For emerging economies like India, the implications of closing the Strait of Hormuz are immediate and serious. India imports about 85 percent of its crude oil needs, of which about 40 percent comes from the Middle East. This creates a structural dependency on a single chokepoint. Unlike diverse energy systems, India’s supply chain has limited redundancy.

According to the International Energy Agency (IEA) oil market report Published March 12, 2026 Global oil supply is projected to fall by at least 8 million bpd in March alone due to production shutdowns across the Gulf. This is the largest supply disruption in the history of the modern oil market. Continued disruptions in crude oil supply could lead to significant increases in crude oil prices. At oil at $130 and above, the macroeconomic impact becomes systemic for India.

The first means of transmission is inflation. Energy costs are directly involved in transportation, logistics, and manufacturing. In India, where supply chains remain cost sensitive, higher fuel prices quickly translate into higher food and core inflation. This will push the consumer price index well above the RBI’s target range, leading to a halt or reversal of any easing cycle.

The second channel is fiscal. The Indian government has historically used fuel taxes as a shock absorber. During rising crude oil prices, excise duty is often reduced to control inflation. This comes at a fiscal cost. Therefore, a prolonged oil shock will affect government revenues and also increase expenditure pressure.

The third channel is development. Higher energy prices act as a tax on consumption. Household spending has weakened, corporate margins have come under pressure and capital expenditure decisions are being delayed. Emerging markets are particularly vulnerable to such shocks because they lack the financial buffers available to developed economies.

What changes this from a cyclical challenge to a structural risk is the duration. Small disruptions can be managed. Global strategic petroleum reserves may be released. IEA can coordinate supply responses. Demand may adjust on margin.

However, data suggests that these mechanisms are inadequate for longer-term disruptions. IEA countries collectively have more than 1 billion barrels of emergency reserves, but the coordinated release could supply only 2-4 million bpd on a temporary basis. This is worthwhile for short-term shocks, but inadequate if a significant portion of the 20 million bpd flowing from Hormuz is disrupted for weeks or months.

OPEC’s spare capacity, estimated at 3-4 million bpd, provides limited relief. More importantly, this additional capacity also depends on shipping routes that are themselves constrained by the same chokepoints or limited bypass infrastructure. Saudi Arabia and the United Arab Emirates maintain partial bypass pipelines, but their combined capacity cannot completely overcome the disruption. Countries like Iraq, Kuwait and Qatar have no viable alternative.

In other words, there is very little slack in the system. For India, this lack of flexibility translates directly into insecurity. The situation becomes even more worrying in comparison to China. Over the past decade, China has systematically built up strategic petroleum reserves. Estimates suggest that China’s combined strategic and commercial reserves could cover 90 to 100 days of imports, as it holds an estimated 1.2 to 1.3 billion barrels of total crude oil. Additionally, China has diversified its supply base to Russia, Central Asia, Africa and Latin America.

India’s situation is quite weak. India’s strategic petroleum reserves currently cover about 9-10 days of consumption. Even after including commercial inventories, which could theoretically provide an additional buffer of 64.5 days, the total buffer remains below that of China. According to a recent government report, the country has more than 250 million barrels of crude oil and petroleum products. The combined reserves provide a buffer of 7-8 weeks in the country’s energy supply chain.

If the Strait of Hormuz faces disruption for a few days or a few weeks, India can manage through inventory drawdown, policy adjustment and short-term market intervention. However, if the disruption extends to late April and beyond, the situation changes fundamentally.

At that time, India would be facing the double whammy of high prices as well as limited physical supply. Refineries may face shortage of feedstock. There may be a reduction in fuel availability. The government may be forced to implement demand management measures. Inflation will rise sharply and the rupee may come under sustained pressure. Financial markets have already begun to price in macro volatility.

In contrast, China will have more room for maneuver. Large reserves allow it to smooth out supply disruptions. Diversified sourcing reduces dependence on Hormuz. State control over energy infrastructure enables more coordinated responses. These benefits are lacking in India.

Vulnerability is not just about crude oil. It is spread across the entire energy complex. In 2025, the Gulf is expected to export approximately 3.3 million bpd of refined products and 1.5 million bpd of LPG. These flows are now seriously disrupted. Refining capacity in the region has already been reduced by more than 3 million barrels per day due to the strikes and logistics disruptions.

