India, May 11 -- When the war in West Asia started on February 28, India was preparing for elections in four states and a Union Territory. The entrenched populism in India's policy response ruled out any significant action to mitigate the war's economic pain. Now that the elections are over, the economic policy response to the war and its unprecedented supply shock is back on the table.

Speaking in Telangana on Sunday, Prime Minister (PM) Narendra Modi hinted at what is coming when he asked people to voluntarily reduce their consumption of petrol-diesel and foreign exchange (which is what buying less gold and taking fewer foreign trips entails).

The PM's advice needs to be read in the real rather than populist economic context. The ongo...