During the West Asia crisis, several Congress leaders and commentators warned that India was on the verge of a severe economic collapse. However, a combination of government preparedness, strategic policymaking, and proactive diplomacy helped the Indian economy absorb the shock and maintain stability.
As tensions escalated in West Asia, Congress leaders repeatedly argued that India would soon face a major economic crisis. On June 3, Congress MP Rahul Gandhi stated at a public event that an “economic tsunami” was approaching and alleged that the Modi government was incapable of preventing it. According to him, the crisis would cripple the entire economy.
Even before Rahul Gandhi’s remarks, former Reserve Bank of India Governor Raghuram Rajan had expressed concerns about the potential economic fallout. Senior journalist Rajdeep Sardesai amplified these warnings by sharing Rajan’s views. Yet, as on several previous occasions, these predictions did not ultimately materialize.
In March, Congress spokesperson Supriya Shrinate claimed that nearly 69 percent of India’s LNG imports depended on the Strait of Hormuz and warned that any disruption would trigger a major national crisis. Around the same time, educator-turned-political commentator Awadh Ojha painted an even grimmer picture, suggesting that economic conditions could deteriorate to such an extent that social unrest and violence would follow.
Despite heightened tensions in West Asia and disruptions affecting shipping through the Strait of Hormuz, India’s economy demonstrated considerable resilience. Fuel and cooking gas prices witnessed temporary increases, and supply chains came under pressure, but inflation remained under control, economic growth continued, the current account deficit stayed manageable, and India’s substantial foreign exchange reserves acted as an effective buffer against external shocks.
This resilience was not merely the result of favorable circumstances. It reflected years of strategic planning. Anticipating global uncertainties, the government had steadily strengthened India’s energy security by diversifying import sources, building strategic reserves and deepening diplomatic engagement with key energy-producing nations.
Since 2022, Russia has emerged as one of India’s largest crude oil suppliers. Taking advantage of temporary sanctions-related flexibility offered by the United States, India significantly increased imports of discounted Russian crude. At the same time, additional supplies were secured from the United States and several African countries, reducing dependence on the Gulf region.
When LPG supplies came under pressure, the government responded swiftly. Domestic refineries were instructed to increase LPG production, the expansion of piped natural gas (PNG) connections was accelerated, and ethanol blending initiatives were further strengthened. Simultaneously, India’s long-standing diplomatic engagement with Iran ensured that LPG tankers destined for India continued to transit through the Strait of Hormuz despite the regional conflict. The Indian Navy later provided security for these shipments in the Gulf of Oman.
Rather than relying exclusively on Gulf suppliers, India also expanded LPG imports from the United States, Angola, and Nigeria. Long-term procurement agreements, higher domestic production and improvements in the gas distribution network ensured that no major supply disruption occurred.
Chief Economic Adviser V. Anantha Nageswaran elaborated on these developments in his article Steady and Stable as She Goes: India and the Economic Fallout of the Gulf Conflict. He argued that diversification of oil imports, increased domestic LPG production, expansion of the piped gas network, coal gasification, ethanol blending and strategic petroleum reserves collectively strengthened India’s resilience. He also highlighted the importance of Prime Minister Narendra Modi’s energy cooperation initiatives with the United Arab Emirates.
According to Nageswaran, the impact of these measures was reflected in macroeconomic indicators. India’s growth forecast for calendar year 2026 was revised upward to 6.8 percent, while the projection of 6.5 percent growth for FY2027 remained unchanged. The current account deficit stayed close to 0.6 percent of GDP, and foreign direct investment remained relatively stable. In his assessment, prudent policymaking and active diplomacy played a decisive role in achieving these outcomes.
This does not imply that India is immune from future economic challenges. Geopolitical tensions, energy security concerns, technological disruptions, and global uncertainty will continue to test the country’s resilience. However, recent experience suggests that India has significantly strengthened its capacity to withstand external shocks.
A similar pattern was observed during the COVID-19 pandemic. Many analysts predicted a prolonged economic downturn, yet India gradually restored economic activity and returned to a strong growth trajectory. The West Asia crisis once again demonstrated the country’s ability to navigate difficult global circumstances.
While Congress leaders and their supporters repeatedly projected an imminent economic collapse, the available economic data and subsequent developments did not support those claims. Over the past decade, India has maintained growth through multiple global crises. Decisive policymaking, pragmatic diplomacy and the adaptability of its people have together strengthened the country’s economic foundations. The experience of the West Asia crisis suggests that India not only managed the challenge effectively but also reinforced confidence in the resilience of its economy.
