Strait goes quiet, but it won’t be straight going for India
Oil prices will stay up. Current account deficit has widened. True, pressure on rupee will be mitigated by GOI, RBI actions & post-war investor relief. There’s El Nino, though. Growth this fiscal? 6.6%
The 60-day ceasefire announced between Iran and US – expected to de-escalate hostilities and reopen the arterial Strait of Hormuz – offers hope. If signed and sealed, India’s sigh of relief will be the loudest, because it’ll halt downward revisions to growth, and upward revisions to inflation, seen of late.
With the conflict, risks to global growth and inflation flared up, putting India’s resilience to the toughest test post-Covid. Apart from the largest oil shock in history, supply chains were disrupted, freight & insurance costs soared, and availability of fertilisers and petrochemicals was constrained.
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