New Delhi: India is facing growing economic pressure as escalating tensions in West Asia continue to disrupt global energy markets, raising fears that a significant increase in petrol and diesel prices may soon become unavoidable.
The warning signs have intensified in recent days with the Central government already moving to protect foreign exchange reserves by sharply increasing import duties on gold, silver and other precious metals. The decision followed a surge in investor demand for safe haven assets amid fears of prolonged geopolitical instability in the Middle East.
At the centre of global concern is the strategically important Strait of Hormuz, a vital oil shipping route through which nearly one fifth of the world’s petroleum supplies pass. Any disruption in the region has the potential to severely impact global crude oil availability and prices.
For India, which imports nearly 85 percent of its crude oil requirements, the situation poses a major economic challenge. Rising international crude prices have reportedly pushed India’s public sector oil marketing companies into daily losses estimated at nearly Rs 1,000 crore, as retail fuel prices have largely remained unchanged despite the global surge.
Industry experts believe such losses cannot be sustained for long without either direct government intervention or a revision in domestic petrol and diesel prices.
Narendra Modi has already appealed to citizens to reduce fuel consumption through measures such as work from home, online meetings, increased use of electric vehicles and online classes wherever possible. The appeal is being viewed as part of a wider effort to prepare the public for a prolonged period of economic pressure linked to rising energy costs.
Hardeep Singh Puri, Union Petroleum Minister, recently assured that there is no immediate shortage of petroleum products in the country but described the Prime Minister’s appeal as a “wake up call”, signalling the seriousness of the situation.
Adding to concerns, veteran banker Uday Kotak warned that India could face a major economic shock if the West Asia conflict continues. He cautioned that prolonged instability may lead to higher inflation, increased logistics costs, pressure on the rupee and broader disruptions across the economy.
Fuel prices are considered critical because they directly affect transportation, supply chains and the cost of essential goods. Economists now believe that if global crude prices remain elevated for an extended period, India may eventually have little option but to allow a significant increase in petrol and diesel prices instead of continuing to absorb mounting losses.
