Indian officials have indicated that the ongoing conflict in Iran could disrupt the country's economy as significantly as the COVID-19 pandemic did, with lasting effects. The government is drawing from its pandemic response strategies to mitigate the impact, considering a credit guarantee scheme worth ₹2-2.5 trillion (approximately $26.8 billion) to support small and medium enterprises facing challenges from gas shortages and soaring oil prices. India's heavy reliance on energy imports, particularly from West Asia, makes it vulnerable to such conflicts. The Finance Ministry has outlined various scenarios, including one where crude oil prices average $120 per barrel throughout the year. Despite the government's growth forecast of 6.8% to 7.2% for the fiscal year ending March 2027, several economists have begun to lower their projections, with Goldman Sachs predicting 5.9% growth for 2026. The combination of rising energy costs and a widening fiscal deficit is raising concerns among foreign investors, leading to nearly $19 billion in capital outflows from local markets. The Indian rupee has also faced pressure, trading at around 93.38 to the dollar. As the situation evolves, the government may need to adjust its fiscal strategies to manage the economic fallout from the conflict.