NEW DELHI: India’s Prime Minister Narendra Modi said the country has sufficient energy supplies to meet domestic demand, even as he warned the Iran conflict creates unprecedented challenges for the world’s fastest growing large economy.
"Our government’s effort has been to ensure that the supply of petrol, diesel and gas is not excessively disrupted, and that ordinary families in the country face as little trouble as possible,” Modi said during an address in the lower house of the parliament on Monday (March 23).
The war in the Middle East, which began on Feb 28, has roiled energy markets, cutting off flows of crude oil and liquefied natural gas to the world and driving up prices. India is a major importer of LNG and other petroleum fuels from the region, and disruptions have already started to hit various industries, from ceramic factories and restaurants to fertilizer makers and oil refiners.
Modi said India holds 5.3 million metric tonnes of strategic oil reserves and is working to expand that to 6.5 million. He added that New Delhi is helping ensure safe transit for Indian vessels stranded in the Middle East. Two Indian-flagged ships carrying liquefied petroleum gas made the passage earlier this month, while two more are currently transiting the Strait of Hormuz, Bloomberg News reported Monday.
"Attacks on commercial shipping and any closure of the Strait of Hormuz are unacceptable,” Modi said, adding that India imports about 60% of its LPG needs but is ramping up the production of the fuel widely used for cooking.
Hormuz, a vital waterway that connects oil and gas producers in the Persian Gulf with the wider world, has been all but closed since US and Israeli strikes began at the end of February.
Authorities are closely monitoring Gulf shipping routes and working to safeguard maritime trade, Modi said, adding that India’s economic strength will help absorb some of the shock.
India’s foreign exchange reserves and strong economic fundamentals will help cushion against external shocks and increased volatility in the global markets, the Reserve Bank of India said.
Given India’s dependence on crude oil, "the evolving situation requires close monitoring and proactive measures to limit adverse spillovers,” the central bank said in its State of the Economy report on Monday. However, "the capacity and resilience of the Indian economy to absorb external shocks have strengthened over time,” it said.
Modi also said the country has adequate food stocks and assured farmers of government support. - Bloomberg
