India’s Finance Minister Nirmala Sitharaman has cautioned that the ongoing conflict between the United States and Iran is no longer a regional issue but a major threat to the global economic system.
Speaking at the golden jubilee event of the National Institute of Public Finance and Policy in New Delhi, Sitharaman described the crisis as a “systemic tremor” with far-reaching consequences.
Global Economy Faces ‘Permanent Volatility’
The Finance Minister said the world is shifting from isolated economic shocks to a phase of continuous instability.
According to Sitharaman, the current global environment is defined by:
- Volatility
- Uncertainty
- Complexity
- Ambiguity
She noted that escalating tensions in the Middle East are disrupting key energy supply routes and accelerating the emergence of a multipolar global order.
Series of Global Disruptions Intensify Risks
Sitharaman highlighted multiple global events that have reshaped the economic landscape in recent years, including:
- The COVID-19 pandemic
- The Russia-Ukraine War
- Rising geopolitical tensions in the Middle East
- Trade uncertainties linked to policies under Donald Trump
She added that these disruptions have weakened global growth projections and strained supply chains.
Rising Global Debt a Key Concern
Citing data from the International Monetary Fund, Sitharaman pointed out that global public debt has surged to approximately $106 trillion—over 95% of global GDP.
Key figures include:
- United States debt-to-GDP ratio: ~125% (projected for 2025)
- Japan debt-to-GDP ratio: ~235%
She warned that many advanced economies now have limited fiscal space to respond to future crises.
India’s Economic Position Remains Stable
Despite global uncertainty, Sitharaman emphasised that India remains relatively well-positioned.
Key indicators:
- Debt-to-GDP ratio: ~81% (projected to decline to 75.8% by 2030)
- External debt-to-GDP: 19.1%
- Forex reserves: Over $688 billion (as of March 2026)
- Import cover: Around 11 months
These figures reflect strong macroeconomic fundamentals compared to many major economies.
Escalating Conflict Raises Global Concerns
The conflict between the United States and Iran continues to intensify, with no immediate signs of de-escalation.
Donald Trump has issued a deadline to Iran to reopen the Strait of Hormuz, a critical global oil route. Failure to comply could result in further military action targeting key infrastructure.
Iran has rejected temporary ceasefire proposals, demanding long-term guarantees before any agreement.
Meanwhile:
- Military strikes and counterattacks continue across the region
- Over 13,000 targets have reportedly been hit
- Tensions have spread to Gulf nations like Bahrain and the UAE
Global Call for De-escalation
The United Nations Security Council is expected to vote on a resolution to stabilise the situation and reopen vital energy corridors.
Global leaders have urged restraint, warning that continued escalation could deepen economic instability and disrupt global energy markets.
