Beyond politics: India’s economic playbook during the Gulf conflict

Beyond politics - A flavour of India's economic playbook during the Gulf Conflict.

In posts since the war began, we discussed the need for state support for airlines, given their razor-thin margins and incapacity to absorb exogenous shocks. Govt of India's Chief Economic Advisor confirms that response was taken, acknowledging how the government chose to absorb the shock on the fuels that power the wider economy:

"On the fuels that power the wider economy, the government chose to absorb the shock rather than pass it on. It cut the excise duty on petrol and diesel by ₹2 a litre, forgoing about ₹1.7 trillion in revenue, and eased the burden on aviation fuel."

"Only the government has the balance sheet and the time horizon to bear the risk, and it chose to absorb the impact on the fiscal account rather than on households and firms."

(This write-up is for educational/informational purposes only; happy to amend inaccuracies, if any. Views are personal.)