India must map, monitor economic vulnerabilities in energy, food, other areas: EAC-PM chairman
The chairperson of the Economic Advisory Council to the Prime Minister (EAC-PM) has called for India to systematically map and monitor its economic vulnerabi...
What Happened
- The chairperson of the Economic Advisory Council to the Prime Minister (EAC-PM) has called for India to systematically map and monitor its economic vulnerabilities, particularly in energy, food, and other strategic sectors.
- The recommendation emphasises building "physical buffers" beyond the conventional reliance on foreign exchange (forex) reserves and foodgrain stocks — specifically advocating for expanded strategic petroleum reserves (SPR) and stockpiles of essential commodities.
- The call comes against the backdrop of significant geopolitical stress: the West Asian conflict disrupting energy supply chains, the Indian crude basket breaching $120 per barrel in April 2026, and import dependence of ~90% for crude oil and ~47% for natural gas.
- India's SPR currently provides only ~9.5 days of crude import cover, against the IEA benchmark of 90 days.
Static Topic Bridges
Economic Advisory Council to the Prime Minister (EAC-PM)
The EAC-PM is a non-constitutional, non-permanent body that advises the Prime Minister and the central government on economic policy matters. It is an independent body that provides objective analysis of economic issues confronting the country. Unlike the NITI Aayog (which replaced the Planning Commission in 2015), the EAC-PM has no planning or resource-allocation role — it is purely advisory. Its recommendations carry persuasive rather than binding authority.
- EAC-PM reports to the Prime Minister's Office and functions through its secretariat.
- It was reconstituted in September 2017 with a broader mandate.
- Distinct from NITI Aayog: EAC-PM advises on macroeconomics; NITI Aayog on long-term policy, cooperative federalism, and development strategy.
Connection to this news: The EAC-PM's recommendation to expand physical strategic buffers illustrates how advisory bodies shape macroeconomic policy, particularly in response to emerging geopolitical-economic risks.
India's Strategic Petroleum Reserves (SPR): Architecture and Gaps
India's strategic crude oil reserves are managed by Indian Strategic Petroleum Reserves Limited (ISPRL), incorporated in 2004 as a Special Purpose Vehicle under the Ministry of Petroleum and Natural Gas. Phase I facilities consist of three underground rock-cavern complexes:
| Location | State | Capacity |
|---|---|---|
| Vishakhapatnam | Andhra Pradesh | 1.33 MMT |
| Mangaluru | Karnataka | 1.50 MMT |
| Padur | Karnataka | 2.50 MMT |
| Total | 5.33 MMT |
Current utilisation stands at ~64% (approximately 3.37 MMT), providing roughly 9.5 days of import cover. The IEA recommends a 90-day emergency reserve for member countries. Phase II expansion — approved in July 2021 — targets two additional facilities at Chandikhol, Odisha (4 MMT) and expanded Padur (2.5 MMT) on a public-private partnership basis, but has faced land acquisition and funding delays.
- India imports ~85% of crude oil needs; ~40% of crude and 55–60% of LNG imports transit the Strait of Hormuz.
- India holds IEA Association status (since 2017) but is not a full IEA member; it participates in collective emergency response on a voluntary basis.
- Indian crude basket breached $120/bbl in April 2026, compressing current account and fiscal space.
Connection to this news: The EAC-PM recommendation to expand SPR is a direct response to the structural inadequacy of India's current ~9.5-day cover and the demonstrated vulnerability during the 2026 West Asia disruption.
Foreign Exchange Reserves as an Economic Buffer: Scope and Limitations
Foreign exchange reserves serve as a buffer against balance-of-payments crises, currency volatility, and import financing disruptions. India's forex reserves (managed by the Reserve Bank of India) have historically been used as the primary macro-stabilisation tool. However, forex reserves address price shocks (you can afford costlier imports) but cannot address quantity shocks (when physical supplies are unavailable regardless of purchasing power). The EAC-PM's argument for physical stockpiles explicitly addresses this limitation — when supply chains are disrupted by conflict or sanctions, no amount of forex can substitute for physical inventory.
- India's forex reserves peaked at over $700 billion in 2024.
- Adequate forex reserves are typically benchmarked at 3 months of import cover.
- The Liquidity Trap analogy applies: monetary buffers (forex) are ineffective against supply-side physical shocks.
Connection to this news: The recommendation to go "beyond conventional reliance on foreign exchange reserves" is a conceptually important policy shift — recognising that 21st-century supply shocks are physical, not just financial.
Economic Security as a National Security Concept
Economic security — the ability to maintain economic performance and welfare against external shocks — has become a central pillar of national security strategy globally. For India, this encompasses: (a) energy security (oil, gas, coal, critical minerals); (b) food security (cereals, edible oils, pulses); (c) technology security (semiconductors, rare earth elements); and (d) financial security (forex, credit ratings). The National Security Council Secretariat coordinates these across ministries. Economic vulnerabilities can be weaponised by adversaries (as "economic statecraft") — disrupting imports, restricting technology transfer, or manipulating commodity markets as instruments of coercion.
- India's import dependence: ~85% crude oil, ~47% natural gas, ~100% for several critical minerals (lithium, cobalt).
- Economic statecraft (weaponising trade and finance) is documented in UN reports and India's foreign policy discourse.
- NITI Aayog has flagged supply chain concentration risks for critical minerals in the context of the energy transition.
Connection to this news: The EAC-PM's call to "map and monitor economic vulnerabilities" is India's institutional articulation of economic security — moving from reactive crisis response to proactive risk mapping.
Key Facts & Data
- EAC-PM: non-constitutional advisory body to the Prime Minister, reconstituted in September 2017.
- India's SPR capacity: 5.33 MMT (Phase I) at Vishakhapatnam, Mangaluru, and Padur.
- Current SPR fill: ~64% (~3.37 MMT), providing ~9.5 days of crude import cover.
- IEA benchmark: 90 days of emergency reserves.
- Phase II expansion: 6.5 MMT at Chandikhol (4 MMT) and Padur (2.5 MMT) — approved 2021, delayed.
- Indian crude basket in April 2026: >$120 per barrel.
- India's import dependence: ~85% for crude oil, ~47% for natural gas.
- ~40% of crude imports and 55–60% of LNG imports transit the Strait of Hormuz.
- India's forex reserves: peaked above $700 billion, but forex cannot substitute for physical supply in a quantity-disruption scenario.