It's not oil.

"India's external balance and government finances could be hit if oil prices stay for an extended period," as India "imports nearly 90% of its crude requirement and about 50% of its gas requirements." "A prolonged crisis could widen the country's current account deficit, weaken the rupee and stoke inflation, the government said," and "This concern has pushed the rupee to a record low and forced the central bank to sell dollars from its reserves." Reuters. In fact, the rupee has been weakening from long before the US and Israel launched their attacks on Iran on 28 February 2026 which caused the current rise in the price of oil. wikipedia. Since 2014, when Mr Narendra Modi first became prime minister (wikipedia) the rupee fell from 62.33 against the dollar to 88.72 in 2025, a depreciation of 42.33% (bookmyforex.com). One dollar buys Rs 92.38 this morning. xe.com. " Foreign investors have sold about $4 billion of Indian equities in January, adding to nearly $19 billion outflows last year. Corporate hedging demand has also weighed on the currency." Reuters. Blaming the current rise in the price of oil is deceiving because historically prices have been higher in the past. Brent crude is selling at $100.6 per barrel today (oilprice.com) but had risen to a high of $111.26 in 2011, $111.57 in 2012 and $108.56 in 2013 (macrotrends), dropping sharply to $53.03 in 2015 and $45.13 in 2016, during this government's tenure. But, while Indians were able to buy petrol at Rs 63.77 per liter in 2011 and Rs 68.57 in 2012, the retail price jumped to Rs 78.52 per liter in 2018 and has been over Rs 95 since 2021 as the government has increased taxes instead of passing on the benefits of lower prices to consumers (cleartax..in). If the government passes on the increase to consumers it will immediately raise transport costs and cause inflation and if it lowers taxes to keep the retail price of petrol at the same level the government will have to increase borrowing to plug the gap in revenue. In 2025, the Reserve Bank of India (RBI) cut its policy rate by 125 basis points to 5.25% (ddnews.gov.in) but yield on the benchmark 10-year bonds is at 6.677% this morning (in.investing.com). On 09 March, the RBI bought Rs 1 trillion worth of government bonds through open market operations to increase liquidity in banks and bring down borrowing costs but the yield on 10-bonds rose to 6.78% before closing at 6.72%. Mint. On top of selling dollars and buying government bonds the RBI has been paying rising record amounts of dividends to the government. It paid Rs 1.02,000 in 2023-24, Rs 2,10,874 in 2024-25 (panoplexa.com) and another record Rs 2.70 trillion last year (Mint). Naturally, the government has asked for Rs 3.16 trillion in this year's budget. MC. So, where has the money gone? Not to oil. As yet. 

Cost of freedom.

 Even though Ali Khamenei opposed the elevation of his son Mojtaba Khamenei to the post of Supreme Leader, the Islamic Revolutionary Guards Corps (IRGC) forced his appointment because he is likely to back their hardline agenda. TOI. After their horrific crimes against the people any loss of power will mean brutal revenge against them and their families. Yesterday US President Donald Trump said the US has "practically nothing left to target" in Iran. ET. This is the right time when the US and Israel should let Iranians earn their freedom by completely ridding their country of every branch of the regime. The US should remember that gifted freedom is inherently unstable. In 2003, the US invaded and easily defeated Saddam Hussein's army in Iraq (wikipedia) but this was quickly followed by the emergence of Al Qaeda, which spread over into Syria, and a decade of extremely bloody terrorist attacks ensued (Britannica). Even after the defeat of the Islamic State in Iraq, "Over one million people remain internally displaced," and "the government has struggled to achieve the demobilization and integration of powerful Shiite militias, which formed during the fight against the Islamic State." cfr.org. Not learning from Iraq, the US and NATO illegally used a UN resolution to impose a 'No-Fly Zone' over Libya (press.un.org), ostensibly to protect civilians, to attack Moummar Gaddafi, resulting in his capture and murder by rebel forces in 2011 (wikipedia). Even after 15 years Libya remains a divided country with clashes between different armed groups. news.un.org. On the other hand, Vietnam won its war against the US at the cost of over 3 million lives (Britannica) which ended in a panic- stricken flight by the US in 1975 (wikipedia), Vietnam has been stable since then and has a booming economy with the GDP growing 8.02% in 2025 and GDP per capita at about $5,026 (Vietnam Briefing), higher than that of India's at $3,005 (IMF). In Afghanistan, following Soviet occupation in 1979, the US, Pakistan and Saudi Arabia supported the Afghan Mujahideen with billions of dollars forcing the Soviet Union to withdraw in 1989. wikipedia. A civil war followed, leading to Osama bin Laden and the 9/11 attacks in 2001 (wikipedia). The US occupied Afghanistan but was forced to flee in 2021 by the Taliban, leaving behind $7 billion worth of armament. CBS. Afghanistan has been stable ever since. The time is right for the US and Israel to supply guns to young Iranians so that they can fight the IRGC and the Basij thugs, but only to Shia Persians, and never, under any circumstances, to Kurds or Arabs, Sunnis or Christians. US and Israeli special forces can help by targeting the regime's arms depots but the ultimate victory must be seen to be that of the Iranian people. As soon as victory is achieved, quickly lift sanctions, bring in food and medicines, arrange loans to the central bank to stabilize the currency and help the economy to grow. A stable and peaceful Iran will be fantastic for the Middle East, the world and, especially Iranians. It will come from freedom. But, only if it is earned.

