Prime Minister Narendra Modi’s remarks on Sunday, May 10, regarding the economic impact of tensions in West Asia were aimed at addressing growing concerns around India’s macroeconomic stability, particularly the current account deficit (CAD), CNBC-TV18 has learnt from sources.The Prime Minister had urged citizens to show “collective responsibility” as fears of prolonged disruptions in the Strait of Hormuz threaten global oil supplies and push up fuel and fertiliser prices.
Sources said the government currently sees the West Asia conflict as a bigger threat to India’s CAD than to economic growth, unlike the Covid-19 crisis, which had a broader impact on activity and demand.
Policymakers are closely monitoring the impact of rising crude prices and the financing burden of a widening current account gap.
According to sources, the burden of elevated oil prices may need to be shared between the government, oil marketing companies (OMCs), and households to prevent excessive fiscal strain.The government is also keeping a close watch on the rupee, with recent depreciation helping narrow the gap with the Chinese yuan.The developments come amid heightened uncertainty over shipping routes through the Strait of Hormuz, a critical global energy corridor.Earlier, PM Modi had said that when global supply chains come under stress, economic difficulties rise even if governments take corrective steps. He called for collective responsibility during such times, urging people to keep national interest above all else.He described the situation as one where citizens must take “resolutions” to reduce unnecessary fuel consumption, especially petrol and diesel, to help the country navigate global volatility.He stressed that imported petro products should be used only as per requirement, noting that such an approach would help save foreign exchange and reduce the economic burden caused by war-related disruptions.(Edited by : Navneet Singh)
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