West Asia conflict: Centre to continue with calibrated, targeted relief measures

As the West Asia war throws up fresh challenges for the Indian economy, the government is likely to continue with a calibrated strategy to address problems as and when they arise. Sources indicated that for now, a blanket relief package on the lines of the Covid-19 pandemic package may not be in the offing.

Pointing out that seven empowered groups of secretaries have been set up, sources said that these groups have been able to flag challenges arising from the West Asia war, which have also been addressed subsequently.

“These continuous meetings and discussions will continue, and more relief measures, as and when needed, will be provided for sectors and segments,” the sources said.

In recent weeks, the government has announced a number of measures to alleviate the impact of the US-Israel and Iran war on the domestic economy, including customs duty exemption to critical petrochemicals for a period of three months as well as a reduction in the excise duty on petrol and diesel by Rs 10 per litre. The measures are seen to cost about Rs 1.5 lakh crore this fiscal.

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Sources further indicated that the Centre has adequate fiscal space that would cushion the impact of these measures, and if needed, the fiscal consolidation roadmap will be revisited. “It is still early days to revisit the Budget math. We need to roll out whatever measures are needed to ensure that the economy and people remain largely insulated from the shocks arising out of the war,” the source underlined.

Underlining that surging crude oil prices are a challenge, sources said the government has been undertaking an impact analysis of the surging crude oil prices at different price scenarios. “We are prepared for all scenarios. A call on the fiscal consolidation roadmap will be taken at a later date,” they said, adding that if needed, the roadmap can be recalibrated to ensure faster consolidation in later years.

Noting that the current year 2026 has become even more challenging as the West Asia conflict evolved into a “systemic tremor”, Finance Minister Nirmala Sitharaman had on Monday said that India has fiscal space and room to expand capital expenditure.

As part of a new fiscal consolidation roadmap, the Union Budget 2025-26 has said the aim would be to keep the fiscal deficit in such a manner that the Central government debt is reduced to about 50% of the GDP by March 31, 2031.