Economist and former Planning Commission Deputy Chairman Montek Singh Ahluwalia warned that India must prepare for crude oil prices to exceed $100 per barrel [2].
This warning comes as global volatility threatens India's macroeconomic stability, potentially impacting inflation and the national trade balance if regional conflicts persist.
Ahluwalia discussed these risks during a conversation aired on NDTV and shared via The Wire, focusing on the current state of the Indian economy. He said India should prepare for this price surge if the conflict in West Asia continues to drag on [2]. Such a spike in energy costs would place significant pressure on the economy, given India's reliance on imported oil.
Beyond energy prices, Ahluwalia addressed the government's approach to currency valuation. He said the obsession with maintaining a strong rupee is economically flawed [3]. According to Ahluwalia, prioritizing a strong currency over other economic indicators can hinder competitiveness in global trade.
The economist also touched upon the necessity of trade deals, and broader policy reforms to shield the country from external shocks. His remarks, which appeared in reporting on May 30, 2026 [3], suggest a need for a more flexible economic strategy to navigate geopolitical instability.
While discussing these structural issues, Ahluwalia emphasized that the government must look beyond short-term currency stability to ensure long-term growth. He said that the current policy framework may not be sufficient to handle the combined pressure of high oil prices and rigid exchange rate targets.
“India should prepare for crude oil prices above $100 per barrel”
The warnings from Ahluwalia highlight a tension between India's desire for currency stability and the reality of its vulnerability to energy imports. If oil prices hit the predicted $100 mark, the government may be forced to choose between allowing the rupee to depreciate to maintain export competitiveness or absorbing the cost of expensive imports, which could fuel domestic inflation.
