NEW DELHI: Amid the backdrop of the West Asia conflict, India will need to provide immediate relief to the most affected and vulnerable businesses and households, and generate fiscal space to meet strategic and long-term needs, a finance ministry report said on Saturday.The ministry report said this would need building long-term buffers in several commodities and materials, not just energy-related ones. “This calls for re-prioritisation of spending and targeted relief for the most affected and vulnerable businesses and households,” said the preface to the monthly economic report for March authored by chief economic adviser V Anantha Nageswaran.The report said the impact of the conflict on India will be felt through four channels: (a) supply disruptions to oil, gas and fertilisers and more importantly, to exports as well, (b) higher import prices, (c) higher logistics costs (e.g., freight and insurance) and (d) a possible decline in remittances by Indians in the Gulf countries. (The slowdown in exports to Gulf countries may not be particularly consequential for overall exports.)“The combined impact across the four channels on growth, inflation, the fiscal balance, and external balances is likely to be significant,” Nagswaran said. Given the considerable impact of the conflict on India’s economy, he said, efforts should be made to leverage the fallout to redouble recent reform efforts to enhance India’s competitiveness and preparedness.Nageswaran said the ‘entrepreneurial mindset’ in bureaucracy (not making the ‘best’ the enemy of the ‘good’), accompanied by enhanced speed of decision-making, discussed in the latest Economic Survey, is “ precisely what is called for if India is to emerge from this episode stronger, more resilient and more competitive.” The report said govt has undertaken steps to manage supply disruptions, ensure energy availability, support trade and logistics, and maintain economic stability. It called for proactive measures to mitigate the impact of crisis.
