NITI Aayog Vice Chairman Dr. Ashok Lahiri Discusses PM Mdoi's Austerity Call, Ruppee, Gold And War

Ajouté : 2026-05-14

[00:00:00]Hello everyone and welcome to the special conversation. For over 70 days India watched the West Asia crisis and with every passing day that crisis and the war is only escalating and deepening at the same time.

[00:00:16]Till now there has been no call of restraint here at home.

[00:00:21]And that changed.

[00:00:23]72 hours ago Prime Minister Narendra Modi gave the first call appealing to Indians that they should watch their expenditure, cut discretionary spending, and also conserve foreign exchange.

[00:00:38]What does this actually mean?

[00:00:40]Are these some signs of concern for you and me?

[00:00:44]Let me take all those questions to the Vice-Chairperson of NITI Aayog, Dr. Ashok Lahiri. And this is his first interview ever since he took charge. Dr. Lahiri, really appreciate your time.

[00:00:55]Thank you.

[00:00:57]Uh should we be concerned?

[00:01:00]With the war waging in West Asia, which no one can predict how long it will go.

[00:01:10]There's really reason to be concerned, no doubt about that.

[00:01:15]But I'm surprised that some people are saying, "Why this national austerity?"

[00:01:19]National austerity is another term for national savings.

[00:01:23]And forget this current crisis.

[00:01:26]You know national savings is the main source of national investment.

[00:01:31]China, the East Asian tigers, they used to save a lot. China saved more than 50% of its GDP in 2010.

[00:01:44]Whereas my country, your country, we saved 34%.

[00:01:50]15% less than this. So national austerity, if it's a synonym for national savings, asking people to save more because that savings is what will finance investment is always a good thing.

[00:02:05]But that's [clears throat] a circuitous way of answering your question.

[00:02:09]There's no doubt that with this kind of uncertainty regarding West Asia it's always a good thing to avoid unnecessary spending.

[00:02:23]Avoid gold imports and gold is my favorite topic. You know, gold the foreign the Afghans used to call it Sona Kichidia.

[00:02:34]India has got something like 18,000 tons of gold.

[00:02:40]Which is a lot of what all the gold that has been produced in the world and your ancestors didn't produce any gold.

[00:02:48]So all the gold was imported from outside. And in a way it's a waste of money.

[00:02:54]So if the Prime Minister is asking people to avoid importing gold, avoid unnecessary ostentatious expenditure like destination weddings.

[00:03:06]We should be happy. This call could have been given in all times, but this is particularly important now because as you know the [clears throat] exports and imports. We export more when we save more.

[00:03:19]We import more when we spend more than what we earn. So that's the natural arithmetic.

[00:03:30]>> uh if the consumption goes down, that will have a negative impact on the growth?

[00:03:35]See, consumption is one source of demand. The other source of demand is investment.

[00:03:42]Consumption plus investment is total demand. If people are not consuming and people are not investing, then there is a problem.

[00:03:51]But people are if people are it has to be funded from somewhere.

[00:03:56]Where will you invest money?

[00:03:59]Where will you find out finance it from?

[00:04:01]It is financed by my savings, which you borrow from the banks.

[00:04:05]The problem comes when I'm saving, you're not investing.

[00:04:12]So, under consumption is a problem when investment is slow.

[00:04:18]But if investment picks up, So, it's the national income identity, consumption and investment, if investment is not picking up, then you ask people to consume. But as a general rule, you'll find in East Asia and China, that's the Asian model.

[00:04:39]The US developed with high consumption.

[00:04:42]They financed investment from foreign savings.

[00:04:47]But most of the Asian countries have financed their investment from domestic savings.

[00:04:53]So, are we suffering from an under consumption problem? I doubt it.

[00:04:58]I doubt it. But Dr. Lardy, if we were to look at the volatility which has been around oil prices in particular, many would say that is this too little, too late, this call for restraint?

[00:05:13]Should it have been given earlier?

[00:05:16]Now, you've already voiced concern that as soon as the Prime Minister says, cut down on these, is it a danger signal?

[00:05:27]We are worried about that.

[00:05:29]So, I think the main uncertainty is the West Asian crisis.

[00:05:34]Is it going to last for a long time? Is it going to end in weeks?

[00:05:39]If it is going to end in weeks, then it's a short-term supply shock. Then we You need to be worried that much.

