Israel-Iran Tensions Pose Risk, But India’s Growth Outlook Resilient: CEA Nageswaran

By A Staff Reporter

Thiruvananthapuram: Chief Economic Adviser (CEA) V. Anantha Nageswaran on Monday flagged the emerging economic risks from the escalating conflict between Israel and Iran, particularly the recent uptick in global crude oil prices. Addressing a gathering in Kerala, Nageswaran said the geopolitical instability could pose challenges for India’s economic outlook but remained optimistic about the country's resilience.

“The current conflict between Israel and Iran may not be too good for us,” he said. “In the last week, crude oil prices have increased to about USD 73–74 per barrel. This raises essential risks for India, which imports a significant portion of its energy needs.”

However, Nageswaran recalled India’s performance during the Russia–Ukraine conflict in 2022, when crude prices soared above USD 100 per barrel. “Despite that, the Indian economy was able to sustain a 7% growth rate. That shows a certain degree of resilience,” he noted.

He emphasised that much depends on how high oil prices rise and for how long elevated levels persist. “Short-term spikes are one thing, but sustained high prices are what pose a deeper macroeconomic threat,” he explained.

On the issue of global tariffs and their impact on Indian exports, Nageswaran played down immediate concerns. “It need not necessarily be against India's interest. Ultimately, what matters is how India’s tariff access compares with that of competing nations,” he said, suggesting that global trade dynamics are complex and context-specific.

Calling it “premature” to assume that emerging tariff regimes will dent Indian export competitiveness, the CEA encouraged a wait-and-watch approach, guided by comparative access and sectoral strengths.