Make, break, and save in India
Hey there,
It is wild how quickly human beings get used to things. Two months ago we were wondering if the world was at the brink of a third world war. Today, we are barely concerned about the conflict in West Asia as it drags on. The 'new normal' keeps moving further and further away from anything decent we know and remember from a decade ago. But at the same time life does just go on. And I guess there is nothing wrong about it. I used to be disturbed by how 'normal' everything felt living in relative safety. It disturbs me less now because one thing that I have learnt from the first half of 2026 is that there is very little under our control. We barely control our lives, let alone global conflicts.
I am not trying to be grim about it. Quite the contrary. I want to remind you that you have one thing that is uniquely yours. We all have that one thing that is uniquely ours when living in democracies. And that is our vote. We all get one vote. Despite everything we have seen happen in India and the world, I still strongly believe that every vote counts. So while the new normal takes up space and it feels there is nothing one can do, just vote. Wherever you can, whenever you can. So make the effort.
I'll leave it at this. Have a good week ahead, folks!
Just the gist
🔗 The burden of the middle class
Prime Minister Modi gave a speech this week that was equal parts economic policy and lifestyle intervention. Modi urged Indians to stop buying gold for a year (hope you do not have a wedding coming), work from home to reduce petrol consumption (nobody is complaining), cut edible oil use by 10%, use less chemical fertiliser, and buy only Indian-made products (here we go again!).
The Iran war has made imported crude oil dramatically more expensive, the rupee has hit record lows, and India's foreign exchange reserves have been under pressure since mid-2024. So the logic of Modi's appeal is not entirely wrong: gold and crude oil are two of India's biggest import drains, and if Indians bought less of both, the pressure on the rupee would ease.
Every single suggestion he made, however, is about cutting consumption. Not one is about boosting production or exports. Weaker consumption in an economy already struggling with weak consumption drags down growth and further discourages the foreign investment India needs to stabilise its forex situation. The self-reliance argument also runs into the same wall it always does: India's food production depends on imported fertilisers, whose domestic production depends on imported feedstock that accounts for over 80% of production costs. The chain does not end at the border. The fertiliser point has a separate factual problem too. What is hurting India's soil is not too much chemical fertiliser but imbalanced use, specifically the over-subsidisation of urea by the government's own policy, which nudges farmers to use too much of one thing and too little of everything else.
➡️ If you send remittances home, the weak rupee is still working in your favour on transfers. But consumption-cutting as a national strategy is not going to resolve a forex crunch. Producing more and exporting more competitively will. That requires investment, efficiency, and time. It does not require the middle class to check the label on their toothbrush.
🔗 Home is getting further away
Air India announced this week that it will reduce services on select international routes between June and August. The reason is the same double trouble the entire aviation industry is dealing with: airspace restrictions over conflict regions and jet fuel prices at record highs due to the West Asia war. Routes being temporarily suspended include Delhi-Chicago, Mumbai-New York, Delhi-Shanghai, and Chennai-Singapore, among others.
The airline says it will still operate over 1,200 international flights a month, so this is not a collapse of service. But the routes being cut are not minor ones. Delhi-Chicago and Mumbai-New York are among the most used by the Indian diaspora in North America, and Delhi-Shanghai matters for business travel to China.
This is not just an Air India problem. The Federation of Indian Airlines, which represents IndiGo, Air India, and SpiceJet, wrote to the Ministry of Civil Aviation in April warning that the current jet fuel pricing mechanism is "creating severe imbalance in domestic and international operations and rendering airline networks unviable and unsustainable".
➡️ If you have flights booked on any of these routes between June and August, check with Air India directly about your booking. And if you are planning travel to India this summer, book sooner rather than later: fewer seats on fewer flights in peak season is not a combination that keeps fares reasonable. The fuel crisis is not resolving any time soon so airlines will keep making these calls until it does.
Before the war started on February 28, over 130 vessels passed through the Strait of Hormuz every day. That number is now in single digits. The strait, which used to carry a fifth of global oil flows, has been effectively closed for over two months, and there is still no clarity on when normal traffic will resume.
The situation is worse than analysts initially thought. The US Energy Information Administration now forecasts that global oil inventories will decrease by 2.6 million barrels per day this year, nearly nine times its forecast from last month. Brent crude averaged $117 per barrel in April, 65% higher than February. The EIA assumes that the strait will begin reopening in late May and prices will fall through the year, but those assumptions depend on the war resolving itself and who has any faith in any global leader in making that happen any time soon.
India is absorbing the hit from multiple directions simultaneously. The country imports over 88% of its crude oil, 40% of which used to come through the Strait. It imports half its natural gas, with 60% coming through the strait. LPG import dependency is 60%, with 90% of that through the strait. For every dollar increase in oil prices, India's annual import bill goes up by $2 billion. If oil sustains at $100 per barrel this financial year, the import bill could cross $200 billion, up from $123 billion last year.
