Oil price shock threatens India's economy with widening deficits and rising inflation. Former UN Economic Advisor Santosh Mehrotra warns that every USD 10 increase in oil prices widens India's current account deficit by 0.3 percent of GDP while simultaneously pushing consumer prices higher by roughly the same magnitude. With geopolitical tensions persisting and global oil prices expected to reach record highs, the impact on household budgets and business operations intensifies. Supply disruptions from the Strait of Hormuz closure are already affecting industrial LPG availability, impacting restaurants and ceramics sectors with significant job losses. Mehrotra criticizes recent diesel price hikes as counterproductive, noting that transportation cost increases will eventually be passed to consumers.
