India shielded consumers from oil price shock during West Asia crisis, says government

As the West Asia crisis rattled global economies with surging oil and gas prices since the US-Iran war began on February 28, the defining choice of the crisis for India was to absorb the cost at the level of the State and the public sector marketing companies rather than the household, according to the government, as no comparable economy chose to shoulder a burden of this scale on behalf of its consumers.

The contrast with India is sharpest among the import-dependent economies that slid from price pressure into physical shortage.

Sri Lanka, still recovering from its 2022 collapse, reintroduced mandatory petrol rationing within a fortnight and moved the public sector to a four-day week, its registration portal crashing as millions rushed to sign up.

Pakistan closed schools, shortened the working week and played its cricket behind closed doors to keep traffic down.

Myanmar combined odd-even driving with QR-code rationing, Bangladesh posted troops at its oil depots, and Ethiopia routed fuel to security forces and essential industry, suspending distribution altogether in Tigray.

The wealthier importers avoided rationing by leaning on their reserves and their budgets. Japan ran down its strategic stock and subsidised the pump, South Korea capped prices for the first time in thirty years, and across the European Union, 22 of its 27 members had together spent over nine billion euros on relief by mid-April, with Germany cutting its fuel tax and Hungary releasing reserves that were soon reported running low.

Even oil producers were not spared at the pump -- the United Arab Emirates (UAE) saw diesel rise about 85 per cent and Nigeria’s citizens squeezed by transport costs despite the windfall to its exporters.

Where the market was left to clear the rise was steep, diesel up about 80 per cent in New Zealand, petrol up a fifth in the United Kingdom and California past five dollars a gallon.

The International Energy Agency’s largest-ever coordinated release, about four days of world demand, signalled how grave the supply position was judged to be.

“India did none of this. It declared no emergency, rationed no household, shortened no working week, closed no school and ordered no driving ban. The only curbs it applied were on commercial and bulk LPG and on the export of diesel and aviation fuel, and these were to protect the domestic household, allocation rather than rationing,” according to Petroleum Ministry.

After an initial scare on cooking gas, the household cylinder kept arriving. Retail pumps stayed open, and the rise at the pump was the smallest of any major economy.

India was then among the first to unwind its measures, the commercial and bulk LPG restrictions lifted by June 25. The contrast is the clearest measure of the dividend of a decade of energy-security investment and of strategic autonomy in practice, according to the ministry.

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