Second day, PM makes austerity push, invokes Covid-era habits, Pg1

Key Highlights:

• PM Narendra Modi urged government and private sectors to reinstate Covid-era practices like work-from-home to mitigate economic impacts of the West Asia conflict.
• India's forex reserves have decreased by $38 billion since the conflict began, causing the rupee to fall past 95 against the US dollar.
• The PM advocated for reduced fuel consumption, promotion of public transport, and preference for local products to decrease imports and foreign exchange outflow.
• Modi advised citizens to postpone gold purchases and reduce cooking oil consumption to ease pressure on foreign exchange reserves.

Detailed Insights:

• The West Asia conflict poses risks to India's economy through increased import prices, disrupted supply chains, and strain on foreign exchange reserves.
• In Q3 2025, India's current account deficit rose to $13.2 billion (1.3% of GDP), compared to $11.3 billion (1.1% of GDP) previously.
• A weaker rupee could diminish investor confidence and worsen the capital account, prompting the government to advocate for austerity measures.
• The PM emphasized domestic tourism and the use of electric vehicles to reduce dependence on foreign goods and services.
• Modi highlighted that a significant portion of India's imports is crude oil, and the conflict-affected regions are major oil suppliers.

Key Concepts Involved:

• Foreign Exchange Reserves: Assets held by a central bank in foreign currencies, used to back liabilities and influence monetary policy.
• Current Account Deficit: The shortfall when a country's total imports of goods, services, and transfers are greater than its exports.
• Capital Account: Records all international capital transactions, such as the purchase and sale of assets like stocks and bonds.

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