Impact on Indian Economy if the war continues for one more month and suggestions for short-term/temporary policy support measures

 If the ongoing geopolitical conflict continues for another month, the impact on India would extend beyond energy prices and logistics disruptions and could begin to affect growth, inflation, exports, MSMEs and fiscal stability.

The situation becomes more complex because, in addition to global uncertainties arising from the conflict, there is also a growing possibility of below-average rainfall due to the potential development of El Nino conditions. The combination of an external energy shock and a domestic monsoon risk could compound inflationary pressures and weaken rural demand, thereby creating a dual economic challenge for the Indian economy.

At the macroeconomic level, the most immediate transmission channels of the conflict are higher crude oil and LNG prices, increased freight and insurance costs, and supply chain disruptions.

Higher energy prices will increase transportation and manufacturing costs and eventually feed into inflation. At the same time, a higher oil import bill will widen the current account deficit and will put further pressure on the already weak rupee. The RBI move to force banks to unwind foreign exchange position beyond $100 million to steady the slide is timely but banks will lose money hampering credit growth. If the government reduces fuel taxes to control inflation, fiscal pressures will also increase.

These above factors together can slow economic growth if the situation persists.

If, simultaneously, the country experiences below-average rainfall due to El Niño conditions, the impact could be more pronounced. Lower rainfall can affect agricultural output, increase food prices, and reduce rural incomes. Since rural consumption plays a significant role in supporting domestic demand in sectors such as FMCG, two-wheelers, tractors, consumer goods and affordable housing, a weak monsoon combined with high inflation could dampen consumption demand in the economy.

Therefore, the risk is not only inflation but also a slowdown in consumption, which is an important pillar of India’s growth.

 

From a sectoral perspective, energy, petroleum, and refining would remain the most impacted sectors due to sustained high crude oil and gas prices. However, a particularly serious concern arises in LPG and gas-dependent sectors. Several industries in India, especially MSME clusters such as ceramics, glass, chemicals, foundries, food processing units, and small manufacturing units depend heavily on LPG and gas for their furnaces and heating processes. In addition, a large number of small eateries, bakeries, food processing units, and hospitality establishments also depend on LPG for daily operations.

If LPG supply becomes constrained or prices rise sharply due to prolonged disruption in supplies, several small and medium factories may be forced to reduce production or temporarily shut down. Similarly, small eateries and food-related businesses may face severe cost pressures affecting their viability. This has implications not only for domestic employment and livelihoods but also for exports, particularly in sectors such as ceramics, chemicals, processed foods, glassware, and certain engineering products where India has a significant presence in global markets. Any production disruption in these sectors would affect export commitments, employment in MSME clusters and overall industrial output, thereby putting additional strain on the economy.

The aviation sector would be significantly affected due to higher aviation turbine fuel prices, longer routes to avoid conflict zone, which would increase operating costs for airlines and potentially lead to higher airfares, thereby affecting tourism, hospitality and business travel.

Fertilisers and agriculture would become particularly sensitive if both global supply disruptions and weak monsoon conditions occur simultaneously. Higher fertiliser input costs combined with lower rainfall could affect agricultural production and farm incomes, which would have second-order effects on rural consumption and inflation.

Export-oriented sectors such as engineering goods, textiles, gems and jewellery, chemicals and pharmaceuticals would face increased freight costs, higher marine insurance premiums, shipment delays and longer working capital cycles. This could particularly affect MSME exporters who operate on thin margins and limited liquidity.

Logistics, shipping and port operations would continue to face disruptions due to rerouting of ships, higher freight rates and insurance costs, which would impact both imports of raw materials and export shipments.

MSMEs would be among the most vulnerable segments because they face immediate working capital stress when input costs rise and payments are delayed. Even otherwise viable MSMEs may face temporary financial stress due to external disruptions of this nature.

Suggested Short-Term Policy Support Measures

In view of the above situation, if the conflict continues for another month and the monsoon outlook also remains uncertain, the government may consider the following short-term measures:

1. Energy Security and LPG Availability

• Continue diversification of crude oil, LNG and LPG sourcing.
• Ensure uninterrupted availability of LPG and natural gas for MSME clusters and critical industries such as ceramics, glass, chemicals, food processing and small manufacturing units.
• Maintain readiness to use strategic reserves in a calibrated manner to manage extreme price volatility.

