India says it needs to build resource buffers, reprioritise fiscal spending
By Nikunj Ohri
NEW DELHI, March 6 (Reuters) - The conflict in the Middle East has underscored the importance of natural resource buffers, and fiscal resources have to be reprioritised in coming years, the Indian government said in its monthly economic report.
India is vulnerable to energy supply shocks, with crude oil stocks covering only about 25 days of demand and about 40% of its petroleum imports flowing through the Strait of Hormuz.
Strong forex reserves, a low current account deficit and moderate inflation should help India cushion rising oil prices, despite heavy oil import dependence, the report said.
If the crisis persists, it could weaken the currency, widen the current account deficit and stoke inflation, it said.
Prolonged crisis could hit sectors dependent on liquefied natural gas and crude such as fertilisers and petrochemicals, the report added.
India invoked emergency powers on Friday directing refiners to maximise production of liquefied petroleum gas to avoid any shortage of cooking fuels.
