Fragile Shield |
For years, India’s economic story has rested on a comforting assumption: that strong domestic demand can insulate the country from global turmoil. That assumption is now being tested again. The latest signals from policymakers suggest that India is entering a more uncertain phase, not because of collapsing consumption or financial instability at home, but because geopolitics is beginning to intrude directly into everyday economics. Wars fought thousands of kilometres away are starting to influence fuel bills, commodity prices, shipping costs and inflation expectations inside India.
The danger is not an immediate crisis. India’s macroeconomic fundamentals remain stronger than those of many emerging economies. Growth continues to be driven by domestic consumption. Foreign exchange reserves remain substantial. Services exports continue to perform well, and foreign investment flows have not dried up. Compared to the fragile conditions that preceded earlier balance-ofpayments scares, India today is far better prepared. Yet resilience is not immunity. The conflict in West Asia has exposed how dependent modern economies remain on a handful of vulnerable trade arteries.
The Strait of Hormuz continues to function........