Israel-Iran conflict: Chittoor MP highlights adverse economic impact on India

Underscoring India’s heavy dependence on oil imports from Gulf countries, Daggumalla Prasada Rao cautions that any conflict in the region could directly disrupt the supply of oil

Chittoor MP Daggumalla Prasada Rao, a former IRS officer, on Friday, voiced his concerns regarding the escalating tensions between Israel and Iran, warning about the potentially significant impact it could have on the Indian economy.

Speaking to the media in Chittoor, Mr. Prasada Rao emphasised the susceptibility of India in the face of any conflict in the Middle East and the wider geopolitical landscape. Underscoring India’s heavy dependence on oil imports from Gulf countries, he cautioned that any conflict in the region could directly disrupt the supply of oil, leading to widespread economic repercussions — increased production costs for manufacturing, plastics, and transportation, ultimately resulting in heightened inflation, rupee depreciation and reduced disposable incomes.

Given India’s deep economic and strategic ties with the Middle East, Mr. Prasada Rao highlighted the potential risks to the security and livelihoods of the 9 million Indian expatriates working in the Gulf countries. He emphasised their crucial role in supporting their families and contributing to the national economy, indicating that the conflict could cause a significant loss of remittance inflows, further destabilising India’s economy. Any escalation of disputes could halt port operations, undermining India’s commercial ambitions and geopolitical influence, he added.

Furthermore, he noted that increased volatility in the Middle East could impact Indian financial markets, resulting in capital outflows and affecting investor confidence. This, in turn, could potentially delay or cancel long-term development projects and infrastructure investments. The rising production costs due to surging oil prices are expected to have a cascading effect on a wide range of industries, he reiterated.

Published - October 04, 2024 06:58 pm IST