6 min readMay 14, 2026 06:20 AM IST First published on: May 14, 2026 at 06:20 AM ISTPrime Minister Narendra Modi has called on Indians to tighten their belts, particularly on fuel and gold consumption. It is a belated public admission that the fallout from Donald Trump’s morally appalling, “the world be damned”, war in Iran is likely to add to the cumulative uncertainties already besetting the global economy. The sinking value of the rupee has made it inevitable that India will have to confront the shortages. Managing demand is not a reasonable tool to deploy under such circumstances. India is vulnerable as an economy, with imports surging, foreign investment and remittances slowing down, and energy self-reliance a chimera. How effective the exhortation will be remains to be seen.Modi loves nothing better than appealing to the language of sacrifice, patriotism, and civilisational virtue as an asset to be deployed in solving problems. This is of a piece with his approach to demonetisation or the clanging of pots and pans during the early days of Covid as a show of national solidarity. But there is a larger danger that India will once more fail to attend to the three risks inherent in these forms of appeal. The first risk is to assume that what we are witnessing is a temporary shock. For starters, the duration of the war is still uncertain. It is exerting immense pressure on the US economy as well. But in most scenarios, there is no quick resolution to the war. There is no question that the United States and Trump have lost face in this war. Most of the terms Iran has to offer will be seen as a defeat. In the long run, the United States will be better off eating a small dose of humble pie now for its own democracy and the world’s sake. But if it had even this minimal sense of enlightened self-interest, it would not have pushed the world down this path of catastrophe.AdvertisementIsrael’s capacity to subvert any ceasefire should not be underestimated. And while Gulf states need peace for the viability of their own models, they also cannot stomach a resurgent Iran. Iran itself is also playing for existential stakes. So, protracted instability is a high-probability outcome. The challenge with the language of sacrifice is that it works, if at all, on short-term time horizons. Otherwise, it is a recipe for inducing more cynicism.But more importantly, India has repeatedly made the mistake of using moralised language to deflect attention from deep structural and governance problems. Like most shocks, this one has also exposed our preexisting vulnerabilities. Despite impressive gains in renewables, India’s long-term energy strategy has not reduced our dependence on the world. It is all very well for analysts to propose, and for the government to adopt, diversification as a mantra. But our diversification options have been limited by growing fears of American pressure. The environment for foreign investment was never particularly benign in India. Astonishingly, we are still having the same debates over complex tax regimes, regulatory uncertainty, and an ad hoc legal system that we were having 40 years ago. We have passed measures such as labour-law reforms, but in the larger scheme of things, India is still not an attractive place for investment.We also misread the world economy. We assumed that there would always be capital sloshing around the world, and were caught off guard by the massive reallocation of capital induced by AI. Private domestic investment is finally rising, but only after a decade of stagnation. There are individual success stories in manufacturing, but our aggregate share in global manufacturing has barely moved. We are almost totally irrelevant to the world’s leading technology races. The world has also figured out that governance is a scarce resource, and how it is allocated matters enormously. Let us say that in India, it has been disproportionately allocated to the circus part of the bread and circuses. This familiar litany of woes can go on. But the basic point is that we have accumulated structural problems that have made us vulnerable in the first place. The world is now hypercompetitive. In a world of cumulative uncertainty, where geopolitical, technological, financial, climate, and possibly pandemic shocks reinforce one another, there is no margin for error. What we need at this moment is not merely moralised discourse on the economy. This is not just a time to tighten demand for energy and gold. It is a time to double down on the fundamentals of the economy, in a framework that is credible and concrete. This is the only way to avoid a possible confidence doom loop in the Indian economy. But, likely, the emphasis will quickly pivot to spins like “we are still the fastest-growing economy in the world”. At this point, a statement like that is a bit like saying, “I have a big gun. Oh, by the way, I have no ammunition.” It does not solve any problem you are trying to fix. Some honesty might make us more credible.AdvertisementMoralised calls for demand management can disguise distributive conflicts. For one thing, moralised appeals are not about structural change; they are meant to reinforce the direct emotional appeal between the leader and the people. There is nothing intrinsically wrong with that aspiration, but it can also detract from serious economic thinking. Even the implementation of rationing is not simple; it requires serious economic trade-offs. Already, the brunt of the costs of the LPG gas shortage has been borne by the poorest consumers and the smallest restaurant businesses. One of the secondary effects of this war, and the inflation it creates, will be political and social churn across the world. Just like we were underestimating the vulnerability of our economy, we may also be underestimating the social churn about to follow. The age of cumulative uncertainty will require, not patriotic exhortation, but sophisticated statecraft. Right now, patriotism is a substitute for statecraft.The writer is contributing editor, The Indian Express