The Indian government is vigilantly observing how the ongoing crisis in West Asia is affecting the domestic economy, with particular attention on fuel prices, fertiliser costs, and foreign exchange reserves, according to Union Finance Minister Nirmala Sitharaman. Speaking at the Small Industries Development Bank of India’s anniversary event, she highlighted the significant concerns posed by escalating crude oil and fertiliser prices. Additionally, she pointed out that the rising cost of gold is adding further strain to the economic landscape.
Despite these challenges, Sitharaman reassured that India’s economic fundamentals remain robust. She emphasized the importance of avoiding panic and “fearmongering” amid the global uncertainty. The current economic pressures, she noted, are largely driven by external factors, underscoring the necessity for responsible policy-making and clear communication to sustain public confidence.
In response to these economic pressures, the government recently reduced excise duty on petrol and diesel, a move that Sitharaman acknowledged would result in a revenue loss of approximately ₹1 lakh crore. However, she deemed this step essential to alleviate the financial burden on consumers. The minister also addressed the issue of delayed payments to micro, small, and medium enterprises (MSMEs), revealing that about ₹8.1 lakh crore is locked in pending dues. She urged public sector companies to comply with the mandated 45-day period for clearing these payments.
Amid the West Asia tensions, India is facing potential disruptions in the import of petroleum products and fertilisers, especially with the Strait of Hormuz being a critical global shipping route. Recently, fuel prices have seen a sharp increase, with state-run oil companies raising petrol and diesel prices again on Monday. Since mid-May, these prices have increased by more than ₹7 per litre. In light of the growing global economic uncertainty, Prime Minister Narendra Modi has advised citizens to exercise caution in their spending and avoid unnecessary purchases.