How best to tackle oil shock? Dr Sajjid Z Chinoy responds

In an interview with India Today, Dr Sajjid Z Chinoy, Chief India Economist at JP Morgan, discussed the global energy shock and its impact on the Indian economy following the recent hikes in commercial LPG and anticipated domestic fuel price increases. He explained that the global reduction in crude supply by 13.5 million barrels has forced countries to deplete inventories, stating, "I hate to say, but crude prices I think at 110 are deceptively low." Chinoy noted that while India entered the crisis with strong macroeconomic indicators, the external sector remains a primary concern. He stated, "Growth will take a hit undoubtedly," as capital flows dry up and the current account widens. To navigate the crisis, he suggested that the rupee must act as a shock absorber and emphasised the need for equitable burden-sharing among households, businesses, and the government. Furthermore, Chinoy recommended building economic buffers, diversifying imports, hedging import prices, and allowing more foreign direct investment to de-risk supply chains.