Incomplete reserves.

 "India will not participate in the International Energy Agency's (IEA) proposal to release strategic petroleum reserves (SPR) to stabilize global oil markets," because "The crisis (that led to a rise in prices) is not our creation. Those responsible have to deal with it and create situations to ease (prices)." India will continue to export refined fuels as we have "reasonably" comfortable stocks of petrol, diesel and aviation turbine fuel. TOI. On the other hand, "India allocated Rs 58.76 billion for this financial year to fill and expand its SPR but is expected to spend only Rs 10.39 billion of it - and has budgeted a mere Rs 2 billion for next year - leaving emergency stockpiles partially empty and expansion plans stalled, Budget documents show." SPR capacity is about two-thirds full and "The government's oft-cited figure of 9.5 days of crude cover from SPR assumes the caverns are full and is based on 2019-20 consumption figures." HT. Lying their heads off, aren't they?. "The Donald Trump administration of the United States yet again called India 'good actors' after 'permitting' New Delhi to buy Russian oil amid the West Asian crisis." DH. Yes Massa (dictionary). Much obliged. "The US has earlier claimed that India had stopped buying Russian oil as part of the trade deal that reduced tariffs on exports to Washington." "For India, which imports most of its oil, the combination of soaring crude prices, a weakening rupee and falling equity markets represents a triple shock." If the conflict drags on, "the impact could extend beyond financial markets into inflation, fiscal balances, corporate earnings and economic growth." ET. Inflation is under control because of weak domestic demand and soft commodity prices. Even so, "The rupee, the worst-performing Asian currency, has tumbled 9% against the dollar. This has happened even with the greenback losing ground elsewhere." "Additionally, nine million Indians work in the Persian Gulf, providing critical remittances," wrote Andy Mukherjee. The reality is that, "Even as tensions escalate across West Asia, queues outside visa application centers for Gulf countries in Delhi show little sign of slowing, with many workers saying that economic compulsions leave them little choice." ET. "Without money we will die here as well," said Dilip Yadav from Bihar. "The dual petroleum dependency: Indian households now depend on Petroleum products for both cooking (LPG) and transport (petrol, diesel, fares). Together LPG + Conveyance account for 7.5-10.2% of monthly budgets," said Shamika Ravi. That is one-tenth of monthly expense. A comparison of household monthly consumption with total income from the Periodic Labor Force Survey (PLFS) showed that 26.4% spent more than what they earned, wrote Abhishek Jha & Roshan Kishore. No reserves with the government, no reserves with households. Exposed by the conflict.    

Looks like scorched earth.

"A small coral island in the Persian Gulf," - "Kharg Island handles the vast majority of Iran's crude oil exports and remains untouched despite an expanding military campaign targeting Iranian military and nuclear infrastructure." "Subsea pipelines connect the island to major oilfields in southern Iran. Long jetties stretch into deep water to allow supertankers to load crude, while large storage tanks and worker housing cover much of the island's southern area." ET. Two days back, Israel hit fuel depots in Tehran, releasing a cloud of toxic smoke "that unleashed black rainfall dozens of miles away," making it difficult for people to breathe and fires to burn for hours. Time. However, not even a madman would ever contemplate touching Kharg Island, which would immediately block oil suppliers from Iraq, Kuwait and even Saudi Arabia  (maps), resulting in such an upsurge in oil prices that the global economy, including that of the US, will collapse. India is particularly vulnerable. "India imports 50% of its dense energy, whether it is in the form of oil, gas, fertilizer," and "Every dollar per barrel is about 1.8 billion a year. If there is a $50 increase in oil prices, we are talking about $90 billion of impact," said Neelkanth Mishra. Already, "The Indian rupee slipped to its all-time low yesterday (92.3350 against the dollar)," despite intervention by the Reserve Bank of India (RBI). ET. The weaker the rupee, the higher the cost of imported oil. In addition to selling dollars to support the rupee the RBI sought to buy government bonds worth Rs 1 trillion, despite a surplus of Rs 5 trillion in liquidity as of 27 February, to force government borrowing costs down. Traders weren't buying it. Yields on the benchmark 10-year bonds rose to 6.78% before closing at 6.72%. HT. Naturally, Indian stock markets fell. Yesterday, ""The BSE Sensex plunged more than 1,300 points and settled at 77, 566, while Nifty 50 slipped 422 points to touch 24,028. Investors lost over Rs 12 trillion in a day." NDTV. This government is directly responsible. Despite allocating Rs 58.76 billion to fill out strategic petroleum reserve (SPR), the government spent only Rs 10.39 billion, reduced imports of cheap Russian oil to please the US, increased taxes on petrol when oil prices were low and, while forcing 20% ethanol mix in petrol, did not pass on the lower costs to consumers. The Wire. Since 2015, the government has extorted over Rs 40 trillion from higher taxes on fuel. ppac.gove.in. Plunder citizens through higher taxes and then buy votes with cash handouts just before elections. Before the recent Bihar elections Prime Minister Narendra Modi transferred Rs 10,000 into bank accounts of 7.5 million women at a cost of Rs 75 billion. NDTV. The BJP-led Mahayuti won the 2026 Brihanmumbai Municipal Corporation election (wikipedia) with a scheme to distribute Rs 18,000 per year to every woman from 21 to 65 years of age (cleartax.in). This is expected to add Rs 360-460 billion, or over 5% of the state's total expenditure, to the state's budget. So a minister proposed chopping down teak plantations to raise Rs 120 billion to plug the shortfall, wrote Ajit Ranade. Naturally, the BJP's election spending is more than double of its closest rival. DH. A party led by a man totally obsessed with staying in power no matter what the cost to the nation. This seems to be scorched earth policy (wikipedia). Sadly, they'll not burn. Only we will. 

