Think ahead: Beyond an economic stabilization fund, India must tackle its energy vulnerability

The government’s ₹57,300 crore economic stabilization fund has come at the right time, allowing its fiscal math to adjust to sudden geopolitical headwinds and supply chain disruptions. This is a textbook policy response, as the fund is designed to act as a shock absorber.

It could help diffuse external economic jolts of the Iran war.These are extraordinary times and the Centre should place pain reduction for households over the accuracy of its fiscal arithmetic, even though finance minister Nirmala Sitharaman told Parliament that unplanned expenditure will not unsettle its deficit target for 2025-26. The stabilization fund, introduced on 13 March through a supplementary demand for grants, affords the government headroom to meet the war-driven spike in energy prices while holding down price-lines for families across the country.The Centre also sought Parliamentary approval for a separate fund to neutralize a rise in fertilizer prices and restore supplies for the farm sector.

The fund’s adequacy is uncertain, like much else right now, but shockwaves from the war and the hardships caused by them hold out some important lessons for India’s economic strategy and management. First, we must undo India’s lackadaisical approach to reducing energy import dependence by aggressively exploring and exploiting hydrocarbon reserves in our own backyard.

It is nobody’s case that this is an environmentally flawed idea, not to mention how anachronistic it might seem in this day and age; but given the economy’s reliance on oil and gas for the foreseeable future, the government should draft a new hydrocarbon policy that opens up fresh reserves for exploitation at optimal cost. The entire chain—surveys, exploration, drilling, refining and