For most people Prime Minister Narendra Modi asking Indians to stop buying gold for weddings for one year sounded strange at first as after all in India gold is not just jewellery it is emotion, tradition, status, security and often a family’s biggest saving and from weddings to festivals buying gold is almost seen as compulsory in many households.
But this time the Prime Minister’s appeal was not really about weddings or traditions rather it was about money, economy and how global tensions could slowly affect daily lives of ordinary Indians and honestly this issue may impact people more personally than they realise.
Right now the world is facing a major oil crisis because of rising tensions in the Middle East and one of the biggest worries globally is Strait of Hormuz which is an important sea route through which a huge amount of world’s oil supply passes and because of this uncertainty crude oil prices have suddenly jumped from around $70 per barrel to nearly $126 per barrel.
Now you may wonder “Why should I care about crude oil prices?” well because almost everything in your daily life depends on fuel in some way as India imports nearly 85% of its crude oil from other countries and oil is paid for in US dollars so when oil prices rise globally India has to spend much more money in dollars to buy same amount of oil which ultimately creates pressure on Indian rupee and once rupee weakens life slowly becomes more expensive for common people.
Petrol and diesel prices may rise, transport becomes costly, delivery charges increase, vegetable prices can go up because trucks become expensive to run, flight tickets rise and even products like electronics, medicines and imported items can become costlier so basically one global oil crisis can quietly start affecting your monthly budget.
This is exactly why PM Modi repeatedly asked people to conserve petrol and diesel and he also suggested reviving work from home practices wherever possible and avoiding unnecessary travel but then came the gold appeal “I would appeal to people not to buy gold for weddings for one year” the Prime Minister said and that line immediately grabbed attention because Indians buy huge amounts of gold every year especially during wedding season so economically gold becomes a problem during crises because India imports most of it from abroad again using US dollars and this means India is currently dealing with two expensive imports at the same time: high crude oil prices and heavy gold imports.
When both rise together more dollars flow out of country and this increases pressure on India’s foreign exchange reserves and weakens rupee further and for economists gold is different from essential items like oil which is necessary to run vehicles, industries and electricity systems and gold however is mostly seen as a savings or luxury purchase so during global financial stress governments often try to reduce gold imports to save foreign exchange and this is not happening for the first time.
In earlier economic crises too Indian governments increased import duty on gold restricted imports and promoted alternatives like sovereign gold bonds and the idea was always the same: stop too much money from flowing out of the country during difficult times.
So how is this statement by PM Modi going to affect you personally? that is the real question. If the rupee weakens badly and inflation rises middle class and lower income families usually feel pressure first as monthly expenses increase faster than salaries while fuel, groceries, transport and utility bills become heavier on the pocket consequently wedding budgets become more stressful, loan EMIs can feel harder to manage and small businesses may also suffer because operating costs increase.
Even families planning weddings may notice rising jewellery prices if gold rates continue climbing and ironically many Indians buy gold during uncertain times because they see it as the safest investment but when millions of households start buying more imported gold together during a global crisis it increases pressure on the economy overall and one family skipping jewellery shopping may not change the rupee but when a country of over 1.4 billion people changes spending habits together the impact becomes significant.
There seems to be a bigger message behind PM Modi’s statement and this was not really a social appeal but it was an economic warning hidden inside a cultural conversation Indians would instantly notice as the government appears worried about a dangerous combination: rising crude oil prices, increasing import bills, weakening rupee, inflation and pressure on foreign exchange reserve so if all these problems grow together the economy can slow down and everyday life can become more expensive for ordinary citizens so while Prime Minister’s request about gold may have sounded surprising the larger point was simple: during a global crisis, even personal spending habits can affect country’s economic stability.
And eventually that economic stability affects everyone’s wallet.