Unsecured growth.

"India's inflation outlook remains stable despite the US-Israel-Iran war pushing global crude prices higher," and, "For 2025-26, RBI has projected CPI inflation at 2.1% with the March quarter at 3.2%." Mint. "India's key inflation rate accelerated to 2.75% in January,..returning to the central bank's target rate for the first time since August." Reuters. The Reserve Bank of India (RBI) was told by the government to target consumer price index (CPI) inflation at 2-4% with a 2% band on either side till March 2026. BI. With inflation at such a low level, an increase of 10% in the price of crude oil will add only about 40-60 basis points (bps), retaining the rate of inflation still within the target range. "For India, each $1 increase in crude adds roughly $2 billion to the annual import bill, putting pressure on the trade balance," and "Fertilizer prices could rise sharply if supplies through the Strait of Hormuz are disrupted, potentially increasing India's subsidy burden." India holds "crude inventories estimated to cover around 74 days of consumption." ET. The benchmark Brent Crude is trading at $115.71 per barrel this morning. oilprice.com. The retail price of petrol ranges from a low of Rs 94.30 per liter in Chandigarh to a high of Rs 107.49 per liter in Thiruvananthapura. goodreturns. in. Any significant rise in the cost of fuel will immediately feed into transport cost and raise prices all round. "Data from the RBI showed aggregate deposits grew 10.2% in the financial year to Jan 31, with banks adding Rs 23 trillion. Credit expanded faster rising 12.2%, or Rs 22.3 trillion over the same period." TOI. "Household debt has grown at roughly twice the pace of nominal GDP, reaching about Rs 1.5 trillion," "Personal loans, credit cards and gold loans are doing the heavy lifting." "For many young Indians credit bridges the gap between aspiration and income." "Digital lending removes friction but preserves consequences." "Unsecured credit has thin recovery values and nasty habit of herd defaults." And "By the time the gross non-performing assets (GNPA) ratio moves from 1.8% to 4%, the liquidity bridge will have already collapsed for non-bank financial companies," wrote Krishnan Raganathan. India has been the fastest -growing major economy since 2021, But "Half of India's population also continues to rely on agriculture for subsistence." "That keeps GDP per capita far below other major economies - it is 12 times smaller than Japan's and 20 times smaller than Germany's." "Analysts at Morgan Stanley believe India will require and average GDP growth of 12.2% to truly tackle underemployment." ET. The RBI is planning to buy government bonds worth Rs 1 trillion to boost liquidity in banks. ET. If prices rise for a few months before coming down, households may be forced to default on their debts. Will banks be able to absorb the shock? Unsecured credit leads to unsecured growth. "Education is not only for exams but for life," said Prime Minister Narendra Modi. At least we'll be able to count our losses.      

Trying to be humane.

