NEW DELHI: Prime Minister Narendra Modi’s call for austerity in view of the Iran war triggered sharp reactions across markets and sectors on Monday, with investors interpreting the remarks as a signal of an imminent crisis.
Equity markets tumbled over 1.5%, while the rupee—which depreciated 11.5% in the past year— plunged 82 paise to settle at a record closing low of 95.31 against the US dollar.
Taking cues from the PM’s warning on economic disruptions, the BSE Sensex fell 1,312.91 points, or 1.7%, to close at 76,015.28, while the NSE Nifty50 declined 360.30 points, or 1.49%, to settle at 23,815.85.
During a speech in Hyderabad on Sunday, Modi called for collective participation to help India navigate global economic disruptions, supply chain challenges, and rising prices.
He urged people to avoid buying gold and cut down on foreign travel, and asked companies to revive work-from-home arrangements similar to those adopted during the Covid-19 pandemic.
The PM’s call for reducing petrol and diesel consumption also fuelled speculation that a retail fuel price hike was imminent.
On Monday, the petroleum ministry said oil marketing companies are likely to face under-recoveries of `2 lakh crore in the first quarter of FY27. The ministry added the government is reviewing fuel pricing.
Petroleum products and gold imports remain major burdens on India’s external account. In FY26, India imported petroleum products worth $172 billion while gold imports surged 24% to $72 billion. India’s foreign exchange reserves stood at $690 billion in the week ending May 1, down from a peak of $728 billion in the week ended Feb 27.
The PM’s appeal for restraint on gold purchases has brought renewed attention to the free trade pact with the UAE, following which gold imports jumped from $3 billion in 2022 to $16.5 billion in 2025.
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