During a recent event hosted by the Confederation of Indian Industry (CII), India's Chief Economic Advisor, V Anantha Nageswaran, underscored the significant impact of the ongoing West Asia crisis on India's economy. He described the situation as a live balance-of-payments stress test that directly affects inflation, the current account deficit (CAD), and exchange rates. Nageswaran's comments follow Prime Minister Narendra Modi's appeal to citizens to judiciously manage their consumption of petrol and diesel, as well as to refrain from purchasing gold and traveling abroad, in an effort to mitigate economic repercussions. The International Monetary Fund (IMF) has projected that India's CAD will increase for four consecutive years, extending to 2027-28. To address this looming crisis, experts suggest that some demand deflation may be necessary to prevent the situation from escalating further. Understanding the dynamics of India's current account and external balance issues is crucial in evaluating the effectiveness of the Prime Minister's recommendations.