Chief Economic Advisor V Anantha Nageswaran on Tuesday termed West Asia Crisis as a “live balance of payments stress test”. However, he expressed optimism that India has the tools to navigate the current environment of conflicts.
Addressing CII’s Annual Business Summit here, Nageswaran said 87 per cent of India’s crude requirement is imported, of which 46 per cent is transiting through or near the Strait of Hormuz, where the seven-day moving average tanker traffic has fallen to five vessels. 60 per cent of our LPG is imported, over 90 per cent via the Gulf. 38 per cent of annual remittances originate in Gulf countries.
“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. Managing the current account credibly, financing it, and preventing further currency depreciation are the central macroeconomic imperatives of FY27,” Nageswaran said. However, India‘s macroeconomic foundations, the fiscal consolidation path, infrastructure investment, and reform record, provide a base from which the country can navigate this environment effectively, he said.
Noting that currently, the world is “geopolitically contested and dotted with active conflicts”, Nageswaran said emerging economies that continue to plan on the assumption that the pre-2020 global economic architecture will reassert itself will be making a “strategic error”.
“India, given its scale, democratic legitimacy and the breadth of relationships, is better placed than most to help shape what comes next,” he said, adding that what is also required is the strategic clarity to recognise that it is only a limited time window to reposition trade relationships, technology partnerships, supply chain architecture and the coalition building that will shape the next international economic order.
Nageswaran noted that four structural shifts are imperative for emerging economies going forward. The first is geoeconomic fragmentation, trade wars, strategic decoupling and an expanding architecture of export controls and sanctions. The second is technology bifurcation, semiconductor supply chains, digital infrastructure and standards architectures are splitting between competing technological ecosystems. The third is the energy transition premium, and the fourth structural shift is the permanent repricing of geopolitical risk across every market that matters.
Published on May 12, 2026