Auditor Karthikeyan has warned that if the ongoing Iran conflict continues, it could trigger an economic slowdown and widen India’s current account deficit to around 3% of GDP. Speaking to Dinamalar in Coimbatore, he said the impact is already being felt through energy prices and supply disruptions.
He noted that the US and Israel have been carrying out joint strikes on Iran for more than 24 days, and that the conflict is affecting a wider set of countries in the Middle East where the US has military bases. Alongside military action, he said, economic pressure is also playing out through disruptions to key trade routes.
Karthikeyan highlighted the strategic importance of the Strait of Hormuz, about 33 km wide, through which a large share of crude oil shipping moves. With Iran restricting shipping through the route—while allowing some vessels bound for India—overall supply chains have been hit, leading to gas shortages and price rises. He said crude has climbed to about $100 a barrel, and warned that if the situation persists for another week or two, the macroeconomic impact could deepen.
He said shortages of commercial LPG cylinders are forcing some small eateries to shut, creating stress for food-related businesses. He also cautioned that remittances could be affected, noting that about one crore Indians live in the UAE and that roughly half of India’s remittance inflows come from the Middle East.
On preparedness, he pointed to India’s foreign exchange reserves of $723 billion, adequate coal stocks for power generation, diversified crude sourcing from 41 countries (up from 27), and sufficient foodgrain production as supportive factors. However, he stressed that supply-chain disruptions remain a key risk, urging businesses to plan forex hedging, logistics and financing based on different timeframes if the war continues.
