PM Modi Appeal To Reduce Petrol Diesel Usage: Prime Minister Narendra Modi has appealed to reduce the consumption of petrol and diesel. Know why foreign exchange reserves are important for India, how it benefits the rupee, inflation, imports and the country’s economy.
Amidst the increasing tension in the Middle East and the global energy crisis, Prime Minister Narendra Modi has appealed to the countrymen to reduce the consumption of petrol and diesel. He has talked about promoting work from home, more use of public transport and saving fuel. At first glance, this may seem to be just an advice to save oil, but behind it lies a big mathematics related to India’s economy and foreign exchange reserves.
If fuel consumption reduces in the country, people adopt metro and public transport instead of private vehicles, companies promote work from home, then it can have a direct impact on India’s import bill. This will not only reduce the burden on people’s pockets, but will also save the country’s foreign currency.
What is foreign exchange?
Foreign currency means currency of other countries, such as US dollar, euro, pound or yen. When India does business with other countries, payments are made in these foreign currencies. For example, when India buys crude oil, the payment has to be made in dollars. For this reason, it is considered very important for India to have adequate foreign exchange reserves i.e. forex reserves. This is a big indicator of the economic strength of any country.
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Why is foreign exchange so important for India?
India is among the world’s largest energy importers. The country buys a major part of its needs from abroad. Crude oil, gas, electronic equipment, machines, chips and many technical goods come from abroad. If India’s foreign exchange becomes less, then import of these things may become expensive. Its direct impact is on inflation, prices of petrol and diesel and the strength of the rupee. This is the reason why the government continuously emphasizes on reducing imports and saving foreign exchange.
How does foreign exchange make India economically stronger?
- Important imports become easier: India requires large quantities of crude oil every day. If the foreign exchange reserves are strong, the country can easily purchase oil, gas, pharmaceutical raw materials and machines. If the reserves become weak, imports become expensive and its impact reaches the common people.
- Rupee remains strong: When a country has good foreign exchange reserves, its economic position in the international market is considered strong. This increases confidence in the rupee and reduces the possibility of a sharp fall in its value. The advantage of a strong rupee is that goods coming from abroad do not become more expensive than necessary.
- A protective shield is formed in economic crisis: A situation like war, epidemic or oil crisis can arise at any time in the world. At such times, strong foreign exchange reserves act as a security shield for the country. Even during the Covid pandemic, it was clearly visible that countries which had stronger economic preparedness were able to deal with the crisis better.
- Foreign investment increases: Foreign investors always prefer to invest in countries where there is economic stability. Strong forex reserves send a message to the world that India is an economically capable and stable country. Due to this, foreign companies invest in India, industries are set up and employment increases.
- Development plans gain momentum: When the country is not under economic pressure, the government is able to invest rapidly in sectors like roads, railways, digital technology, energy and defence. Strong foreign exchange reserves help in carrying out development plans in a stable manner in the long run.
Where does India get foreign currency from?
India earns foreign exchange through many means. The main ones are:
- export
- foreign investment
- IT services
- Tourism
- Money sent by Indians living abroad
Indian IT companies provide services across the world, due to which large amounts of dollars come into the country.
What is the big message of PM Modi’s appeal?
Prime Minister Narendra Modi’s appeal is not limited to saving petrol only. Its main objective is to reduce India’s import dependence and save foreign exchange. If the country imports less oil, dollars will be saved. This can strengthen India’s economic position. The same thinking is also visible behind campaigns like “Atmanirbhar Bharat” and “Vocal for Local”.
What benefit will the common people get from this?
Many people wonder what relation foreign exchange reserves have to the common man. But its impact falls directly on the public’s pockets. If the foreign currency remains strong, then:
- Pressure on petrol and diesel prices may reduce
- Rupee will not weaken much
- Will help in controlling inflation
- Investment and employment opportunities may increase
That is, foreign exchange is not just an economic figure of the government, but a matter related to the pocket and future of every citizen.
Why is fuel saving important?
There has been increased volatility in the global oil market amid the ongoing tension in the Middle East. At such a time, if India controls fuel consumption, it can reduce the country’s import bill. Work from home, car pooling, increased use of metro and public transport is not only better for the environment but can also help in strengthening the country economically.
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