How the West Asia War Threatens India’s Goldilocks Economy
The conflict in West Asia is disrupting India's energy supplies, threatening inflation, growth, and fiscal stability. The country is heavily reliant on imports of LPG, crude oil, and liquefied natural gas, which are being impacted by the closure of the Strait of Hormuz.
India's economy is facing challenges due to the conflict in West Asia. The Strait of Hormuz, a key energy supply route, is closed, affecting India's imports of LPG, crude oil, and liquefied natural gas. India gets 90% of its LPG imports and 54% of its crude oil imports through this route. The disruption is already being felt, with longer waiting times for domestic cooking gas and restaurants shutting down due to lack of fuel. The country's ports are expected to receive limited LPG shipments in March and April, raising concerns of a prolonged shortage. Prime Minister Narendra Modi has called for unity and patience in the face of this challenge. Economists warn that if the shortage persists, difficult choices will have to be made about how to allocate limited supplies between households and commercial users. A sustained squeeze on businesses could lead to production and employment losses, ultimately affecting households.
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