of how a daughter goes from her parents’ home to her husband’s. For the rural poor, gold is the only savings instrument they trust, because they have learned, often the hard way, that paper assets and bank deposits can be lost in ways that ornaments under the mattress cannot. A one-line appeal does not distinguish between these.

“Halve your fertiliser.” This is the ask that should make us pause the longest. India is the world’s largest urea importer in part because Indian agriculture is heavily fertiliser-dependent, in part. After all, urea is heavily subsidised, and in part because decades of policy have built farming around it. A small farmer who actually halves the urea on a paddy or wheat crop is not making a patriotic gesture. He is risking the difference between a yield that feeds his family and a yield that does not. Asking the cohort with the thinnest margins for the deepest cut is, at minimum, a question worth asking out loud.

“Cut cooking oil.” India consumes around twenty-five million tonnes of edible oil a year and imports more than half of it. For a household at the lower end of the income distribution, cooking oil is already a budget line item that gets watched closely. Asking them to use less is, in effect, asking them to eat plainer. It is also, again, technically true that this is good for the body.

“Work from home,” on the other hand, lands on people who have a job that can be done from home, which is, in India’s labour market, the relatively small white-collar minority.

The construction worker, the auto driver, the domestic help, the delivery rider, the small shopkeeper, the tea-stall owner, the nurse on shift, the police constable, none of them can work from home.

The arithmetic of this is uncomfortable. Some of the asks fall on the wealthy. Some fall on the comfortable. Some fall on the working poor. Some fall on the small farmer. They do not balance.

What the markets heard

If citizens were being asked to make voluntary adjustments, the markets were not in the mood for voluntary anything.

Within hours of the speech, Titan, Tata’s jewellery flagship, fell nearly 6%. Kalyan Jewellers and other jewellery stocks dropped by as much as 10–11%. IndiGo, the country’s largest airline, fell 2.8%. The market was reading the appeal not as a moral nudge but as a signal, a sign that the government is worried enough about the external situation that, if appeals do not work, restrictions might.

There is a long Indian memory here. In 2013, with the rupee in trouble and the current account deficit ballooning, the government raised gold import duties, and the RBI restricted gold inflows. Jewellery stocks fell then too. The pattern is familiar.

This is the gap between what an appeal sounds like and what an appeal does. To a family, it is moral suasion. To a market, it is a leading indicator.

This is not the first time India has been here.

It is also worth saying and worth Indians remembering that this is not a new genre of speech.

Indira Gandhi made similar appeals during the 1973 oil crisis. The 1991 crisis went further, forcing India to physically ship gold to the Bank of England as collateral and triggering the structural reforms that eventually opened the economy. In 2013, the rupee slid against the dollar in a way that forced gold curbs and a tightening cycle. The current moment fits into that lineage, a country with an unhealed external dependence on imported oil and imported gold, getting whiplashed every time the rest of the world goes through a crisis.

That dependence has not, structurally, been closed. The push for renewable energy is real but slow. The electric vehicle transition is happening, but partially. Sovereign gold bonds were a serious attempt to give Indians a way to hold “gold” without importing it; their reception has been mixed. The fundamental fact that a war in the Middle East can move the Indian rupee in days has not gone away.

The Prime Minister’s appeal, then, is a stopgap. A serious one, perhaps a sincere one, but a stopgap.

What an honest version of the speech might also have said

There is an honest version of Sunday’s speech that the country did not quite get.

That version would have said: yes, we are exposed, and yes, we are asking you for restraint, but the heaviest part of this is not yours to carry. It would have laid out, alongside the citizen list, a state list of the structural moves the government is taking on energy diversification, on strategic petroleum reserves, on the rupee, on accelerating renewables and EVs, on insulating small farmers from a fertiliser cut, and on protecting daily-wage workers from the inflation that an oil shock always produces.

That version would have acknowledged, plainly, that the foreign trip you might cancel and the urea a small farmer might cut are not on the same scale of sacrifice. It would have said which segments will be asked to do more and which will be cushioned. It would have used the word patriotism sparingly, because the word does a lot of work, and the work it does in a country with this much inequality is not neutral.

That is not the speech that was made. The speech that was made was a list, addressed to every Indian as if every Indian had the same room to give.

The bigger picture

A war in West Asia has, within weeks, knocked nearly $38 billion off India’s forex reserves, shaved half a percentage point off the country’s projected growth, sent jewellery stocks plunging, sent airlines down, and brought the Prime Minister out to a public stage in Hyderabad to ask the country to spend less of its currency. That sentence, in itself, is the diagnosis.

India’s vulnerability is not a story about one war or one Prime Minister. It is a story about an economy that has not yet built itself enough of a moat against the things it cannot control. Oil. Gold. The Strait of Hormuz. The dollar.

Until that moat is built, every few years, an Indian leader is going to stand at a podium and ask the country to be patriotic about its petrol pump and its jewellery box. There is nothing wrong, in principle, with that ask. The country has weathered worse together before.

The least we owe each other, while we listen, is to ask honestly who is being asked for what and to make sure the answer is not, as it so often is, that the people with the least are being asked for the most.

References

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