"Days before the sinking of IRIS Dena by a US submarine South of Sri Lanka, India was approached by Iran to take in another Iranian ship, IRIS Lavan, which was also in the region for the International Fleet Review. According to government sources, India gave permission to safely dock at the Kochi port on March 1 and accommodated the 183 crew members at the facility there." TOI. As the Iran International's Editorial Board can confirm that more than 36,500 Iranian protesters were killed by security forces "after reviewing newly obtained classified documents, field reports, and accounts from medical staff, witnesses and victims' families." Verified photos of brutally massacred protesters show unarmed young people, couples and peaceful gatherings. BBC. Do any of these Iranian sailors that we are so lovingly sheltering took part in the mass murder? "So for us, when this ship wanted to come in, and that too in difficulties, I think it was the humane thing to do. And I think we were guided by that principle," said Minister of External Affairs, S Jaishankar. Makes you feel all warm and gooey inside, doesn't it? Pity, this "humane thing" did not protect Princess Latifa, a helpless lone woman who was kidnapped by 12 to 15 Indian commandos, two of whom sat on her and forcibly injected her with tranquilizers, and then dumped her back in Dubai in 2018. All she wanted was asylum from a forced marriage. The Telegraph. Dear Leader's principles are so inspiring. US President Donald Trump said, "There will be no deal with Iran except Unconditional Surrender. After that, and the selection of a Great & Acceptable Leader(s),..will work tirelessly to bring Iran back from the brink of destruction, making it bigger, better, and stronger than ever before." BBC. In response, Iran's President Masoud Pezeshkian said that "demand by the United States for an unconditional surrender is a 'dream they should take to their graves'." He apologized for attacks on neighbors and promised to halt them. ET. Either he lied or, more possibly, he has no command over the inhuman Islamic Revolutionary Guards Corps (IRGC) and the Basij militia who were seen by eyewitnesses deliberately shooting live rounds into unarmed protesters (BBC). This morning, Gulf countries the UAE, Saudi Arabia, Qatar and Bahrain have been activating their missile interceptors and a Pakistani taxi driver was killed in Dubai by falling debris from an intercepted missile. TOI. Iran spent decades and billions of dollars building proxy paramilitary groups in Iraq, but most of them aren't keen to join the present fight. Reuters. Just as the Pakistani Army spent its energies building the Taliban as its proxy and is now trying to survive attack by the well-armed, committed   Taliban. Reuters. States which brutalize their own citizens lose credibility and trust. And eventually must fall. Only we are "humane". It's a matter of principles. Hallelujah.     

Any new ideas?

 "The ongoing conflict in the Middle East could pose short-term challenges for the India economy by pushing up oil prices and disrupting trade flows, though the country's long-term growth trajectory is unlikely to be significantly affected, according to Nagesh Kumar, external member of the Monetary Policy Committed of the Reserve Bank of India (RBI)." TOI. Not just oil, "Qatar, India's largest supplier of India's natural gas, has declared force majeure on deliveries following a halt in production in the wake of an Iranian drone strike - a disruption that has led to a cut in supplies to Indian industry by up to 40%, sources said." ET. "Adani Total Gas has sharply raised prices for supplies to industrial clients," and "Lower gas supplies have marginally hit production at some Indian fertiliser companies." Reuters. The cost of buying fuel for Indian consumers not only depends on the selling price of oil in dollars but also the buying price in rupees which, in turn, depends on the exchange rate of the two currencies. The rupee hit a low of 92.123 against the US dollar on 4 March but hardened to 91.933 yesterday. investing.com. "The central bank was apparently judiciously selling the greenback in the last 10-15 sessions,..as the RBI was looking to protect the Rs 91 level," but now "the RBI will look to safeguard the psychological Rs 92 per dollar level, and could continue selling the greenback in both the onshore and off-shore non-deliverable forward (NDF) market to maintain the current level." MC. Spending dollars on buying more expensive oil and gas and on defending the rupee will increase our current account deficit (CAD). Already, "The CAD stood at $13.2 billion, or 1.3% of GDP in the third quarter (September-December) of the fiscal year 2025-26, compared to $11.3 billion, or 1.1% of GDP, a year earlier.' Reuters. The GDP, using better methodology, was updated to base year 2022-23 from 2011-12, showed India's nominal GDP at Rs Rs 345.47 trillion compared to Rs 357.14 trillion using the previous method. A smaller nominal GDP could result in lower tax collections and raise the fiscal deficit to 4.51% from 4.36% of GDP, wrote Pragya Srivastava & Payal Bhattacharya. Crude oil prices collapsed from $132.83 per barrel in July 2008 to $29.78 per barrel in January 2016 and, apart from a brief period between February and October 2022, has stayed well below $90 per barrel. indexmundi.com. Mr Narendra Modi first came to power in May 2014 (wikipedia) and soft prices of crude oil allowed him to rake in a total of around Rs 40 trillion by raising taxes on retail fuel sales in India (ppac.gov.in). The government may have to lower taxes on retail fuel to keep prices constant, which would result in a tax shortfall, or pass on higher costs to consumers, which would instantly add to the cost of transport and raise prices all round. Higher inflation reduces the value of the rupee and could result in further weakening of the currency. Apart from selling dollars, does the RBI have any other ideas? Would it share them with us? Just asking..