Monetary, fiscal and supply-chain measures are needed to ease pressure on consumers
Indians are facing difficult times — difficult not only in terms of an unprecedented hot summer, thanks to climate change, but also due to unpredictable inflation arising from the ongoing conflict between the US, Israel and Iran. The rate of commercial LPG cylinders has already been hiked by around Rs 1,000, while fuel prices have increased on four occasions over the past 11 days. This steep spike will directly impact a number of things, including food, thus making the existence of the common man very difficult. Whether one cooks food at home or depends on restaurants, hotels and small-scale eateries, the spending will burn a hole in the consumer’s pocket.
In such extraordinary circumstances, it is no wonder that Finance Minister Nirmala Sitharaman has hit out at critics of the government for peddling pessimism. As is expected of her, she has defended Prime Minister Narendra Modi’s austerity call, stressing the need to focus on the ‘3Fs’ — fuel, fertiliser and forex — amid the West Asia crisis. Speaking at the 37th Foundation Day function of the Small Industries Development Bank of India (SIDBI) in Mumbai, she hit out against naysayers who have built a cynical and pessimistic narrative following the Prime Minister’s appeal and underlined that India cannot afford fear-mongering at this stage. The Finance Minister further said that even though the crisis is driven by external events, the country’s domestic economic situation remains positive and resilient.
The annual inflation rate in India inched higher to 3.48 per cent in April 2026 from 3.4 per cent in the previous month, marking the fastest inflation rate in one year. However, it was well below market expectations of 3.8 per cent. Food inflation climbed to 4.20 per cent, up from 3.87 per cent in the previous month. Personal care, miscellaneous goods and groceries were the primary contributors to this sustained momentum. All this strain is slowly shifting to the rupee, making it further vulnerable and causing it to trade near record lows against the US dollar. Plagued by a combination of surging crude oil prices, persistent foreign capital outflows and regional geopolitical tensions, the rupee could soon breach the 100-per-dollar mark.
Speaking at the SIDBI event, the Finance Minister said that fuel prices are high and gold prices have climbed to elevated levels, creating concerns on the external front, and that there has been an “unimaginable increase” in fertiliser prices. She also said there is a need to focus on conserving forex. Stating that India’s policy response has been calibrated to preserve domestic growth, Sitharaman said the cut in diesel and petrol excise duties will lead to a revenue impact of Rs 1 lakh crore. Taking up cudgels against some “naysayers” who jumped into the debate following the Prime Minister’s appeal and claimed that everything is “crumbling”, she said such observations are factually incorrect.
If, on one side, global events are impacting food prices in India, then on the other, temperatures are rising more frequently to record levels, while rainfall anomalies are becoming more regionally differentiated. Furthermore, the simultaneous disruptions to both winter and summer crops in recent years point to a structural intensification of the climate-food-inflation nexus. More specifically, fuel hikes have triggered immediate and cascading increases in food prices across the supply chain. The government will no doubt undertake measures such as utilising a mix of monetary policy, targeted fiscal relief and structural supply-chain interventions. However, only time will tell how effective these will be in providing relief to the common man.