2. Support for Exporters

• Faster GST refunds and duty drawback disbursement.
• Increase export credit availability and provide temporary interest subvention for export sectors affected by freight and insurance cost escalation.
• Extension of export obligation and realisation timelines where shipments are delayed due to global disruptions.
• Consider partial support for abnormal war-risk insurance premiums for a limited period.

3. Support for MSMEs

• Temporary working capital support through enhanced emergency credit lines.
• Partial credit guarantee support for MSME loans.
• Flexibility in loan restructuring for viable MSMEs affected by external disruptions.
• Faster release of payments due from government departments and public sector undertakings.
• Temporary deferment of select statutory dues for the most affected sectors.

4. Aviation and Tourism

• Temporary and calibrated reduction in taxes on Aviation Turbine Fuel in consultation with state governments to prevent sharp increases in airfares.

5. Fertilisers and Agriculture

• Priority allocation of natural gas to fertiliser plants.
• Timely import of fertiliser raw materials.
• Build buffer stock of key fertilisers in case global supply disruptions coincide with weak monsoon conditions.

6. Logistics and Shipping

• Establish a coordination mechanism between Ministries of Commerce, Shipping, Petroleum and Finance to monitor freight rates, insurance costs and shipping routes.
• Provide logistics facilitation and faster clearances for critical imports and export consignments.

7. Inflation and Food Security Management

• Maintain adequate buffer stocks of food grains and essential commodities.
• Be prepared for timely market intervention to control food inflation if monsoon conditions weaken.

8. Temporary Relief in Corporate and Individual Taxes

Given the extraordinary global situation involving war, supply chain disruptions, energy price volatility and the possibility of a weak monsoon, the Government may consider temporary and targeted relief in corporate tax and individual income tax for one year. This would help companies manage rising input costs, maintain employment and investment, and help households cope with rising prices, thereby sustaining consumption demand in the economy.

Timely intervention will be critical to ensure that a temporary global crisis does not translate into factory shutdowns, export losses, MSME distress and a broader economic slowdown.

 

Union Budget 2026–27: Expectations at a Strategic Inflection Point

The Union Budget 2026–27 will be presented at a defining moment for India, as the global order enters a phase where economic strength and strategic autonomy increasingly determine influence. In an uncertain and fragmented world, the Budget is expected to reinforce India’s economic, and military might while maintaining a firm commitment to fiscal discipline. With the economy growing at over 7 per cent, the focus will not merely be on sustaining growth, but on insulating it from external shocks, supply-chain disruptions and geopolitical coercion. Some of the broader expectations from the forthcoming Union budgets are as follows:

A continued capex-led growth strategy is widely anticipated. Higher allocations for infrastructure—roads, railways, ports, airports, urban transit, logistics parks and digital infrastructure—remain critical to improving productivity, reducing logistics costs and crowding in private investment. Equally important will be faster execution, deeper Centre–State coordination and outcome-based monitoring to ensure timely asset creation.

The Budget is also expected to sharpen India’s ambition of becoming a global manufacturing and supply-chain hub. Industry will look for stability and predictability in policy, simplified compliance, faster approvals and targeted incentives for high-value manufacturing sectors. Strengthening MSMEs through easier access to credit, technology upgradation and formalisation will be essential to broad-base manufacturing and employment generation.

In a “might-is-right” environment, defence and strategic capabilities are likely to receive sustained emphasis. Higher capital outlays for modernisation, indigenisation and defence R&D—particularly in electronics, drones, aerospace and advanced materials—will not only strengthen national security but also create a globally competitive domestic defence industrial base.

Enhanced budgetary support for export credit, interest equalisation, market access initiatives, trade promotion infrastructure, and faster digitised customs processes. Greater resources for export insurance, logistics cost support, port modernisation and dedicated export hubs—particularly for MSMEs— to ensure India’s exporters are not disadvantaged in a highly competitive global marketplace.

Agriculture and rural demand will remain another key pillar. Beyond income support, the Budget is expected to focus on productivity improvement, irrigation, post-harvest infrastructure, agri-logistics, dairy and food processing, enabling farmers to integrate more effectively with domestic and global value chains.

For new-age sectors and innovation, expect structured funding for pharma/medtech R&D and innovation and enabling frameworks for emerging sectors such as space (including procurement and recognition of space assets as critical infrastructure), alongside green energy and climate-resilience investments. 

 

Finally, long-term competitiveness will hinge on human capital development. To sustain long-term growth and reduce inequality in access to services, the Budget is expected to reinforce spending efficiency in education, skilling, and public health, with greater use of technology and outcome-linked models.