[00:05:47]But if it shows signs of continuing and festering, then the problem becomes severe.

[00:05:53]So, what should be the right approach?

[00:05:57]It depends on your judgment regarding how long will this frustration crisis last. The middle class is already dealing with inflationary pressures. So, if you have a you know, this appeal of some kind of voluntary measures like cutting travel or even reducing consumption, even limiting gold purchases, uh can this really meaningfully reduce import dependence?

[00:06:28]An appeal to national sentiment and people's good sense.

[00:06:35]We know the limit there are limitations.

[00:06:38]1963, we had this gold control order after the Chinese war.

[00:06:44]Also, lots of restrictions put.

[00:06:46]It didn't add up too much.

[00:06:49]But times have changed.

[00:06:52]And maybe people will have more sort of rationality in looking at gold imports that why import gold? It's not even such a good store of value. Historically, you can show that gold has been a poor store of value.

[00:07:08]All the gold that your grandmother saved up, if she had put the money in stock exchange, popular mutual fund, or even banks, she would have earned more.

[00:07:19]But we have this touching faith in gold.

[00:07:21]But in any case, should this appeal have come earlier?

[00:07:28]If this appeal had come earlier, then again you would have said, "It's a danger signal."

[00:07:36]So, I think the Prime Minister has done the right thing. If your question is, "Will this appeal be enough?

[00:07:44]I think you'll need some other measures.

[00:07:47]And it has already been done. For example, when the Prime Minister's appeal for restraint on gold imports, he has also increased the tax rate.

[00:07:55]Yes, the import duty.

[00:07:56]>> The import duty. So, you need a combination of two.

[00:08:00]So, that brings me to my next question because the import duty on precious metals has been increased. Uh don't you think that that it will impact the industry itself because this is one of the biggest employer sector as well.

[00:08:13]This is a sector which employs millions of people.

[00:08:18]Yeah, in a way, no matter what you impose a uh import duty on, if it is used as an input in some industry, it'll be affected.

[00:08:29]But, the question is is that more important than conserving foreign exchange?

[00:08:37]And if you do not buy gold, you'll save send spend on something else.

[00:08:43]Or hopefully, that money that you'll save and put in the bank will be reinvested by someone. Gold to me, I actually don't understand.

[00:08:54]It's in my blood perhaps also.

[00:08:56]But, our love for gold, the Indian love for gold is absolutely difficult to understand.

[00:09:05]But, Dr. Lalry, for decades, this curb on gold gold and also on electronics has been there. Do you think uh this appeal has to be matched with something more?

[00:09:16]Because those uh you know, curbs really did not yield much results. Uh voluntary asking people to voluntarily give up something, is that enough?

[00:09:26]I think the right term for it is nudge.

[00:09:30]The government is nudging the people that side. Will the nudge be enough? I I it.

[00:09:36]It has to be supported by some concrete measures. Mhm. And one measure that actually works automatically, how does the market function?

[00:09:47]Something supply becomes short, price goes up, demand is curbed.

[00:09:54]If supply goes down and demand also is reduced to some extent, then the price does not go up as much as it would have if you hadn't restrained your demand.

[00:10:06]So, all these appeals, will it result in prices not going up at all?

[00:10:13]I doubt it.

[00:10:15]But prices will not go up as much as it would have if these restraints were not exercised.

[00:10:23]And uh we have also seen the markets react very negatively to these appeals of spending wisely.

[00:10:31]See, markets, that's a counterfactual.

[00:10:34]We don't know the answer.

[00:10:36]Even without these appeals, the reason the appeal was made, for the same reason markets may have reacted.

[00:10:44]I don't think anyone with money is sitting comfortably with this uncertainty festering about the West Asian crisis.

[00:10:53]I mean, um futures markets are uncertain, currency markets are in a bit of a turmoil, and um so you shouldn't be linking markets to the Prime Minister's announcement.

[00:11:08]Markets may be moving for the same reasons as the Prime Minister made his appeal.

[00:11:17]And Dr. Lady, you know, when we were to look at the rupee versus dollar, the exchange rate, that has been a matter of concern much before this announcement.

[00:11:28]In fact, if we were to look at it, the rupee is hovering somewhere around 95 to 96 to the dollar. It was at 16 2014, 85 to 86 at the end of 2024, which is before the West Asia crisis began.

