The global energy crisis ignited by the war with Iran is beginning to increasingly resemble the darkest days of the pandemic, with governments shifting into emergency states under the fear of economic shock. In India, Narendra Modi has called on citizens to return to Covid-type practices—from remote work and travel restrictions to reduced fuel consumption and gold purchases—as the closure of the Strait of Hormuz and skyrocketing oil prices threaten to trigger a global domino effect on the economy, inflation, and markets.
Covid-style austerity measures to save foreign exchange and fuel
Indian Prime Minister Narendra Modi urged citizens to return to remote work, limit international travel, and even reduce gold purchases, as the ongoing crisis in the Middle East and the war with Iran cause an explosive rise in global energy prices. Modi stated that the austerity measures, reminiscent of the Covid-19 pandemic era, will reduce fuel consumption and help the country save precious foreign exchange. India imports approximately 90% of the oil it consumes, and the cost of crude imports has surged by billions of dollars following the US and Israeli war with Iran, according to BBC data. The situation deteriorated further as the Strait of Hormuz, the critical maritime corridor in the Persian Gulf, has remained closed for more than two and a half months. Analysts characterized Modi's intervention, delivered Sunday at a public event in Hyderabad, as his "most drastic to date."
"Patriotism means living responsibly"
"Patriotism is not only about the willingness to sacrifice one's life at the borders. In times like these, it means living responsibly and fulfilling our duties to the nation in our daily lives," Modi stated. "In the current situation, we must place great emphasis on saving foreign exchange," he added. The Indian Prime Minister urged citizens to use public transport, such as the metro, and to engage in carpooling to limit fuel consumption. At the same time, he called on farmers to cut their use of fertilizers by half.
Markets plunge amid fears of a prolonged crisis
The impact was immediately evident in the Indian markets on Monday. Analysts estimate that Modi's statements contributed to a drop of over 1,000 points in the benchmark Sensex index during early trading, as fears of prolonged economic turmoil intensified. So far, the Indian government has avoided raising petrol and diesel prices, despite the tremendous pressure facing state-owned fuel companies. However, the protracted conflict and oil supply disruptions are now beginning to squeeze the entire economy.
Hundreds of thousands of jobs at risk
The repercussions are already visible across many industrial sectors, with hundreds of thousands of jobs threatened in glass, plastic products, and tile manufacturing plants. Dwindling fertilizer stocks have also sparked fears of lower agricultural output and subsequent spikes in food prices. The greatest blow, however, has been dealt to the rupee, which has plummeted to historic lows in recent weeks, driving up import costs and fueling inflationary pressures.
Attack from the opposition
The opposition launched a fierce critique of Modi, arguing that his statements reveal a planning failure by the federal government. The leader of the Congress party, Rahul Gandhi, accused the government of shifting "the responsibility onto the citizens" to avoid its own accountability. "[Modi's proposals] are not advice—they are proof of failure," he wrote in a post on X.
www.bankingnews.gr
Σχόλια αναγνωστών