India consumes about 1.1 to 1.2 million bpd of LPG, a large portion of which is imported from the Gulf. More than 45 percent of Middle Eastern LPG exports are directed to India, primarily for domestic consumption. Unlike industrial fuels, LPG consumption in India is linked to basic domestic needs like cooking. The ability to replace or reduce this consumption in the short term is limited. At the same time, LPG storage capacity in India is minimum. Supply chains are designed for continuous flow rather than storage. This creates a delicate balance.

There is another avenue of risk that is often underappreciated: LNG. Qatar exports about 75–80 million tonnes of LNG per year, most of which passes through Hormuz. The disruption will therefore not only impact oil markets, but also global gas markets.

For India, which is increasing its dependence on LNG for power generation and industrial use, this creates an additional layer of vulnerability. Higher LNG prices will impact power costs, fertilizer production and industrial input prices. This has increased the shock of inflation. Combined effect is a multi-layer stress phenomenon. Oil prices increased. Gas prices increased. Inflation increases. Growth slows down. Both fiscal and monetary policy are constrained.

For India, a short disruption is manageable. Medium-term disruption is painful. Prolonged disruption is destabilizing. We must remember that the oil shock of the 1970s was one of the main factors contributing to the emergency declared by Indira Gandhi in 1975. This is why the timeline matters more than the event. If the crisis extends beyond the end of April, India will find itself in a precarious situation where its limited reserves, high import dependence and constrained policy flexibility will translate into a full-scale supply shock.

The uncomfortable reality is that India is not adequately prepared for such a scenario. Emerging economies that import oil will bear the greatest burden from the closure of the Strait of Hormuz. Among them, India stands out due to its dependence on imported energy from the conflict zone and limited buffer capacity.

The Indian government’s good relations with Russia will help ease the situation. As of March 2026, Russia remains India’s largest crude oil supplier, with its share reaching 33 percent in mid-2025. Recent reports suggest Indian refineries are increasing purchases, with about 33 million barrels of Russian crude due to arrive in March 2026 after US rebates. Although Russian oil will provide some relief to India, it may not be enough in the event of a prolonged conflict.

The Iran crisis has exposed India’s energy vulnerabilities with unusual clarity. If this conflict continues, it could cause significant economic damage to India. Disruptions in the Strait of Hormuz cause energy shocks that weigh on domestic inflation, growth and financial stability. If the disruption continues beyond a limit, it will have a devastating impact on our economy and markets.

Smirn Bhandari is an investment manager and equity analyst with a keen interest in geopolitics, financial markets and global power dynamics. He has written articles in leading publications including Firstpost, Swarajya, The Wire, Newslaundry and The Quint. His writing focuses on the intersection of economics and geopolitics. The views expressed are personal.

On a cool March morning in 1977, inside the stately halls of Rashtrapati Bhavan, a brief swearing-in ceremony lasting barely three minutes changed the course of Indian politics.When 81-year-old Morarji Desai was sworn in as the country’s first non-Congress Prime Minister on March 24, 1977, it was not just a change of power, it was the first real disruption of a system that had remained largely unchanged since independence.The oath was administered by the then acting President BD Jatti.

At first glance, the ritual seemed routine, a formal transfer of power to the presidential residence. But behind its brevity lies a historic change, the end of almost decades of Congress dominance, the post-Emergency political reckoning and the beginning of coalition politics at the Centre.

1977 elections: the vote that changed everything

The general elections of 1977 were unlike any election held in India since independence.In the months before the vote, four major opposition factions – Samajwadi, Jan Sangh, Bharatiya Lok Dal (BLD), and Congress (O) came together. Janata Party.This unprecedented unity was driven by a common goal: to challenge the Congress rule under then Prime Minister Indira Gandhi and end the Emergency.The campaign gained momentum from widespread anger over the Emergency – which included forced sterilization campaigns, slum demolitions, arrests of political opponents, and press censorship.Perhaps for the first time, voters in rural and urban India were not just participating – they were abstaining.The result was decisive. Of the 542 seats, the Janata Party won 295 seats, while the Congress was reduced to 154, losing more than 200 seats compared to the last election.

Morarji Desai emerged as the unanimous choice to lead the new government.A veteran of the independence movement, Desai served as Chief Minister of Bombay (1952–1957) and Deputy Prime Minister (1967–1969).At 81, he became the oldest person to hold office as Prime Minister, a symbol of continuity at a moment of disruption.

