Sridhar Vembu explains why Modi is urging Indians to limit foreign spending
Zoho co-founder and Chief Scientist Sridhar Vembu has offered an economic explanation for Prime Minister Narendra Modi’s recent appeal to Indians to reduce overseas travel, gold purchases and expensive foreign weddings.
Responding to questions over why such a message was being given when India’s economy is reportedly expanding at a strong pace, Vembu argued that rapid growth can also increase the country’s demand for imports.
He said India remains dependent on overseas supplies for several critical requirements, particularly energy and advanced technology. As economic activity accelerates, the need for imported machinery, materials, processors, GPUs and sophisticated software can also rise.
According to Vembu, this creates greater pressure on the country’s foreign-exchange reserves. He argued that India therefore needs to increase exports while gradually reducing its dependence on imported inputs.
Drawing comparisons with East Asian economies, Vembu said several countries in the region experienced rapid growth while simultaneously working to conserve foreign exchange and build domestic technological capabilities.
He suggested that India is following a broadly similar path and that developing expertise in advanced technologies will take considerable time.
Vembu added that greater technological self-reliance and progress towards energy independence through domestically developed renewable technologies could eventually reduce the need for foreign-exchange conservation.