(Image source from: Bloomberg.com)

The government may need to increase the prices of petrol and diesel if the situation in the Middle East continues for a long time, stated Reserve Bank Governor Sanjay Malhotra. While speaking at a conference in Switzerland on Tuesday, Malhotra pointed out that the government has been careful with its spending and is working towards improving its financial situation. The ongoing conflict in the Middle East and the blockage of the Strait of Hormuz have affected the supply of oil and gas, leading to higher energy costs. Malhotra noted that India heavily relies on importing energy and fertilizers, and these current issues are starting to have effects on the country.

When discussing the crisis, the governor of the Reserve Bank of India (RBI) mentioned that if it persists for an extended period, it will only be a matter of time before the government starts to increase these prices. Despite the Middle East conflict beginning on February 28, the government has not raised retail prices for petrol and diesel. Prime Minister Narendra Modi has urged for a decrease in fuel usage and the consumption of cooking oil, among other measures to save foreign currency. The rupee has sharply declined and is now valued below the 95 mark against the US dollar.