West Asia crisis impact on Indian economy | West Asia crisis raises India inflation fears as rupee and crude oil prices surge

Prime Minister Narendra Modi’s appeal to curb foreign exchange outflows has highlighted the mounting economic toll of the West Asia conflict on India. The impact is likely to be felt most acutely by households if state-run fuel retailers are forced to raise petrol and diesel prices, pushing up the cost of everyday goods and transport across the economy. India’s inflation story may be approaching a more turbulent phase due to elevated crude oil prices and the potential for a below-normal monsoon. Economists expect the Monetary Policy Committee to hold rates steady in the near term, but inflation is expected to drift above the central bank’s target. The government has rolled out a multi-pronged fiscal and regulatory response to cushion the economic shock from the escalating West Asia crisis, including a ₹1 lakh crore economic stabilization fund, excise duty cuts on petrol and diesel, reimposition of export levies on aviation turbine fuel (ATF), and an expanded Emergency Credit Line Guarantee Scheme.