Overall, the Union Budget 2026–27 is expected to move beyond incrementalism, positioning India as a resilient, export-driven, strategically secure economy—capable of navigating global volatility while advancing its vision of becoming a leading economic power by 2047.

 

Justice After Hours: A Course Correction Long Overdue

 The recent statements and administrative decisions announced by Chief Justice of India Justice Surya Kant mark one of the most consequential course corrections attempted by India’s higher judiciary in recent decades. They are commendable steps. Taken together, these measures strike at some of the deepest systemic infirmities afflicting our legal ecosystem—endless litigation, unequal access to justice, procedural gaming by powerful lawyers, and the growing misuse of criminal process by enforcement agencies.

At the heart of the Chief Justice’s vision lies a simple but transformative idea: constitutional courts must function like hospitals with emergency wards. If an individual’s liberty is threatened at midnight, the doors of the Supreme Court of India and High Courts must not remain closed. This commitment to 24×7 accessibility for legal emergencies restores the primacy of fundamental rights, especially Article 21, to its rightful place.

Ending the Tyranny of Endless Arguments

One of the most debilitating features of India’s judicial process has been the culture of interminable oral arguments in high-stakes cases. Matters dragged on not because justice required it, but because the system allowed it.

By enforcing strict timelines, insisting on concise written submissions, and requiring advance declaration of oral-argument schedules, the Chief Justice has sent a clear signal: court time is a shared public resource, not the private preserve of a few senior advocates. This reform is not cosmetic—it directly addresses inequity, ensuring that poor litigants receive both attention and time, rather than watching justice delayed indefinitely while marquee matters consume weeks.

There will, as the CJI correctly observed, be no repetition of cases argued for 26 days. That chapter deserved to close.

A Shield Against Midnight Arrests

Perhaps the most far-reaching assurance offered by the Chief Justice is protection against harassment through late-night arrests. The reality is uncomfortable but undeniable: enforcement agencies increasingly appear at citizens’ doorsteps at unearthly hours, using the threat of arrest as a coercive tool rather than a lawful necessity.

By making it explicit that emergency hearings can be sought at any hour, the judiciary has reclaimed its role as the sentinel on the qui vive. The message is unmistakable liberty does not sleep, and neither should constitutional protection.

Relief for Independent Directors and Board Professionals

These reforms will be especially reassuring for independent directors, who have become collateral damage in the over-criminalisation of corporate governance. Despite repeated judicial pronouncements clarifying that independent directors are not responsible for day-to-day operations—and cannot be treated as default accused—the ground reality has been brutal.

Independent professionals, many of them distinguished experts, have been summoned, threatened, and arrested as if they were hardened criminals. This has led to a disturbing trend: mass resignations from boards and an acute shortage of willing independent directors, undermining the very purpose for which board independence was mandated.

The requirement of independent directors was meant to strengthen governance, transparency, and accountability—not to expose professionals to arbitrary criminal jeopardy. In this context, the CJI’s approach opens an important opportunity.

There is now a strong case to institutionalise judicial guidance—directing magistrates and lower courts not to issue arrest warrants mechanically and reminding probing agencies of settled law limiting the liability of independent directors unless direct, operational involvement is clearly established.

Such guidance, cascading through the judicial hierarchy, would restore confidence among board professionals and realign enforcement practices with constitutional fairness.

Constitutional Clarity on Contentious Social Questions

The CJI’s willingness to explore a nine-judge Constitution Bench to adjudicate the recurring conflict between religious freedom and women’s rights also deserves recognition. Whether it concerns Sabarimala, entry into mosques, practices like female genital mutilation, or exclusion from places of worship, these questions demand principled, authoritative resolution—not fragmented, case-by-case uncertainty.

A larger bench promises doctrinal clarity, stability, and legitimacy in areas where law, faith, and equality intersect.

 

Rebuilding Trust in the Justice System

These steps represent more than administrative tinkering. They signal an effort to humanise the justice system, curb abuse of process, and make courts responsive to the citizen rather than intimidating for them.

In a legal environment where cases often linger for decades, where procedure overwhelms substance, and where power asymmetries skew outcomes, this intervention by the Chief Justice deserves unreserved commendation.

If implemented in letter and spirit—and reinforced across all judicial levels—these reforms could go a long way in restoring credibility, trust, and moral authority to India’s justice delivery system.

Justice delayed may be justice denied—but justice inaccessible, or justice misused, is equally corrosive. The course correction has begun.

