According to BMI, a division of Fitch Ratings, India is anticipated to implement a three-pronged plan to protect its economy from the effects of the current Iranian crisis. Businesses in all industries are under more strain due to rising oil prices, shipping route disruptions, and increased logistical expenses.
Securing supplies of essential inputs is the main goal of the first measure. In order to promote businesses like semiconductors and fertilizers, the government has previously used the Essential Commodities Act to prioritize natural gas for important sectors. It may also think about limiting exports of essential materials like sulfur and helium.
The second approach uses tax breaks and subsidies to keep expenses from going up. A new ₹1 lakh crore Economic Stabilisation Fund may boost support for energy and fertilisers, alongside temporary customs duty waivers and tax rebates for domestic businesses.
Improving credit support, especially for MSMEs, is the third pillar. A planned loan guarantee scheme around ₹2–2.5 lakh crore could help maintain demand and safeguard jobs.
BMI anticipates that India would sustain a deficit of about 4.5% of GDP, striking a balance between short-term assistance and long-term fiscal restraint, even though these actions may increase fiscal pressure.
Source – The Economic Times
