{"id":909602,"date":"2026-04-21T20:48:17","date_gmt":"2026-04-21T20:48:17","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/909602\/"},"modified":"2026-04-21T20:48:17","modified_gmt":"2026-04-21T20:48:17","slug":"india-must-pursue-energy-independence-fuel-price-cushion-will-not-last-says-gita-gopinath","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/909602\/","title":{"rendered":"India must pursue energy independence; fuel price cushion will not last, says Gita Gopinath"},"content":{"rendered":"

India must accelerate its push towards energy independence as the cushion of controlled fuel prices<\/a> becomes increasingly unsustainable, former IMF chief economist Gita Gopinath warned on Tuesday, cautioning that the current stability in the economy could quickly come under strain if the Iran-US conflict drags on.<\/a><\/p>\n

India\u2019s economic outlook amid the ongoing Middle East crisis remains a careful balancing act, Gopinath said in an interview with Consulting Editor Rajdeep Sardesai on India Today TV. While India has so far managed to absorb the global oil shock, Gopinath made it clear that shielding consumers from rising crude prices cannot continue indefinitely.<\/p>\n

\u201cIn the matter of fuel, I don’t think it’s sustainable for the Indian government to continue to subsidise fuel prices for a very long time. It’s not sustainable. Just given the impact on the fiscal deficit,\u201d she said, adding, \u201cat some point, they will have to pass through some of that into what prices consumers pay.\u201d<\/p>\n

ENERGY INDEPENDENCE KEY LONG-TERM LESSON FOR INDIA<\/p>\n

Energy independence, Gopinath stressed, must become a central priority for India as global shocks expose the risks of heavy import dependence.<\/p>\n

\u201cEnergy independence is going to be very critical for India. The more that you can get from having to rely on imported energy, the better it’s going to be for India,\u201d she said.<\/p>\n

For now, India\u2019s economy remains steady on the surface. But as Gopinath\u2019s assessment makes clear, that stability rests on temporary buffers \u2013 fuel subsidies, manageable inflation and a short-lived conflict. If those assumptions break, the impact could quickly become far more severe.<\/p>\n

‘BIT OF A WASH FOR NOW’<\/p>\n

Gopinath said India\u2019s current growth trajectory reflects two opposing forces that are, for the moment, cancelling each other out.<\/p>\n

\u201cIn the case of India, two things offset each other. The Iran<\/a> conflict was a negative shock for India, but on the other hand, because of the (US) Supreme Court ruling, and tariffs<\/a> coming down from 50 per cent to 10 per cent, that was a positive event,\u201d she said.<\/p>\n

\u201cSo, the combination was a bit of a wash, and India’s economy is expected to grow at around 6.5 per cent for this fiscal year,\u201d she added.<\/p>\n

However, Gopinath cautioned that this balance is fragile and heavily dependent on how the conflict evolves.<\/p>\n

‘BIGGEST OIL SHOCK FACING THE WORLD’<\/p>\n

Gopinath described the ongoing crisis as an unprecedented energy shock with global consequences.<\/p>\n

\u201cThis is serious. It’s the biggest oil shock to the world.<\/a> It’s bigger than what we saw during the 1970s, even if nothing else happens in terms of the restriction in terms of oil and gas coming onto the market. This is the largest shock that the world has experienced,\u201d she said.<\/p>\n

At the same time, the former IMF chief economist underlined the uncertainty shaping global outcomes. \u201cJust like back then, my caution came from the fact that with Trump, nothing is totally certain about what’s going to happen,\u201d she said.<\/p>\n

Gopinath pointed to shifting US trade policies as an example. \u201cRemember, we had the April 2 Liberation Day tariffs. The US was going to impose about 25 per cent on the world. And that has come down now to 10 per cent, also because of the Supreme Court ruling on it. India’s tariffs have gone from being 50 per cent to being 10 per cent.\u201d<\/p>\n

SHORT CONFLICT VS PROLONGED DISRUPTION<\/p>\n

Gopinath outlined sharply different economic outcomes depending on how long the conflict lasts. \u201cSo the effect right now, if everything gets resolved in the next week or so. We’re talking about global growth being lower by about 0.3 percentage points,\u201d she said.<\/p>\n

But a prolonged crisis would be far more damaging. \u201cIf oil goes up to say USD 100, then we have growth coming down to 2.5 per cent for the world, which is, in the absence of this conflict, 3.4 per cent. So that would be really substantial, the cut,\u201d she added.<\/p>\n

She agreed that uncertainty itself can amplify the damage. \u201cThat is correct. The impact could be much larger.\u201d<\/p>\n

SUPPLY DISRUPTION BIGGER RISK FOR INDIA<\/p>\n

For India, the most serious risk lies not just in higher prices but in supply shortages, said Gopinath.<\/p>\n

\u201cBut if there is much more disruption, and it’s because India relies on the Middle East so much for oil, also for its fertilisers, it’s not just about the price effect, but if you just don’t have the supply, and you have supply disruption, for example, to LPG, that is going to cause a lot of disruption,\u201d she said.<\/p>\n

She added, \u201cThat’s going to complicate production in India, and it’s going to be much more consequential, but that’s going to require a much longer duration for this conflict.\u201d<\/p>\n

TRIPLE WHAMMY RISK: FUEL, FERTILISER, FOOD PRICES SPIKE<\/p>\n

Gopinath warned of cascading pressures if the crisis deepens. \u201cWith fertiliser prices, depending upon if there’s going to be just this blockage, then you’re not even going to get the supplies, and I think that’s the bigger damage,\u201d she said.<\/p>\n

\u201cAnd if this continues for much longer, it’s usually not just food, fuel, and fertilisers. The problem is financial conditions could tighten much more than what we’ve seen right now, including the pressure on the rupee. You could see much more, not just on the rupee, but on many<\/p>\n

Gopinath said if the Iran war dragged away the full summer,<\/a> it could have a serious impact on all economies, including India.<\/p>\n

\u201cThe timeline of the conflict remains critical. If this conflict stretches completely into May, June…, we are talking about a much more serious impact on all economies,\u201d she said.<\/p>\n

\u201cIn that scenario, economies like India that rely on the Middle East heavily will have a very severe impact on their growth.\u201d she said.<\/p>\n

– Ends<\/p>\n

Published By: <\/p>\n

Prateek Chakraborty<\/p>\n

Published On: <\/p>\n

Apr 21, 2026 23:34 IST<\/p>\n

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