West Asia crisis could push govt to raise fuel prices: RBI

India may eventually have to raise petrol and diesel prices if the ongoing West Asia crisis persists for a prolonged period, Reserve Bank of India (RBI) Governor Sanjay Malhotra said, highlighting the country’s vulnerability to rising energy costs and supply disruptions.
Speaking at a conference in Switzerland, the RBI Governor said the government has so far maintained fiscal prudence and stayed committed to fiscal consolidation, even as geopolitical tensions continue to pressure global energy markets.Malhotra noted that India remains heavily dependent on imports of energy and fertilisers, and the disruptions caused by the conflict in West Asia and the blockade of the Strait of Hormuz are beginning to affect the country.
“If the crisis continues for a longer period of time, then it is a matter of time that the government will actually pass on some of these price increases,” he said, referring to the possibility of higher retail fuel prices.Global crude oil and gas supplies have come under strain due to the conflict and shipping disruptions in the Strait of Hormuz, a critical route for global energy trade. The rise in energy prices has increased concerns over imported inflation and pressure on India’s current account balance.
Despite the conflict that began on February 28, the government has not raised retail petrol and diesel prices so far.Prime Minister Narendra Modi has also urged citizens to reduce fuel consumption and cut the use of edible oils as part of austerity measures aimed at conserving foreign exchange.Meanwhile, the Indian rupee has witnessed sharp depreciation amid global uncertainties and is currently trading below the 95-mark against the US dollar.

(Business Correspondent)