Iran War: The economic impact of increasing tension in the Middle East is being widely seen on India. The conflict related to Iran is affecting India in two ways – firstly, the rise in crude oil prices and secondly, the fall of the rupee against the dollar. According to estimates, India has incurred an additional burden of more than Rs 2,000 crore in just four days. Let us understand how much and what kind of loss is being caused every day, and what opinion the experts are giving on this.
How much damage does oil cause in 4 days?
India imports about 5 million or 50 lakh barrels of crude oil every day. If we assume an average increase of $10 per barrel, then India will have to pay an additional $10 per 5 million barrels per day. In this way a total additional payment of 50 million dollars per day is made. If the value of dollar is considered to be Rs 91, then this is an additional expenditure of approximately Rs 455 crore per day. According to this, an additional burden of around Rs 1,820 crore has increased in just four days due to oil becoming expensive.
Also read: Why is the Strait of Hormuz so important? 15 million barrels of oil are exported daily
How much loss due to fall in rupee
Apart from this, the fall in rupee is also having an impact. India’s annual oil import bill is approximately $160 billion. If the rupee weakens by Re 1 against the dollar, an additional burden of about Rs 16,000 crore increases annually. If we look at it in the ratio of four days, it works out to around Rs 44 crore per day and around Rs 175 to 180 crore in four days.
What do experts say?
Thus, including the increase in oil prices and the weakness of the rupee, the total additional burden in four days reaches around Rs 2,000 crore. On this issue, retired IIMC professor Shivaji Sarkar says that import-dependent countries like India are bearing the direct economic brunt of the ongoing conflict between Iran, Israel and America. According to him, increasing uncertainty in sea and air routes is affecting cargo movement, which may affect both oil imports and exports.
India is largely dependent on imports for its energy needs, so a prolonged conflict could pose challenges to inflation, supply and government financial management. If this tension continues for a long time, India will have to put more emphasis on measures like alternative supply sources, strategic reserves and currency stability, so that the economic loss can be limited.
Also read: Due to tension in the Middle East, there is a big crisis on oil, India played ‘trump card’ to save itself.
