India’s Forex Satyagrah: The Design Must Match Ambition
· Free Press Journal
Prime Minister Narendra Modi’s appeal last week, with its eleven specific requests spanning fuel, gold, fertilisers, cooking oil, solar pumps, and foreign travel, is being read by many as a prelude to administered price hikes. But there is a larger ambition visible in the speech. It is to make forex conservation a genuine national movement, a civic mobilisation comparable in spirit, if not in form, to Mahatma Gandhi’s Salt March of 1930. Gandhi’s genius was to choose salt, an everyday item, universally used and symbolically powerful, to crystallise the case for economic self-reliance into a mass act of participation. Modi is reaching out so that each Indian feels personally invested in the nation’s economic resilience when conserving foreign exchange becomes as much a patriotic duty as flying the flag.
The instinct deserves credit. India’s import dependence on crude oil, fertiliser inputs, gold, and edible oil is a structural vulnerability that has been diagnosed for decades without adequate remedy. Modi is making it vivid and personal, asking citizens to connect their everyday choices to the national balance of payments. This is an act of economic leadership. Lal Bahadur Shastri did something similar with food in 1965, asking Indians to voluntarily fast on Monday evenings as the country faced both a war and a food crisis. Socialist parliamentarian Madhu Limaye pressed the point further in Parliament, arguing that voluntary austerity was a constitutional duty in times of national stress and that the political class must visibly lead rather than merely preach. The tradition of appealing to civic solidarity in times of economic emergency is honourable and has worked before.
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Questions raised over equity in burden-sharing
But Gandhi’s salt satyagraha movement’s moral force came partly from the fact that the salt tax was visibly and outrageously regressive. It hurt the poor more. Gandhi chose salt precisely because of the injustice. On the other hand, the forex conservation movement is itself regressive because it asks those with the least to bear a disproportionate share of the pain.
Look at the eleven requests through this lens. Deferring foreign vacations and destination weddings abroad is something only the affluent need consider. It is irrelevant to the poor. Shifting to an electric vehicle presumes having the capital to buy one. Work-from-home is an option for white-collar professionals, not daily-wage earners. Asking people to reduce edible oil consumption falls hardest on those with the least since cooking oil is not a luxury. Some of the requests are well-targeted at the wealthy; others inadvertently ask those with the smallest margins to absorb a disproportionate share of the sacrifice.
The economic backdrop makes the equity question more urgent. India’s three state-owned oil marketing companies are losing between Rs 1,600 crore and Rs 1,700 crore every day, with cumulative losses over the past 10 weeks crossing Rs 1 lakh crore. Negative margins stand at Rs 14 per litre on petrol and Rs 18 on diesel. Excise duty cuts to cushion the blow are costing the treasury Rs 14,000 crore a month. Fertiliser subsidies, budgeted at Rs 1.71 lakh crore, face an overshoot of Rs 35,000 crore to Rs 50,000 crore. And this crisis lands on top of an already strained fiscal position: in FY26, direct tax receipts fell short of revised estimates by Rs 80,594 crore. The FY27 direct tax target is Rs 26.97 lakh crore, which is a 15 per cent jump over FY26 actuals. But revenues are already slowing down.
Concerns over fiscal pressure and tax recovery
Here lies a structural paradox in Modi’s appeal. Some of what he asks will genuinely help the current account without hurting domestic output, like reducing gold imports and foreign travel. But fuel price hikes are categorically different; they are inflationary, compress real household incomes across the board, and will force the Reserve Bank of India into the uncomfortable trade-off between defending the rupee and protecting growth. There is also a cognitive dissonance in the government trying to suppress prices while also asking citizens to behave as if prices were too high.
There is now pressure on tax mobilisation. The Income Tax Department’s Central Action Plan for 2026–27 directs field officers to prioritise recovering Rs 2.57 lakh crore in demands upheld at appeal, track the top 10,000 PAN-wise defaulters, and classify Rs 7.88 lakh crore in large unclassified arrears by July. The scale of what has gone uncollected is striking: confirmed, undisputed tax demands of over Rs 9 lakh crore sit in arrears, concentrated overwhelmingly in Mumbai (Rs 1.65 lakh crore) and Delhi (Rs 1.21 lakh crore) — the wealthiest urban centres in the country. In FY26, the actual cash recovery against a target of Rs 5.04 lakh crore was only Rs 85,000 crore.
The government cannot credibly ask families to cut their cooking oil consumption while Rs 9 lakh crore in confirmed tax dues from large corporations and individual defaulters remains uncollected year after year. Ensuring that tax demands are actually recovered using whatever digital surveillance would be a powerful signal that the national sacrifice is genuinely shared.
Call for structural reforms and stronger reserves
This is also an opportune moment to revisit whether India’s tax architecture is structurally progressive enough. India abolished its wealth tax in 2015 and has had no estate or inheritance duty since 1985. The top one per cent of Indians hold an estimated 40 per cent of the nation’s wealth. A temporary crisis surcharge on very high incomes, a windfall levy on entities benefiting from the disruption — commodity traders and domestic refiners — or a carefully designed wealth tax would serve multiple purposes: raising revenue to offset the fiscal haemorrhage, making burden-sharing visibly equitable, and giving the mass movement the moral authority it needs. Madhu Limaye’s argument was precisely this: austerity without equity is not patriotism; it is the displacement of pain downward.
We also need to examine our resilience and risk buffers. IEA member nations hold 90 days of strategic petroleum reserves as a treaty obligation. Europe built LNG import terminals and diversified supply at emergency speed. Japan and South Korea pass through price signals rapidly and hedge exposure through financial markets. India’s strategic reserves cover roughly nine to 10 days. India has had almost no institutional buffer to deploy. Which is why the response is necessarily an appeal to voluntary restraint rather than a drawdown of reserves that do not exist.
Modi’s forex conservation call can become the foundation of something lasting, or it can be a speech that ages badly — if fuel prices are quietly raised while wealthy defaulters continue to defer confirmed tax dues and the poor find cooking oil more expensive. Gandhi’s movements succeeded because they were morally unimpeachable in their equity. If this is to be India’s forex satyagraha, the design must match the ambition. It must be progressive in burden-sharing, rigorous in enforcement, structural in remedy, and honest about the price signals that no volume of voluntary restraint can ultimately replace.
Dr Ajit Ranade is a noted Pune-based economist. Syndicate: The Billion Press (email: [email protected]).