ECONOMY
West Asia crisis has put India in a live BoP stress test, notes CEA Anantha Nageswaran
- IBJ Bureau
- May 13, 2026
India is facing a “live balance of payments (BoP) stress test” due to the ongoing West Asia crisis. But the country’s macroeconomic fundamentals and reform momentum place it in a stronger position than many emerging economies to weather the turbulence, Chief Economic Adviser (CEA) V Anantha Nageswaran has said.
He has cautioned that the conflict in West Asia has moved beyond a geopolitical concern and now poses direct risks to inflation, current account deficit (CAD), balance of payments (BoP) and the rupee.
“The West Asia crisis, therefore, is not a foreign policy concern that occasionally bleeds into economic planning. It is a live balance of payments stress test, with direct consequences for inflation, the current account and the exchange rate,” he has added.
Managing the current account credibly, financing it and preventing further currency depreciation are the central macroeconomic imperatives of FY27, he has said.
Addressing the Confederation of Indian Industry’s Annual Business Summit in New Delhi, Mr Nageswaran has said that India imports nearly 87 per cent of its crude oil requirement, with around 46 per cent transiting through or near the strategically crucial Strait of Hormuz.
He has added that tanker traffic through the route has sharply declined, while 60 per cent of India’s LPG requirement is imported, with more than 90 per cent sourced through the Gulf region.
In addition, 38 per cent of India’s annual remittances originate from Gulf countries.
The crisis has intensified after the Strait of Hormuz was effectively shut since February 28 following the US-Israel conflict with Iran, sending global crude oil prices surging.
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