New Delhi, March 30 -- The surge in crude oil prices due to the prolonged US-Iran war has stoked fears of high inflation and rattled global financial markets. The Indian stock market is also reeling under heavy selling pressure and sustained outflow of foreign funds as the risk-appetite remains weak.

Economists estimate that every $10 per barrel increase in crude oil prices widens India's current account deficit (CAD) by 35-50 basis points (bps) of GDP, raises headline CPI inflation by 20-25 bps through higher fuel and transportation costs, dents GDP growth by 15-20 bps, and exerts depreciation pressure on the rupee.

Against this backdrop, the crude oil price shock is expected to prompt policy responses from the government aimed at stre...