[00:11:46]Now, here I think we need an attitudinal change.

[00:11:53]You know, in the 19th century, late 19th century, the Britishers were very keen about keeping the rupee appreciated.

[00:12:03]And Dadabhai Naoroji, R.C. Dutt, they used to say, "Depreciate the rupee.

[00:12:08]Don't make it so valuable because if the rupee becomes too valuable, then your imports go up because you can import with less rupees.

[00:12:20]Your exports suffer because exports become uncompetitive in the markets."

[00:12:25]So, at that time, during the freedom movement, we used to ask for a depreciated rupee.

[00:12:30]After independence, the rupee external rupee value has become almost as a symptom of our manhood. We feel that our manhood is affected if rupee is depreciated.

[00:12:42]The price of rupee should be fixed by the market. Look at East Asia.

[00:12:49]East Asia never allowed this rupee, its currency, to appreciate much. Mhm. So, why should we have an appreciated rupee?

[00:12:57]Because when the rupee depreciates, your exports are stimulated.

[00:13:03]When the rupee appreciates, depreciates, imports become more expensive. So, domestic industries stimulated.

[00:13:14]So, I don't think we should take a sentimental view of the rupee exchange rate. But then, what are the measures that are being taken to increase the inflow into India?

[00:13:27]It's for me investment both domestic and foreign are affected by two things. One is uncertainty. Money is shy.

[00:13:39]In this uncertain environment where you don't know what is going to happen to West Asia, there are different views.

[00:13:47]Money people, investors will take cautious approach. Why do it now? Do it after some time. Second, the ease of doing business.

[00:13:58]I mean, why domestic investment doesn't come?

[00:14:02]Domestic investment is not coming because of fundamental reasons.

[00:14:07]The I have this belief that there are five important determinants of your development indicators and your development prospects. One is education, one is health, one is infrastructure, fourth is social welfare measures so that there is social stability. And last but not the least, a corruption-free administration and rule of I think these fundamental factors, they're improving. And as they improve more, there'll be more investment. But in today's scenario, I think it's uh until the West Asian crisis is settled, it's not uh judicious to expect a lot of foreign investment. Okay. And on the oil front, let's move away from your favorite gold topic now to oil. India imports nearly 85% of its oil and [snorts] one of the world's largest gold buyers as well. Uh when the Prime Minister makes appeal to cut down on both, what is the actual maths looking like?

[00:15:26]If you ask me indirectly, just an appeal to your patriotism and right things, will it deliver?

[00:15:34]No, it has to be combined with some concrete measures.

[00:15:38]And whether you like it or not, if oil prices go up, oil prices have gone up from $60. I think I was looking at West Texas um WTI. Mhm. It has gone up from $60 to over $100.

[00:15:54]So, if it has gone up something like as much as 80%, then prices will go up.

[00:16:04]And your imports will be affected.

[00:16:07]So, oil prices going up will have an effect on inflation as well as growth.

[00:16:13]It's something like 1973.

[00:16:16]73, remember? You may have been a child, but the oil price shock.

[00:16:20]>> You weren't born. So, 1973 oil price shock after the Yom Kippur War, I think, in the Middle East. And um oil prices went up, inflation went through the roof. Compared with that situation, there inflation went to double-digit levels.

[00:16:40]We haven't gone to double-digit levels.

[00:16:42]We are screaming just as inflation is trying to inch up to 5%.

[00:16:47]Now, when it comes to how do you deliver yourself from this constant vulnerability?

[00:16:56]One is after Bombay High, we haven't had much success in uh discovering new oil sources. So, since you know, uh are you in NITI Aayog also looking at safeguarding jobs? Because there would be sectoral impact of the appeal, or should I say, you know, the the national austerity measure which is being adopted here, be it in hospitality sector, in travel sector, in jewelry sector, uh even segments of services.

[00:17:33]You know, some churning of the consumption basket or output basket is inevitable in a growing economy.

[00:17:44]Demand shifts from one sector to another.

[00:17:47]And you have to shift resources. You can't stay put with something.

[00:17:53]Now, hospitality, tourism that you're talking about, if times are hard, if West Asia is burning up, and inflation is going up, oil becomes very expensive, then some adjustments is inevitable.

[00:18:10]But as I told you, we need to know whether it's a three-day influenza that you're suffering from, or whether it's typhoid or malaria which is going to afflict us for long.

