Sridhar Vembu Explains Modi’s Call to Avoid Gold and Foreign Travel

India's economy grew by 7.8% in the April-June quarter, but Zoho founder Sridhar Vembu maintains that this strong GDP growth does not mean the country can stop conserving foreign currency.

Vembu was responding to a question about why Prime Minister Narendra Modi is asking Indians not to travel abroad, buy gold unnecessarily, or hold weddings outside the country, despite India's robust economic growth.

"If the economy is growing at 7.8%, why is the Prime Minister asking us not to travel abroad, not to buy gold, not to hold weddings abroad, etc.?" he wrote.

Vembu's explanation focuses on India's continued reliance on imports. He noted that the country remains dependent on foreign supplies for both energy and advanced technology. As the economy grows faster, the need for these inputs also increases.

This is where conserving foreign currency becomes important. Spending on imported goods—such as gold—or on overseas activities—such as travel and weddings—means money leaving India. Vembu's argument is that India needs to balance such capital outflows with the foreign currency it earns through exports.

Why India needs to conserve foreign currency

Vembu indicated that India's exports are rising, but that these exports themselves may require imported technology. He listed precision machinery, materials, CPUs, GPUs, and advanced software among the inputs India still needs to import.

In other words, simply increasing exports does not eliminate India's dependence on foreign technology. Vembu stated that developing these capabilities domestically would take time—possibly decades.

He compared India's situation to that of Japan, Taiwan, South Korea, and later, China. These countries, he noted, experienced rapid economic growth while needing to conserve foreign currency reserves as they built up their technological and industrial capabilities. "Look at how long it took East Asia to catch up with the West. Their economies grew rapidly even as they strove to preserve their foreign exchange reserves."

Vembu noted that India has already embarked on this path but needs time to develop advanced technologies and achieve greater energy independence through domestically developed renewable energy.

"Once we master all advanced technologies and achieve energy independence through renewable energy technologies, we have developed ourselves, there will no longer be a need to conserve foreign exchange reserves."

Statements by Prime Minister Modi following 7.8% GDP growth

Modi made these remarks while celebrating India's latest GDP growth figures and reiterating his call to build an ‘Atmanirbhar Bharat’ (a self-reliant India).

"Hearty congratulations to the country's citizens. A growth rate of 7.8% has filled the nation with joy. I congratulate my fellow citizens on their determination and hard work; this reflects our collective strength," the Prime Minister stated in an Instagram video recorded from Kyrgyzstan.

Modi also addressed the global situation—including armed conflicts, supply chain disruptions, and the instability persisting since the COVID-19 era—while highlighting India's continued economic growth.

Vembu compared India's situation to that of a rapidly growing company that needs to conserve capital for investment. He noted that, similarly, the country must preserve its foreign currency reserves while developing the technology and energy capabilities it is currently compelled to acquire abroad.

ABOUT THE AUTHOR

Kahekashan

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Kahekashan is a passionate technophile with a keen eye for cutting-edge gadgets, emerging technologies, and everything in the digital realm. Raised in a Defence family with strong values and a background in literature, she has consistently pursued excellence in every endeavour. Her last full-time assignment involved content writing with the Indian School of Business.

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