 

Set Mumbai on Right Course: Free it from Freebies and Corruption, Towards a Livable and Breathable Future

 As Asia’s richest municipal corporation heads towards the BMC elections 2026, Mumbai stands at a decisive crossroads. One path leads deeper into a politics of short-term freebies, fiscal populism, and creeping corruption. The other points towards clean air, efficient mobility, accountable governance, and strong public services. Reassuringly, recent signals suggest that Mumbaikars know exactly which path they want the city to take.

What Mumbaikars Want: A City That Moves Faster and Breathes Easier

A clear and compelling vision has emerged from recent policy announcements by Chief Minister Devendra Fadnavis, who has articulated the idea of “building a Mumbai that moves faster and breathes easier.” The proposed ‘Green Mumbai’ initiative anchors development in sustainability—linking mobility, air quality, and climate-conscious budgeting.

Key elements of this vision resonate strongly with citizens:

• Cleaner air and stricter pollution control, including real-time monitoring of over 1,000 construction sites and a shift by local industries to cleaner fuels.
• Integrated and efficient public transport, backed by a 411-km metro network, the Aqua underground line, and a growing fleet of 5,000 electric buses—already reducing congestion and carbon emissions.
• Climate budgeting, with nearly 38% of the capital expenditure of Brihanmumbai Municipal Corporation earmarked for green initiatives—an unprecedented commitment in South Asia and a serious step toward Net Zero 2050.

This is the kind of productive public spending citizens are willing to support—long-term investments that improve daily life while safeguarding Mumbai’s future.

What Citizens Are Demanding: Governance, Not Gimmicks

Across Mumbai’s neighbourhoods, citizen collectives are speaking with remarkable clarity. From Chandivali to Andheri, and other localities, residents are demanding basics done well:

• Pothole-free and durable roads, without endless digging and re-digging.
• Clean air, functioning public gardens, and regulated encroachments.
• An anti-defacement pledge, asking political parties to stop defiling public spaces with banners and posters. The message is blunt and powerful: “Paisa humara, naam tumhara nahi chalega.”
• Transparency and accountability, including monthly citizen forums and escalation of unresolved complaints to civic authorities.

These charters underline a simple truth: Mumbaikars want outcomes, not optics. They want corporators who fix problems, not politicians who plaster their faces on public property.

Healthcare: Invest Publicly, Not Privatise Quietly

Equally strong is the call to rebuild public healthcare. Civil society groups such as Jan Swasthya Abhiyan have warned that privatisation and outsourcing have weakened Mumbai’s once-robust civic health system. Their demands are neither ideological nor extravagant:

• Increase health spending to 25% of the civic budget over five years.
• End indiscriminate PPPs in hospitals.
• Fill staff vacancies on a war footing.
• Expand aapla davakhana clinics within neighborhoods and walking distance.

At a time when municipal finances are under pressure, citizens are clearly saying: spend more on hospitals, not handouts; doctors and diagnostics, not doles.

What Mumbaikars Do Not Want: Freebies, Fiscal Drain, and Corruption

Against this backdrop, the politics of freebies stands increasingly exposed. Populist announcements—such as free transport rides or cash-equivalent benefits—may offer instant applause but come at a high cost. They:

• Strain the exchequer of Asia’s richest municipal body.
• Crowd out spending on infrastructure, healthcare, and environmental resilience.
• Create fertile ground for leakages, patronage, and corruption.

The spending sprees promised on non-productive freebies, sharply contrast with citizen aspirations. Mumbaikars are not asking for gifts from the BMC; they are asking the BMC to do its job well.

 

A Silver Lining for Mumbai

Encouragingly, the narrative is shifting. A convergence is visible between:

• A state-level push for green mobility, clean air, and climate-linked financial discipline, and
• Grassroots citizen movements demanding ethical governance, better roads, functional public services, and dignity in public spaces.

This convergence offers Mumbai a rare chance to reset its civic priorities.

The Choice Before Mumbai

The 2026 civic elections must not become a contest over who promises bigger freebies. They should be a referendum on how Mumbai lives, breathes, and moves.

Mumbaikars should send a clear message:

Stop Mumbai from going on the wrong course. Reject freebies and corruption. Choose promises of investment in infrastructure, healthcare, pollution free environment, climate actions, sustainable mobility, better sanitation, safe drinking water, roads that are motorable and footpath which are walkable and available across the city and not just in certain elite localities over inducement, governance over gimmicks, and a city that is livable, breathable, and worthy of its citizens.

Time is to vote to set Mumbai on right course, freeing it from culture of freebies and corruption, towards a livable and breathable future.