|
The escalating conflict in West Asia is emerging as a significant headwind for the Indian economy, impacting everything from energy costs and remittances to the daily lives of the common man. Industry leaders and economists note that while the direct impact on specific sectors like technology remains limited, the broader macroeconomic stability is at risk if the geopolitical tension persists.
Speaking to the media at the sidelines of the Indiaspora Forum 2026, Kris Gopalkrishnan, Co-founder of Infosys, said the situation is not helpful and extends beyond corporate interests. He pointed out that the disruption is already visible at the grassroots level. "It's not just affecting the technology sector. It's affecting the common man. Many roadside food joints are not able to operate because they don't have access to LPG and things like that," Gopalkrishnan said. He also observed that many small restaurants are moving back to wood-based cooking and stoves as a result of these supply chain constraints. Gopalkrishnan expressed concern regarding the potential for sustained inflation driven by rising oil prices. While "there is no impact on the tech sector directly, there is impact on the economy. Its impact on the common man", he said. He also highlighted the vulnerability of the Indian diaspora in the region, noting that one-third of India's remittances come from the East. "If they are affected, those remittances probably will get affected. So there is a significant impact because of this on India and travel," he said, adding that most travel routes through the Middle East are also facing disruptions. Similarly, Gita Gopinath, Economist and Former Deputy Managing Director of the IMF, emphasised the high level of uncertainty regarding the duration of the war and its effect on oil markets. She provided a stark outlook on how oil prices could dictate growth trajectories. "If you take the current numbers and let's suppose oil is going to be at USD 85 a barrel, that can reduce global growth by around 0.3 to 0.4 percentage points. For the Indian economy itself, it would be closer to half a percentage point," Gopinath said. She also warned that if prices reach an average of USD 100 a barrel, the cost to the world economy will be much higher. According to Gopinath, the world is at a sensitive juncture where international cooperation is becoming increasingly difficult. She described this as a complicated time for policymakers who must navigate AI transformation, tariffs, and rising debt levels alongside geopolitical strife. "It's a tough time to be a policymaker to deal with all the different aspects of it," she said. Gopinath noted that the world has changed fundamentally after the war in Ukraine, with countries justified in building up their defence positions. Regarding the path forward for the country, Gopinath suggested that internal stability is the best defence against external shocks. "The option for India is to focus on domestic reforms, make sure India's house is in order, improve ease of doing business, focusing much more on the Indian economy," she said, stressing the importance of improving the ability to transact in land and labour while building human capital to sustain resilience in a volatile global environment. (ANI)
|
