West Asia conflict threatens vital arteries of global energy: Nirmala Sitharaman

The escalation of the West Asia conflict has evolved from a regional security concern into a systemic tremor, threatening the vital arteries of global energy and hardening the lines of a new, multi-polar world order, Finance Minister Nirmala Sitharaman said on Monday.

Speaking at the golden jubilee celebration of the National Institute of Public Finance and Policy (NIPFP), she said that while the acronym VUCA was coined in the late 1980s to describe a post-Cold War world, it has found its truest and most-unsettling relevance in the last decade.

“I wish we could relegate this term to the history books, yet it has become the only honest vocabulary for our present reality. It is what it is: a world of Volatility, Uncertainty, Complexity, and Ambiguity, all at once,” Sitharaman added.

Referring to the US tariffs and geopolitical uncertainties, Sitharaman said, “the year 2025 was monumental in more ways than we initially thought.

Trade fragmentation has introduced severe uncertainty into global supply chains. This led to sharp downward revisions in global growth forecasts, but the year ended more optimistically than previously perceived, particularly for India.”

“This current year is even more challenging, as we move from a landscape of 'shocks' to one of permanent volatility,” she remarked.

She claimed that India’s fiscal position is better than other major economies. “Our general government debt-to-GDP ratio (which includes states’ debt), at approximately 81%, is the lowest among major economies after Germany,” she said.

She added, “India is the only major economy where the IMF projects this ratio to fall significantly — to 75.8% by 2030 — while the debt outlook for the advanced economies such as the US, China, Germany, and others is projected to worsen.”

India’s external debt-to-GDP ratio stood at 19.1% as of September 2025 — one of the lowest in the emerging market world. India's forex reserves, at over $688 billion (as of March 31, 2026), provide import cover of nearly 11 months — a substantial buffer.

Sitharaman said India’s strong fiscal position gives the RBI room to lower policy interest rates.

“India has fiscal space — room to maintain our capex programme, room for the RBI to cut rates, room to offer targeted support to affected sectors,” she said.

“This is the dividend of a decade of fiscal discipline. This is the strategic value of fiscal prudence that pays dividends across decades,” she added.

The FM noted that the global public debt has surged to $106 trillion, exceeding 95% of global GDP. As per IMF, the US has a debt-to-GDP ratio of 125% in 2025, with Japan at a staggering 235%. Many advanced economies that spent decades running expansionary fiscal policies now find themselves with severely constrained policy space precisely when they need it most. “Against this backdrop, India continues to stand out,” she remarked.