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A few months ago, India’s economy was humming along nicely. Inflation was benign and growth was steady — the strongest among the world’s leading economies.
Now, India is increasingly counting the cost of the Iran war, which economists say will keep mounting if the deadlock between the US and Iran remains unresolved and the blockage of oil supplies continues.
As the world’s third-largest oil importer and consumer, India ships in about 90 per cent of its oil, making its economy one of the most exposed to the war and the prolonged war-related disruptions, which include the effective blockade of the Strait of Hormuz through which a fifth of global oil and gas transit.
While India has announced a flurry of measures to contain the impact on the rupee and foreign exchange reserves, the latest of which were from the Reserve Bank of India (RBI) on Friday, analysts say the broader drag on economic growth, inflation and government finances is set to increase so long as oil prices remain elevated.
