A version of this essay has been published by rediff.com at https://www.rediff.com/news/column/gulf-war-crisis-why-india-will-take-a-huge-hit/20260511.htm

In the heat and dust of elections, many of us have forgotten that there is a war going on. But the PM’s warning about sacrifices and conservation reminds us that this essentially unwinnable war, and the on-again, off-again negotiations to bring it to a closure, are going to hit every one of us in our wallets.

On 30th April, the Pentagon announced that the US had so far spent $25 billion on the West Asia war. This is a staggeringly huge number, and I was startled because I had casually thrown around this number as the ultimate cost of the war for all parties. Clearly I underestimated the damage, if this is the US’ cost alone. Add the other frontline states, and then the untold misery and cost imposed on all of us innocent bystanders. And it’s not over yet by any means.

Pete Hegseth, the US secretary of war (self-fulfilling prophecy, isn’t it, they changed the name from secretary of defense, and lo! they went to war immediately thereafter) bristled at the idea of a quagmire, according to The Economist. But I am old enough to remember Vietnam, and then Afghanistan. These forever wars are easy to get into, but hard to get out of.

Indeed, the war has become not only an impasse, but also a charade. Even considering how the narrative gets bizarre from all sides during every war, this one seems especially messed up. So much so that there literally is no point in paying attention to the day-to-day events, because they don’t seem to make much difference. Except of course, when the price of Brent crude hits $120, as it did on April 30th, twice what it was before the war. Ouch! And Hormuz is still closed.

India is reeling under a heatwave, and we live under the Damocles’ sword of power cuts. Kerala announced a half hour of rolling cuts (anodyne euphemism: “load shedding”) every night, but they will not tell you when or where the cuts will be. This is like the Malayalam proverb: “the guy who got hit by lightning was then bitten by a snake”. Incidentally, there’s been a number of deaths from snakebites in Kerala as the reptiles enter houses seeking cooler temperatures.

If this El Nino weather holds up, India’s assumptions about load (maximum 270 GW) will be challenged: we hit a record on April 25th of 256 GW peak demand, and the fact that the grid didn’t collapse is admirable, but being so close to the maximum is worrying. In Kerala, the grid cannot absorb the solar electricity produced by many households during the day because the Electricity Board did not purchase enough storage batteries: so much for on-grid.

I am also fairly confident that once the elections are over, the government will be forced to increase fuel prices. Petrol has held steady at pump prices of Rs. 107.45/liter for a few years, but as crude oil prices have doubled, I see an inevitable rise not of Rs. 28 or so as speculated, but Rs. 50-100 based on how much inflation the Reserve Bank is willing to tolerate. In passing, I remember seeing somewhere that petrol prices have reached Pak Rs. 500/liter in that country.

Therefore I have stopped paying much attention to the daily press releases and JUST IN, BREAKING NEWS types of ‘analysis’ (some of the most prominent of these are clear AI slop, possibly manufactured by Chinese troll farms). The big picture is that the Straits of Hormuz remain blocked, the amount of oil and gas coming from the Persian Gulf remains diminished dramatically, and recovery may take months, if not years, even if the strait is unblocked.

The chances are increasing that this will become a protracted war, as the principals are standing by their maximalist positions, where this is little reason to believe they will be able to arrive at a via media and a lasting ceasefire.

It is not business as usual. This is the biggest energy shock since 1973, and as always, it is developing countries that will be most seriously affected. India is going to take a large hit, with inflation rising by, say, 2%, and GDP growth falling from 7+% to 6%.

There are several things India needs to do urgently:

* Strive for self-reliance (“Atmanirbhar”) in a variety of areas

* Diversify its sources of hydrocarbons to other geographies eg. Africa, South America, Central Asia (through Chabahar), and accelerate exploration of its own (offshore and onshore) blocks as Mumbai High and Assam fields are aging rapidly

* Pursue other forms of energy:

* Renewables

* Coal, including carbon sequestration

* Biofuels

* Nuclear (both SMR and FBR)

* Shift households from LPG to LNG, including tapping Krishna Godavari wells, coal gasification, biomass

Especially at a time when electricity demand for new industries (eg. generativeAI data centers, semiconductors) is ramping up, it is important for India’s manufacturing rise to ensure that this does not become a constraint. From a consumer perspective, increased affluence brings increased electricity demand.

In addition, the Indian migrant worker population of about 10 million in West Asia, and their inward remittances of some $40-$50 billion per annum (total of $120 billion globally) may be increasingly under pressure if oil/gas production does not go back to pre-war levels.

There is one more factor: India needs military muscle. As I said about Pax Indica, the Indian Ocean needs a strong, impartial facilitator of trade in the Hormuz to Malacca sea-lanes, and India is best placed to do this, harking back to Rajendra Chola re-opening Malacca in 1025 CE. But this requires three things:

* Major container ports: Trivandrum (Vizhinjam), Vadhavan, Great Nicobar (Galathea Bay)

* The ‘switch’ to ease multiparty, multi-protocol trade: the India Stack

* Security: three aircraft carrier groups, two dozen SSBNs, SSNs, AIP diesel submarines

This is the time for India to plan forward fully, with the goal of Atmanirbharata, and energy security. The Persian Gulf is no longer a reliable source. The war is indeed a quagmire.

950 words

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