Fuel, gold and politics of economic timing: Why speak of sacrifice only after elections?

By Vikas Meshram 

Against the backdrop of the Gulf crisis and disruptions in the global supply chain, the Prime Minister appealed to citizens to use fuel sparingly and reduce gold purchases. This was the second such public appeal after the assembly election results, first from Telangana and now from Vadodara. While the falling rupee and rising crude oil prices have been putting pressure on India’s foreign exchange reserves for months, an obvious question is being raised: why did this acknowledgement of economic stress come only after the state assembly elections concluded?

Many economists argue that appeals from the highest office of government can unintentionally create anxiety among the public. Such statements often encourage hoarding and speculative activity in the market. Fears of shortages begin to spread, black marketeers become active, and public confidence weakens. Economic caution from the government must therefore be accompanied by transparency and a credible policy roadmap.

India’s heavy dependence on imported crude oil and gold is an undeniable reality. Whenever global prices of these commodities rise, the pressure on foreign exchange reserves intensifies. In such circumstances, conserving fuel, promoting domestic tourism, and reducing import dependence are sensible measures. However, it is equally true that during the past several weeks the government appeared more focused on electoral politics than on preparing the public for emerging economic difficulties. Appeals to avoid foreign travel and reduce gold purchases suggest that the rapid depreciation of the rupee has become a serious concern for policymakers. This naturally raises a larger question: if the economy is repeatedly described as strong and resilient, why is the government now compelled to ask citizens to tighten their belts?

There is also the danger of unintended economic consequences. Gold is deeply woven into Indian social and cultural life. The jewellery industry sustains millions of workers, artisans, and small traders. A decline in gold purchases would hurt these ordinary workers far more than wealthy investors. Similarly, the idea of work-from-home cannot apply to large sections of the workforce such as agricultural labourers, drivers, vendors, and small shopkeepers. People are also justified in asking whether austerity will extend to government expenditure, luxury convoys, and official privileges. Without visible restraint at the top, calls for sacrifice from ordinary citizens are unlikely to inspire genuine public cooperation. Citizens’ responsibility is important, but it cannot replace a coherent economic strategy.

At the same time, India’s obsession with gold deserves serious reflection. Gold in India is not merely an investment; it is linked to weddings, traditions, and household savings. Yet the country imports between six hundred and seven hundred tonnes of gold every year while exports remain negligible. Nearly 27,000 tonnes of gold are estimated to be lying idle in Indian households, outside the productive economy. Since almost ninety percent of India’s gold demand is met through imports, the burden on foreign exchange reserves becomes enormous. In times of national difficulty, reducing excessive dependence on imported gold can indeed be viewed as an act of economic responsibility. Indian history also contains examples of citizens voluntarily donating gold during periods of national crisis.

Inflation is another source of growing concern. Government data shows that the wholesale price index has risen sharply, touching its highest level in more than three years. According to figures released by the National Statistical Office on May 12, retail inflation in April 2026 rose to 3.48 percent from 3.40 percent in March. Rising prices of petrol, diesel, and CNG have increased pressure on household budgets. Costlier fuel raises transport expenses, which eventually pushes up the prices of almost all goods and services. Companies manufacturing daily consumer products report that higher petroleum prices have increased production costs by ten to twenty percent. In response, many firms are cutting discounts and reducing advertising expenditure while prioritising warehousing and supply-chain management.

FMCG companies are now preparing for another round of phased price increases after already raising prices in recent quarters. The weakening rupee has added to these pressures. Alongside price hikes, many companies are quietly reducing the quantity of products in packets, transferring the burden to consumers. Telecom operators are also considering higher recharge tariffs to offset rising operational costs. According to CRISIL’s “Roti Chawal Dar” report, the cost of a home-cooked meal rose again in April 2026, further reflecting the inflationary trend affecting ordinary families.

The recent fuel price increase was the first major revision in more than four years. The government argues that the Gulf crisis left it with no alternative, claiming that public sector oil companies were suffering losses of nearly one thousand crore rupees daily. Yet a public already struggling with stagnant incomes and rising living costs is unlikely to be persuaded by this explanation alone. There is a widespread perception that politically sensitive economic decisions were postponed until after assembly elections in states such as West Bengal and Tamil Nadu. Economic management driven by electoral calculations inevitably weakens public trust.

Warnings from institutions such as the Asian Development Bank and EY India suggest that inflation could climb further in 2026. The India Meteorological Department has also forecast below-average rainfall due to El Niño conditions, raising fears of pressure on agricultural production and food prices. Meanwhile, the RBI Governor has indicated that further increases in the repo rate may become necessary if inflation accelerates, adding to concerns among borrowers and businesses alike.

Despite these challenges, India is not without strengths. Foreign exchange reserves remain above 690 billion dollars, providing an important cushion against external shocks. Large food grain stocks and the continuation of free food distribution to nearly 800 million people help strengthen food security. The government has also reduced excise duties on fuel, increased export duties where necessary, invoked provisions of the Essential Commodities Act, and directed refineries to maximise output. Additional measures, including reducing import duties on edible oil and ensuring an adequate supply of fertilisers, may also become necessary.

India has benefited from discounted crude oil imports from Russia, but this arrangement remains vulnerable to sanctions, shipping disruptions, and geopolitical pressure. Long-term energy security therefore requires diversification of imports from countries such as Brazil and Venezuela, greater ethanol blending in petrol, and rapid expansion of electric mobility. Public transport systems, metro networks, carpooling, and renewable energy must now move from policy slogans to urgent national priorities.

The crisis in West Asia has exposed the vulnerabilities of India’s economic and energy dependence. The larger lesson is that difficult economic realities should not be acknowledged only after elections are over. Public trust depends on honesty, timely communication, and policy consistency. Only a combination of responsible citizenship, strategic governance, and fiscal discipline can help India navigate the uncertainties of an increasingly unstable global economy.