Modi says Iran war poses severe risks to India, urges cuts in fuel use and gold purchases
CNBC • • world
Key Points:
- Indian Prime Minister Narendra Modi urged citizens to reduce fuel consumption, limit overseas travel, and pause gold purchases due to the economic impact of the Iran war and rising global fuel costs.
- India imports about 85% of its fuel, heavily relying on the Strait of Hormuz, making it vulnerable to Middle East tensions that have pushed oil prices higher and strained the rupee near historic lows.
- The government has kept retail fuel prices stable by cutting taxes on oil companies, but this has not curbed fuel demand, while shares of jewelry and airline companies fell following Modi's appeal.
- Economic forecasts have been downgraded, with UBS lowering India's growth outlook for FY 2027 to 6.2%, and experts warning of difficult times ahead unless Middle East tensions ease.
- India’s large import bills for crude oil and gold, combined with rising energy costs, are expected to widen the trade and current account deficits significantly, prompting calls for fiscal measures and shared economic burden.