Austerity is typically associated with economies that have weak fundamentals or otherwise lack options for achieving fiscal sustainability. But the Indian economy’s fundamentals are relatively strong. Real GDP growth is expected to reach 7.4% this fiscal year, with medium-term potential growth hovering around 7%. Moreover, private consumption now accounts for 61.5% of GDP, the highest share since 2011–12. India’s vulnerability lies in its external account: the country runs a persistent merchandise-trade deficit of roughly $280–300 billion annually, which is only partly offset by services, and which is financed largely by capital inflows (including remittances). While this is not a problem during times of relative stability, it generates acute risks when energy prices surge and global capital becomes more risk-averse.