By Santosh Kumar Mohapatra
As global crude oil prices soar amid the escalating confrontation between the United States and Iran, Prime Minister Narendra Modi recently urged citizens to embrace austerity.
Certainly, during moments of global turbulence, responsible citizenship matters. Yet beneath this moral appeal lies a troubling democratic question: must every economic crisis in India ultimately be borne by ordinary citizens?
Self-reliance cannot be built merely through emotional slogans, televised appeals, or symbolic nationalism. China did not emerge as the world’s manufacturing giant because its citizens were repeatedly asked to “consume less.” Its transformation was engineered through decades of strategic industrial policy, export-led expansion, technological advancement, massive infrastructure creation, state-backed manufacturing ecosystems, and relentless investment in productive capacity. India’s manufacturing sector, by contrast, continues to struggle under structural weaknesses and inadequate employment generation.
In terms of per capita income, India ranks below more than 148 countries, and even in purchasing power parity terms, it trails over 118 nations.
Under such circumstances, proclamations of transforming India into a developed nation by 2047 increasingly resemble political aspiration detached from economic realism.
The present situation inevitably revives memories of the 2013 economic crisis, when India grappled with severe currency instability, surging inflation, and a widening current account deficit. That crisis was triggered largely by the US Federal Reserve’s indication that it would taper quantitative easing, sparking massive capital outflows from emerging markets and branding India among the infamous “Fragile Five.” But the gravest danger today is the precipitous collapse of the rupee itself, which has dramatically inflated India’s import bill in a manner disturbingly reminiscent of 2013.
When former Prime Minister Manmohan Singh assumed office in May 2004, the rupee traded near Rs 45.31 against the US dollar. By the end of his tenure in 2014, it had depreciated to around Rs 59.65 — a decline of approximately 31.64 percent. Under the present dispensation, however, the rupee’s fall has been even more severe. By 15 May 2026, the rupee had depreciated by nearly 63.08 per cent compared to 2014 levels. It opened fiscal year 2026 at Rs 85.59 per dollar and crashed to an all-time intraday low of Rs 96.14 on 15 May 2026 before closing at a record Rs 95.8. It has emerged as Asia’s weakest-performing currency against the US dollar, losing nearly 10 percent of its value within a single year amid massive capital flight and a global rush toward dollar-denominated assets.
India’s export performance presents another disturbing contradiction.
Exports of goods and services constituted approximately 25.4 percent of GDP in 2013–14. By 2025–26, this has declined to around 22–23 percent. Grand declarations about reducing dependence on Chinese imports and building an “Atma Nirbhar Bharat” have not translated into proportionate export growth. Imports continue to outpace exports, widening the trade deficit and increasing external vulnerability.
Ironically, it is often the affluent and politically connected classes who consume imported luxury goods most aggressively while austerity sermons are directed toward ordinary citizens.
India’s foreign exchange reserves, though repeatedly showcased as a symbol of strength, reveal deeper vulnerabilities when examined comparatively. China possesses reserves exceeding $3.68 trillion, Japan over $1.28 trillion, while India’s reserves stand far lower and now cover barely around 90 percent of external debt obligations. Unlike China or South Korea, which built robust reserves through sustained export-led growth, India remains dangerously dependent on volatile capital inflows and speculative foreign investments.
Inflationary pressures are simultaneously intensifying. Families are saving less, borrowing more, and exhausting financial buffers merely to sustain basic consumption.
During the 2013 crisis, the government led by Manmohan Singh openly acknowledged the seriousness of the situation. In contrast, today’s ruling establishment frequently projects an image of permanent economic invincibility while attributing every setback exclusively to global circumstances. Successes are personalised and celebrated as proof of visionary leadership, while failures are externalised, denied, or buried beneath relentless propaganda and taxpayer-funded publicity.
Every government will inevitably confront crises. No administration possesses magical solutions to all problems, and many economic disturbances undeniably arise from international conditions beyond national control. Mature citizens understand this reality. But the true test of leadership is not how loudly it celebrates success during favourable times; it is how honestly and courageously it confronts adversity.
The writer is an Odisha-based economist and columnist.