India Ramps Up Domestic Oil and Gas Production Amid Middle East Crisis: RBI Governor

India is ramping up domestic production of oil and gas while diversifying import sources to counter the impact of the ongoing West Asia crisis, Sanjay Malhotra said during an address at Princeton University. The Reserve Bank of India governor highlighted the country’s efforts to safeguard energy security amid global uncertainties.

Malhotra noted that the crisis in West Asia has significant implications for India, as the region accounts for a substantial share of the country’s trade and energy needs. He pointed out that nearly half of India’s crude oil imports and a large portion of remittances originate from the region, making it crucial for policymakers to respond proactively.

To manage the situation, India has increased domestic oil and gas production and expanded its network of import partners. While the country currently maintains adequate oil reserves, Malhotra acknowledged that there has been some rationing of gas supply for industrial use due to pricing pressures and supply constraints.

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The governor also stated that both the government and oil marketing companies have absorbed part of the rising costs of oil, although some of the increase in gas prices has been passed on to consumers. He emphasized that such measures are necessary to balance economic stability with the realities of global supply disruptions.

Highlighting India’s economic resilience, Malhotra said the country has recorded an average growth rate of 6.1 percent over the past decade, outperforming the global average. He attributed this performance to strong policy frameworks, sound fiscal management, and credible institutions that have supported steady growth even during periods of global uncertainty.

Addressing the broader policy outlook, Malhotra stressed the importance of a cautious and flexible monetary approach in dealing with supply shocks. He said the Reserve Bank of India remains in a “wait-and-watch” mode, maintaining a neutral stance while closely monitoring inflation and growth dynamics to ensure long-term economic stability.

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