If the economy is growing at 7.8%, why doesn’t PM Modi want us to travel abroad, buy gold? Sridhar Vembu explains

The Indian economy grew at a faster-than-expected 7.8 per cent in the April June quarter, the Ministry of Statistics and Programme Implementation (MoSPI) announced on Tuesday, in a stark contrast to Prime Minister Narendra Modi urging citizens to be more ‘swadeshi’, not travel abroad, buy gold or have weddings at foreign locations.

What followed was a clamour of questions – if the economy is growing at 7.8 per cent why should Indians stop travelling abroad or buying gold?

Zoho founder and chief scientist Sridhar Vembu took to social media to explain the reasoning behind PM Modi’s ‘swadeshi’ call. He explained that several countries like Japan, Taiwan, South Korea and even China went through such phases of rapid GDP growth but had to conserve foreign exchange.

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Vembu explained that even as the economy is growing at a good rate, India still has an import dependence in energy and technology. He said the faster the economic growth, the more the need for energy and technology.

He explained that to balance the import dependence, India needs to export more. “However, even our exports need advanced technological inputs (precision machines, materials, CPUs, GPUs, advanced software etc) that we need to import today,” he said, adding that it takes time to catch up in all these areas, often decades.

“Look at how long it took East Asia to catch up with the West. Their economies were growing rapidly even as they worked hard to conserve foreign exchange. That is exactly what our government is trying to do,” said Vembu.

He said once India gains competence in all the advanced technologies and achieves all the energy independence, the nation would not need to conserve foreign exchange.

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“The situation is similar to a fast growing company that needs capital to grow. So it has to conserve capital to invest in growth. Our nation needs to conserve foreign exchange likewise,” he said.

With 7.8 per cent growth, the Indian economy maintained its position as the world's fastest growing major economy. This growth rate exceeded the Reserve Bank of India's forecast of 7 per cent for the quarter, highlighting the strength of domestic economic activity despite ongoing geopolitical risks.

The stronger-than-expected quarterly performance indicated that India's growth momentum has remained resilient against external shocks, including the conflict in Iran. This conflict had raised concerns about higher energy prices, inflationary pressures, and weaker global demand.

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