CEA Alerts India on Vulnerability Amid 30% Surge in Crude Prices
Oil prices have surged to $114 a barrel, a significant increase from below $85 in June and July, according to India’s Chief Economic Adviser V Anantha Nageswaran. Speaking at the SBI Banking and Economics Conclave, he noted that India’s imported crude basket rose nearly 30% in September compared to August, with prices reaching $115.27 a barrel on September 22. Nageswaran emphasized that the interplay of trade, technology, and energy risks is exposing India to multiple economic shocks.
Supply Shocks and Global Economic Pressures
Nageswaran highlighted that supply shocks are now the primary force influencing the global economy. Factors such as the pandemic, the Ukraine war, trade restrictions, supply-chain disruptions, and conflicts in the Persian Gulf have intensified pressures on production and prices. He remarked that the nature of these shocks has evolved, with nations increasingly leveraging trade, technology, and energy as strategic tools. “The worst shocks now arrive, not by accident, but by design,” he stated.
He also pointed out that India’s strategic autonomy comes with its own costs. “Given its geography and size, India cannot belong to any bloc,” he said. This independence may lead to higher energy prices and more frequent supply disruptions as geopolitical divisions deepen.
Shifting Economic Landscape
Nageswaran noted a shift away from the disinflationary conditions that characterized the global economy from the 1990s to around 2020. He indicated that globalization, trade integration, and technological advancements previously helped keep prices stable. “We probably have put the disinflation era of the 1990 to 2015 or 2020 behind us right now,” he remarked, suggesting that commodity and real-asset prices are likely to remain under pressure as the global economy becomes more reliant on physical resources.
He also warned that elevated energy prices may persist even if current geopolitical conflicts are resolved, driven by increasing demand from AI-related infrastructure. “The demand for energy in general coming from the AI model… will continue to keep pressure on energy prices in general,” he added. The rising cost of energy coincides with heightened competition among countries for capital.
Observer Voice is the one stop site for National, International news, Sports, Editor’s Choice, Art/culture contents, Quotes and much more. We also cover historical contents. Historical contents includes World History, Indian History, and what happened today. The website also covers Entertainment across the India and World.
Follow Us on Twitter, Instagram, Facebook, & LinkedIn