To keep a lid on inflation, the government slashed excise duty on petrol and diesel by Rs 10 per litre and has not raised pump prices despite the surge in international costs. Oil marketing companies are absorbing losses of Rs 1,000 crore every single day. The Petroleum Minister said this week that their combined losses for April to June alone could wipe out their entire annual profit for FY26, and that the government will eventually have to decide how long this can continue. A full pass-through of international prices to consumers would stoke inflation. Not passing it through is bleeding the companies dry.
➡️ The fuel prices your family sees at the pump right now are being artificially held down by a government that is losing money doing it. That cannot last indefinitely. At some point, a decision gets made: either the war ends and prices fall, or the losses become too large and pump prices go up. Either way, the longer the strait stays closed, the harder the hit.
🔗 India's energy bet for independence
India has a 100 gigawatt nuclear energy target to hit by 2047, and the government is finally getting serious about the infrastructure to do it. The current push is built around pressurised heavy water reactors, which are domestically developed and increasingly competitive. The plan is for these to form the backbone of the first phase of expansion, with roughly 60 gigawatts coming from this technology alone.
The problem is uranium. India has very little of it domestically and imports most of what it needs. With global nuclear generation expected to triple or quadruple in the coming decades, uranium demand is going to significantly outstrip supply, and nuclear geopolitics, as anyone following the news knows, is not getting simpler. There is a potential fuel supply security crunch coming within 10 to 15 years.
This is where thorium comes into the picture. India has among the largest thorium reserves in the world, concentrated in coastal mineral sands in states like Kerala and Tamil Nadu. The three-stage nuclear programme India has been developing since the 1950s was always designed to eventually shift to thorium as the primary fuel.
The caveat is that thorium at scale is still three to four decades away. The technology for thorium molten salt reactors, which experts consider the ideal end-state for this programme, needs to be ready within the next 10 to 15 years to keep the timeline on track. That requires consistent prioritisation, funding, and political will across multiple governments.
➡️ India's energy import dependency is one of the most significant structural vulnerabilities, as the current war and the rupee's weakness are demonstrating in real time. A credible path to thorium-based energy independence would fundamentally change India's economic resilience, its foreign policy flexibility, and its ability to grow without being held hostage to commodity prices set by conflicts it has no say in. The vision and the resource, both exist. The question is whether the execution matches the ambition over the next two decades.
Trending on the internet
🔗 Vijay passed the floor test but failed the vibe test
My God was this election season straight out of the movies. As if the heated election campaign was not enough, there came a cheating scandal with the face of the soon to Chief Minister of Tamil Nadu all over it. Indian cinema fandom is quite something. In a society where even healthy live-in relationships are frowned upon, people quickly accepted the Trisha-Vijay extra-marital affair scandal, even making memes about it because if it is a famous man who is running for CM, who cares, right?
Tamil Nadu's new Chief Minister Vijay, the actor-turned-politician whose Tamilaga Vettri Kazhagam swept to power in the 2026 elections, passed his floor test on Wednesday with 144 votes in favour. The DMK, now in opposition, walked out rather than vote against him, which was the dignified way of saying they did not want to be seen blocking a new government from forming while also not wanting to be seen endorsing one.
The numbers required some assembly. TVK's own strength had shrunk to 105 before the vote, after Vijay resigned his own seat, the Speaker's nomination removed another, and a court barred one MLA from participating. The government was propped up by Congress, the Left parties, IUML, and crucially, 27 MLAs from a splinter faction of the AIADMK, a party that had contested under the BJP-led NDA alliance.
This is where it gets uncomfortable. Vijay built his political brand on being the clean alternative, ideologically opposed to the BJP and everything it represents. Welcoming 27 MLAs who campaigned under the NDA banner into his support base, before he has governed for a single day, is a tension he is going to have to explain. The opposition leader Udhayanidhi Stalin, who is also MK Stalin's son, did not let the moment pass: he pointed out that one MLA, whose party chief had publicly accused TVK of horse trading, was removed from his own party for supporting Vijay, and that Vijay met the breakaway AIADMK faction the day before the test, before any of this was officially sanctioned.
The appointment of Vijay's personal astrologer as an Officer on Special Duty in the Chief Minister's office also drew criticism, which is the kind of detail that sounds minor but tends to stick.
➡️ The TVK won on a wave of anti-incumbency against the DMK and a genuine hunger for something different. Whether Vijay can actually deliver clean governance or whether the compromises start before the first budget is the question Tamil Nadu is already asking. Floor tests are formalities. What comes next is not.
That's all for today.
With love,
Sudeshna
