The central government is considering emergency measures to strengthen its foreign-exchange reserves in response to the economic impact of the US-Israel-Iran war, according to a Bloomberg report citing sources familiar with the matter. Officials are evaluating options such as increasing fuel prices and limiting non-essential imports, including gold and electronic goods.
Consultations Between PMO, Finance Ministry, and RBI
According to the report, officials from the Prime Minister's Office (PMO) and the finance ministry have held discussions with the Reserve Bank of India (RBI) regarding a range of potential steps to mitigate the economic effects of surging oil prices. Among the proposals under consideration is a hike in fuel prices. However, no final decision has been made on these emergency measures, Bloomberg reported, citing sources.
Potential Import Restrictions
The government may also consider measures to curb the inflow of gold and consumer electronics, according to sources cited in the report. These steps are aimed at protecting the economy from rising energy costs and mounting pressure on the rupee and foreign-exchange reserves.
PM Modi's Appeal to Citizens
Prime Minister Narendra Modi has urged citizens twice in the past 24 hours to reduce fuel consumption, limit foreign travel, prioritize work-from-home arrangements, and purchase less gold and non-essential goods. However, no official announcement regarding specific measures has been made yet.
PM Modi invoked the COVID-19 pandemic, stating that if India could overcome "the biggest crisis of this century," then the nation "will surely get through this" crisis, referring to the Middle East situation as "one of the major crises of this decade." He said, "Over the past few years, the world has been continuously passing through unstable circumstances. First, the crisis of Covid, then global economic challenges, and now the rising tensions in West Asia. The impact of all these situations is continuously falling on the entire world, and India is not untouched by it either. If the Covid pandemic was the biggest crisis of this century, then the circumstances created by the war in West Asia are one of the major crises of this decade. When we together overcame the challenge of Covid, we will surely get through this crisis as well. The government is also continuously making efforts to ensure that its impact on the people of the country is minimal."
Objective of Proposed Measures
The proposed measures are designed to cushion the economy from the impact of rising energy costs and the increasing strain on the rupee and forex reserves.
