NEW DELHI: The ongoing West Asian crisis is a “live balance of payments stress test” for the country – directly impacting inflation, the exchange rate and the current account, chief economic advisor V Anantha Nageswaran said at the CII Annual Business Summit Tuesday. “Managing the current account credibly, financing it and preventing further currency depreciation are the central macroeconomic imperatives of FY27. India’s fiscal consolidation path, infrastructure investment and the reform record of recent years provide the foundation,” he said. Nageswaran called India’s exposure to the West Asian crisis structural and cautioned that the “readings” are not of a temporary shock that will self-correct when the situation stabilises. “They are the early-stage consequences of a sustained disruption to one of the world’s most critical energy and commodity corridors,” he added. Besides, he also highlighted four structural shifts reshaping the global economy – geo-economic fragmentation, technology bifurcation, the energy transition being used as industrial policy and the permanent repricing of geopolitical risk. He stressed that the global economic architecture that shaped trade and capital flows for decades is undergoing a “structural challenge” rather than a temporary disruption, and India must prepare for a prolonged phase of geopolitical fragmentation, technology bifurcation and elevated energy risks.“What we are experiencing is not a crisis within the system. It is a structural challenge to the organising principles of the system itself.” At a separate session, Nageswaran said large firms must play a bigger role in easing working capital burden of micro & small enterprises by adopting timely payments and stronger integration of smaller firms into formal credit systems.