[00:18:21]Uh I'm speaking to you at a time when Moody's ratings has also downgraded its GDP growth projections for India uh to 6% from 6.8% for 2026.

[00:18:33]Uh given the geopolitical tensions that we are seeing, Dr. Lahiri, are you of the opinion that this national consensus around spending will give the direction to our economic resilience?

[00:18:51]It should. It should because See, if there is no um restraint, then what will happen is that the balance of payments, our balance of payments, mind you, foreign exchange reserves are quite comfortable still.

[00:19:07]They're much more comfortable than the 2013 taper tantrum.

[00:19:13]It's We still have, I think, if I'm not mistaken, 8 to 9 months of foreign exchange reserves, which is quite comfortable. Mhm.

[00:19:23]So, the issue is that I think Moody's downgraded is where station crisis continues.

[00:19:32]Some reduction may be inevitable.

[00:19:36]But still we have one of the largest fastest growing economies among the large economies in the world.

[00:19:43]And more than that, see, 6% is not a bad number compared to other countries. That's right.

[00:19:53]>> we go into mourning when it becomes 6%, but remember the Hindu rate of growth that Babu Raj Krishna used to talk about?

[00:20:00]When we were young, we used to talk about 3%. That's the Hindu rate of growth, no matter what you do.

[00:20:06]It'll be 3.1 or 2.9.

[00:20:09]>> Mhm. Now, 6% and we go into mourning.

[00:20:12]But why is it 6%?

[00:20:14]I'm delighted that we expect more, but six in these uncertain times is not too bad.

[00:20:22]Not too bad at all.

[00:20:25]What is the Chinese rate of growth that they're predicting?

[00:20:28]I think it's lower than 4%.

[00:20:31]Most countries are going to grow at less than five, if not four.

[00:20:38]But six for India is unsatisfactory.

[00:20:42]As an ambitious Indian, I'll say that.

[00:20:45]We'll do whatever we can to bring it back to seven, eight.

[00:20:50]That brings me to my last couple of questions because the government is also showing the way.

[00:20:56]Uh today the Prime Minister's cavalcade, his own entourage was almost halved.

[00:21:02]Chief Ministers across the country of BJP ruled states are also doing the same. They have reduced the convoy.

[00:21:11]All these measures are being taken.

[00:21:14]But are these signs again of something deeper that we are not aware of?

[00:21:22]Which you are aware of.

[00:21:24]I'm not aware of anything, but I'm a bit surprised.

[00:21:27]What did people expect?

[00:21:30]That the Prime Minister will say, "Please spend.

[00:21:33]Please go on world tours."

[00:21:38]Should that have been what the Prime Minister have said?

[00:21:41]I don't think so.

[00:21:43]So, if he says the right thing and says, "Please be careful. Don't spend unnecessarily." We'll say there is alarm bells are ringing. If he doesn't say anything, then he'll say, "What are you doing?"

[00:21:57]So, this is a problem that heads you win, tails I lose.

[00:22:05]My last question, you had recently said, "When governments begin to signal frugality, it often points to underlying pressures that may not yet be fully visible." So, how are you interpreting the present times?

[00:22:21]Of course. I mean, I have been saying right from the beginning that the West Asian crisis is something which will worry any thinking man or woman.

[00:22:33]Because this is a war between mainly between US, Iran, and Israel, and a few other countries.

[00:22:42]And we are not participants in it.

[00:22:45]We suffer the consequences.

[00:22:47]So, but any thinking man or woman will be worried about the what may happen.

[00:22:54]Doesn't it worry you as to what is going to happen to >> Absolutely. Ormuz?

[00:22:59]I mean, will Ormuz be closed for months, weeks, years? Will it escalate? If it escalates, what will be the collateral damage?

[00:23:09]What will happen? So much oil passes through it. And the effect of it not only on transportation fuel, but energy, fertilizer, plastics, so many chemical industries.

[00:23:26]It's It's It's It's worrying.

[00:23:28]So, it's better to err on the side of caution.

[00:23:32]And be careful.

[00:23:36]A stitch in time saves nine. Okay.

[00:23:39]So, this is the stitch in time right now that we are living in. Difficult times for the entire world. Dr. Larry, really appreciate your time. Thank you for putting the caution in context for our viewers.

[00:23:52]Thank you. Thanks for watching.