Iran-Israel war poses near-term challenges to Indian economy: RBI MPC member

Iran-Israel conflict threatens short-term Indian economic stability with oil price hikes and export disruptions, warns RBI MPC member.

“Conflict in West Asia poses some immediate-term challenges for the Indian economy but is unlikely to dent long-term economic growth momentum,” an external member of the Reserve Bank of India's (RBI) rate-setting panel has said.

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“Going forward, there is a need for fiscal and monetary policies to work in a coordinated manner to push Gross Domestic Product (GDP) growth to a higher trajectory,” Nagesh Kumar has said.

“In the present scenario, a hike in oil prices, exports disruptions and impact on remittances have been identified as the immediate challenges on the growth front,” he said.

"The breakout of the Middle East [West Asia] conflict poses some immediate-term challenges for the Indian economy by raising oil prices, disrupting exports destined to the region and the potential loss of remittances, besides threatening security of the Indian diaspora in the region," Mr. Kumar told PTI in an e-mailed interview.

In the immediate short run, he noted, the conflict is escalating with U.S.-Israel strikes and oil prices are likely to harden. "Hopefully, the crisis will be resolved soon, given the high stakes that the world has in the region," he said. Mr. Kumar added that diversification of oil sourcing could help mitigate risks.