India’s government is keeping a close watch on the economic repercussions of the West Asia crisis, with a particular eye on fuel, fertilisers, and foreign exchange reserves, according to Union Finance Minister Nirmala Sitharaman. During an event celebrating the anniversary of the Small Industries Development Bank of India, Sitharaman highlighted the significant challenges posed by escalating crude oil and fertiliser prices, noting that the latter has reached alarmingly high levels. She also pointed out that rising gold prices are adding to the economic strain.
Despite these external pressures, Sitharaman reassured that India’s economic fundamentals remain robust. She cautioned against panic and urged that the country must avoid “fearmongering” amid the current global uncertainties. Emphasizing that the economic pressures are largely driven by external factors, she called for maintaining public confidence through effective policy measures and transparent communication.
The finance minister also discussed the government’s recent decision to cut excise duty on petrol and diesel, acknowledging that this would result in a revenue loss of nearly ₹1 lakh crore. However, she justified the move as essential to alleviate the burden on consumers. Additionally, Sitharaman expressed concerns over the delayed payments to micro, small, and medium enterprises (MSMEs), revealing that approximately ₹8.1 lakh crore is caught up in pending dues. She urged public sector enterprises to adhere to the mandated 45-day period for clearing MSME payments.
India’s economy is further challenged by potential disruptions in the import of petroleum products and fertilisers, due to tensions in the Strait of Hormuz, a vital global shipping lane. The situation has led to a sharp rise in fuel prices, with state-owned oil companies recently increasing the cost of petrol and diesel. Since mid-May, these prices have surged by more than ₹7 per litre. Amid this backdrop, Prime Minister Narendra Modi has encouraged citizens to practice cautious spending and avoid unnecessary expenditures, as global economic uncertainty continues to mount due to the West Asia conflict.