Mumbai: Billionaire banker Uday Kotak on Tuesday cautioned that Indians must prepare for the worst as the full impact of the oil price surge on account of the war in West Asia is imminent.
At an industry event in New Delhi, Kotak, who founded the Kotak Mahindra Bank, said that one should prepare for paranoia before the event, and hope that tough times do not arrive or persist.
“We must prepare for the worst. It is about preparation, being ready for tough times, rather than waiting for the shock to hit us.”
Kotak said that India has not seen the impact in the past two months of the West Asia war, in terms of energy price transmission. “It is coming, and it is coming big,” warned, days after Prime Minister Narendra Modi appealed to citizens to curb oil and gold consumption amid growing economic distress due to the war.
India has kept pump prices largely unchanged for over 18 months now. The retail price of petrol in Delhi was at ₹94.77 per litre on 12 May, unchanged since 30 October 2024 when rates were raised by 5 paise per litre, per data from the government’s Petroleum Planning & Analysis Cell. The government has kept retail prices unchaged despite crude oil prices surging to $120 a barrel amid supply disruptions caused by the closure of the Strait of Hormuz.
However, that transmission in retail prices is expected now, especially after Modi called for certain voluntary austerity measures. On Sunday, Modi urged citizens to cut discretionary imports, postpone foreign travel, revive work-from-home practices, reduce fuel consumption and avoid buying gold at least for a year, whether as a store of value or as an ornament, to conserve foreign exchange reserves. He reiterated his appeal on Monday.
on 11 May that India’s current account deficit (CAD) is expected to widen sharply in the current financial year as prolonged disruptions in the Strait of Hormuz drive up crude prices, with economists warning that voluntary austerity measures may offer only limited relief.
“Think about a consumer with limited income, having to spend more directly on fuel and indirectly on other items for fuel, dependent on fuel. The shock is coming,” said Kotak.
He said that India had the inventory and the ability for oil companies to be the shock absorber. In fact, petroleum minister said in a tweet on Sunday that oil marketing companies (OMCs) were incurring losses of up to ₹1,000 crore per day. India currently has 60 days of crude oil, 60 days of natural gas and 45 days of LPG rolling stock, Mint reported on Tuesday, citing a government statement.
Import dependence
India imports 85-90% of its crude oil requirements, making it the world’s third-largest oil importer. Its crude oil import bill was $174 billion in FY26, up from $137 billion in FY25.
Meanwhile, on the changing world order, Kotak said that the world in pre-1945 was extremely “tribal” and one can see that the “tribal mindset (is) back in our lives”.
“It is about territory, it is about ownership, it is about seeking rents from assets on the one hand, and of course, there is this whole which is changing the non-tangible side separately. So, you’re living in a world where you’re seeing a significant control over the world’s tangible and intangible assets getting concentrated in a few hands,” said Kotak.
He said there is a tendency in most people to either be excessively optimistic about how things will play out, or excessively pessimistic, whereas one needs to be real, strategic, and smart.
“In a tribal world, what matters is control over assets, a strong balance sheet supported by a P&L (profit and loss) in a country.”
Therefore, Kotak said, the balance sheet and profit and loss account of a country needs to get much stronger, and the ability to generate revenues by a country through its resources or its companies will determine the destiny of each country.
“The United States is powerful not just because of the reserve currency. The United States is powerful because it has extremely powerful companies. We cannot live our lives without a WhatsApp or a Microsoft or a cloud service or an Apple phone,” said Kotak.