India’s reckoning with the war’s economic cost begins

When Prime Minister Narendra Modi asked people to use petrol-diesel judiciously and not buy gold or undertake foreign trips on Sunday, he was conveying a clear message: the economic pain of the ongoing war in West Asia is not going away anytime soon and the economy will have to make adjustments to cope with the fallout.

- Roshan Kishore and Sreedev Krishnakumar

Now that the state election cycle is over, this mitigation is likely to be top priority for the government.

How has India fared so far in dealing with the war's economic costs?

How does it compare with other countries? What about the challenges that lie ahead? Will the adjustments and mitigation strategy bring economic pain? Here is what the data shows.

Indians have avoided the harsher end of the energy shock so far

India has had its share of problems because of the war's supply shock. Shortage of domestic LPG, especially for the poor who were buying their smaller cylinders from the grey market, and inputs to industry are the biggest disruptions. But there are a lot of things which India or Indians have not had to do so far and other countries have done. The International Energy Agency's (IEA) 2026 Energy Crisis Policy Response Tracker lists 82 economies and regional groupings that have taken steps to deal with the energy shock. Twenty-five economies in the tracker have used transportrelated curbs such as fuel rationing, lower speed limits or limits on private vehicle use. Fourteen have pushed work from home for some workers, eight have imposed airconditioning temperature limits, and six have closed or limited opening times for schools and universities. India does not appear in any of these categories.

Its measures have instead concentrated on cushioning prices and managing supply. These include cuts in petrol and diesel excise duty, a cap on domestic jet fuel prices, limits on fuel-retailer margins, rationing of commercial LPG use, and attempts to speed up piped natural gas and electric cookstove adoption.

This shows that although India has been hit by the global energy squeeze, its households have so far avoided the harsher restrictions seen elsewhere.

(See Chart)