Economist Rathin Roy said that India should prepare for a prolonged period of elevated oil prices to protect its macroeconomic stability [1].

This warning comes as conflict in West Asia creates global uncertainty and market disruptions. Because India relies heavily on energy imports, sustained price hikes could weaken the country's financial foundations and increase the cost of living.

In an interview with NDTV, Roy discussed the specific risks associated with volatile energy markets [1]. He said that the country must brace for a long phase of high oil prices as geopolitical tensions continue to influence global supply chains [1].

Roy identified a critical threshold for the Indian economy. He said crude prices crossing $120 per barrel [2] could begin impacting the country's broader macroeconomy. Specifically, this price point could negatively affect the fiscal deficit, and the current-account deficit [2].

These deficits are key indicators of a nation's economic health. A widening fiscal deficit often means the government is spending more than it earns, while a current-account deficit reflects a gap between the value of goods and services imported and those exported [1].

Roy said that the disruptions caused by conflict in West Asia are expected to keep prices elevated [1]. This persistent instability forces the government to manage a delicate balance between maintaining economic growth and controlling inflation driven by energy costs [1].

“India must prepare for a long phase of high oil prices.”

India's economic vulnerability to oil shocks is rooted in its high import dependency. When crude prices breach the $120 mark, the increased cost of imports puts downward pressure on the rupee and forces the government to either increase subsidies or allow domestic inflation to rise, both of which can stifle GDP growth.