Rising Oil Prices Amid West Asia Crisis Could Push India’s Current Account Deficit to 2%: CRISIL

In the coming days, the Indian economy will have some rough times ahead. According to a rating agency called Crisil, an increase in tension in West Asia would cause an increase in the cost of importing crude oil, natural gas, and fertilizers for India. It would also result in an increase in India’s current account deficit to around 2 percent of GDP.

The report states that in difficult circumstances, rising crude oil and gas prices and increased fertilizer imports could significantly widen the trade deficit. Crude oil prices could rise by 23 percent year-on-year, leading to a sharp increase in the petroleum import bill. Additionally, potential disruptions to West Asian exports, increased shipping and insurance costs, and a slowdown in global demand could also put pressure on exports. All these factors will further widen the trade deficit. This could lead to an increase in inflation, as well as pressure on the rupee.