Government Considers Additional Support for MSMEs Amid West Asia Crisis

India Government Considering Additional Relief Measures Amid West Asia Crisis

Key Highlights

• The Indian government is considering additional relief measures for vulnerable segments, including the MSME sector, if the West Asia crisis persists.
• Rising global crude prices and supply disruptions are impacting the domestic economy, with crude oil prices increasing by nearly 50% since February 28.
• USD 119 per barrel was the highest international oil price earlier this month, before easing to around USD 100 per barrel.

Government Interventions

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• The Centre has reduced excise duty on petrol to Rs 3 per litre and exempted diesel from duty to mitigate the impact of rising global oil prices.
• Export duties on diesel and aviation turbine fuel (ATF) have been reintroduced to improve domestic availability amid tightening supply conditions.
• The Rs 497 crore RELIEF scheme has been introduced to address elevated freight costs, higher insurance premiums, and war-related risks faced by exporters.

Economic Review

• The Monthly Economic Review highlights emerging risks to economic growth due to the West Asia crisis, with higher input costs and supply constraints affecting various sectors.
• Chief Economic Advisor V Anantha Nageswaran has emphasized the need for targeted relief to affected businesses and households while creating fiscal space for long-term needs.

Macroeconomic Backdrop and Policy Stance

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• India's strong macroeconomic fundamentals and domestic demand may help cushion the impact of external shocks.
• The government has been recalibrating fiscal and trade measures to address supply disruptions, stabilise prices, and support exporters and small businesses amid the evolving geopolitical situation.