Finance Minister Nirmala Sitharaman has assured that the government is vigilantly tracking the repercussions of the ongoing crisis in West Asia on India’s economy, with a particular focus on fuel, fertilisers, and foreign exchange reserves. Addressing an event commemorating the anniversary of the Small Industries Development Bank of India, she expressed concerns over the rising prices of crude oil and fertilisers, which are becoming significant challenges. She highlighted that the cost of fertilisers has surged to extremely high levels, while the increasing prices of gold are also exerting pressure on the economy.
Despite these external challenges, Sitharaman emphasized that the fundamentals of India’s economy remain robust. She cautioned against inducing panic and underscored the importance of avoiding “fearmongering” amidst a period of global uncertainty. Her remarks come at a time when most economic pressures are being driven by external factors, and she stressed the necessity of maintaining public confidence through prudent policies and effective communication.
The Finance Minister also pointed to the government’s recent decision to cut excise duty on petrol and diesel, a move she described as vital to alleviating consumer pressure, though it is expected to result in a revenue loss of nearly ₹1 lakh crore. Additionally, Sitharaman addressed the issue of delayed payments to micro, small, and medium enterprises (MSMEs), revealing that approximately ₹8.1 lakh crore is tied up in pending dues. She urged public sector companies to adhere to the mandated 45-day period for clearing payments to MSMEs.
India is facing potential disruptions in the import of petroleum products and fertilisers due to escalating tensions around the Strait of Hormuz, a crucial global shipping route. This situation has contributed to the sharp rise in fuel prices in recent weeks, with state-run oil companies increasing petrol and diesel prices once again on Monday. Since the middle of May, the prices have gone up by more than ₹7 per litre.
In light of the growing global economic uncertainty linked to the West Asia conflict, Prime Minister Narendra Modi had previously advised citizens to be prudent with their spending and to avoid unnecessary purchases. The advice comes as part of the broader efforts to navigate the economic strains brought about by the crisis.