Fuel prices may rise if Middle East crisis continues, warns RBI Governor Sanjay Malhotra

Reserve Bank of India Governor Sanjay Malhotra has warned that the government may eventually have to increase petrol and diesel prices if the ongoing Middle East crisis continues for a prolonged period.

Speaking at a conference in Switzerland, Malhotra said India is already beginning to feel the impact of disruptions caused by the conflict and the blockade of the Strait of Hormuz, which have pushed global oil and gas prices higher.

He noted that India remains heavily dependent on imports of energy and fertilisers, making the economy vulnerable to prolonged geopolitical instability in West Asia.

“If the crisis continues for a longer period of time, it is a matter of time that the government will actually pass on some of these price increases,” the RBI Governor said.

Despite rising global crude oil prices since the conflict began on February 28, the Centre has so far not increased retail prices of petrol and diesel.

Malhotra also highlighted that the government has maintained fiscal prudence and remained committed to fiscal consolidation despite external economic pressures.

Prime Minister Narendra Modi has recently appealed for reduced fuel consumption and other austerity measures to conserve foreign exchange amid the global energy crisis.

The pressure on India’s economy has also reflected in the currency market, with the rupee slipping below the 95 mark against the US dollar.