Middle East tension: 5 major side effects of the US-Iran war on India: Escalating conflict in West Asia has increased uncertainty in the global economy. Escalating attacks between Iran and the United States have put pressure on energy markets, stock markets, and currency markets. Questions are being raised about the impact this tension could have on India's economy.
1. Surge in Energy Prices -
Fear of a surge in energy prices. Rating agency Moody's has warned that if the Iran war continues for a long time, it could cause a major shock to the energy market. This is likely to lead to a sharp surge in the prices of crude oil and liquefied natural gas. India imports a large portion of its energy needs, so this could have a direct impact on the country's economy.
2. Inflation and Rupee Pressure -
Inflation and Rupee Pressure - If oil and LNG prices become more expensive, inflation in India is expected to rise. This could weaken the Indian rupee. Furthermore, disruptions in energy imports from Gulf countries could increase the cost of fuel, gas, and transportation, which will impact the common man's pocket.
3. Current Account and Fiscal Balance -
Impact on Current Account and Fiscal Balance: According to Moody's, if the rupee weakens and energy imports become more expensive, India's current account deficit could increase. This will make it even more difficult for the government to maintain fiscal balance and could also put pressure on economic growth.
4. Heavy fluctuations in the stock market -
The West Asia crisis is also impacting the Indian stock market. On Friday, the BSE Sensex fell 1,097 points to close at 78,918.90, while the Nifty 50 fell 315 points. Experts say rising crude oil prices and selling by foreign investors have increased market pressure.
5. Rupee weakens against the dollar -
The Indian rupee is also under pressure due to rising oil prices and foreign capital outflows. On Friday, the rupee fell six paise to close at 91.70 (provisional) against the United States dollar. However, the US government has allowed Indian refineries to purchase Russian oil for 30 days, which has somewhat halted the rupee's decline. This means that if the ongoing conflict in West Asia continues for a long time, its impact will not be limited to the oil market only, but can also be seen on inflation, stock market, rupee and India's economic stability.