Morarji Desai: Experienced politician sitting at the top

Morarji Desai’s rise was shaped by political currents as well as personal convictions.Born in 1896, he resigned from government service in 1930 to join the independence movement led by Mahatma Gandhi.

He was sent to jail several times and later played important roles in the Congress.During the Emergency, Desai was arrested on June 26, 1975 and spent several months in solitary confinement.His return from political prisoner to prime minister in 1977 reflects the larger story of the reset.He consistently argued that no one should be above the law, including the Prime Minister.“One must act in life according to the truth and one’s faith,” he had said – a line that defined both his politics and his moment.

Desai was later awarded the Bharat Ratna in 1991 and Pakistan’s Nishan-e-Pakistan in 1990.

Understanding the 1977 transition: What scholars say

The extraordinary change in Indian politics in 1977 did not happen suddenly. Political scientists and historians have long studied how and why India’s democracy, which appeared intact for decades, suddenly changed.Rajni Kothari: Congress SystemRajni Kothari was among the first scholars to describe the post-independence political system in India as the “Congress system”. in its original work congress system in indiaKothari points out that Indian politics in the 1950s and early 1960s was not dominated by any one party in a simple sense, but by a system in which the Congress functioned as the center of political life.Kothari argued that the Congress system contained a unique internal mechanism of political competition. Opposition parties existed, but played roles similar to pressure groups; There was very little chance of him coming to power directly. Myron Weiner: elections, emergency and democratic reformsIn his influential 1977 analysis, political scientist Myron Weiner examined the parliamentary elections that abruptly ended Congress. Weiner portrayed the 1977 election as a moment when Indian democracy corrected itself following the authoritarian precedent set during the Emergency.Weiner highlights that the Emergency was expected to strengthen Indira Gandhi’s authority. Between 1975 and 1977, the central government under Gandhiji suspended fundamental rights, imposed press censorship and used the state machinery to suppress dissent. Instead, the polls produced resounding congressional disapproval:

Yogendra Yadav: The era of four party systemBuilding on the work of scholars such as Kothari and others who have tracked Indian politics over decades, Yogendra Yadav has contributed to the understanding of how Indian party systems evolved through distinct stages. Yadav’s framework identifies four broad party-system eras in post-independence India:

Rift, Emergency and restoration of Congress

Rift between Morarji Desai and Indira GandhiThe conflict between Morarji Desai and Indira Gandhi was one of the defining power struggles in post-independence India.It began after the succession battle following the death of Lal Bahadur Shastri in 1966, when the party’s traditionalist leadership, the Congress syndicate, supported Gandhi over Desai.Desai, a senior leader and believer in conservative economic and administrative principles, represented the old faction, while Gandhi adopted a new, populist approach that consistently challenged the status quo.Tensions increased further in 1969 when Gandhiji removed Desai from the Finance Ministry. At this moment the Congress split into Congress (R), led by Gandhiji, and Congress (O), an organizational faction led by Desai and other senior leaders. Ideologically, the two leaders diverged sharply: Gandhi embraced socialist measures, including the nationalization of fourteen major banks, while Desai favored limited government intervention. Emergency: The dark chapter of democracyThe Emergency (1975–1977) was the climax of the political conflict between Gandhi and Desai. Following the Allahabad High Court’s decision to invalidate his election to the Lok Sabha, Gandhi imposed a nationwide emergency for 21 months, citing threats to national stability. Opposition leaders, including Desai, were arrested and kept in solitary confinement. During this period, the government took sweeping measures that increased its control over political and social life. Yet, the Emergency also created an unprecedented anti-Congress wave, prompting opposition parties to unite under the Janata Party banner.

Upon his release in early 1977, Morarji Desai became the face of this coalition, campaigning across the country and taking advantage of public dissatisfaction with authoritarian rule. The general elections of 1977 ultimately gave a decisive verdict in favor of Desai. Restoration of Congress: Return of Indira GandhiHowever, the Janata Party’s tenure proved unstable. Internal divisions, factionalism, and lack of united rule weakened its ability to govern effectively. Meanwhile, Indira Gandhi, although out of power, gradually regained her political base. His resurgence was marked by significant victories in the state assembly elections of Karnataka and Andhra Pradesh.Gandhi’s victory demonstrated his enduring appeal among the rural poor, minorities and women. The general elections of 1980 cemented his comeback. Gandhi’s party won a landslide majority by securing 353 seats out of 529, while the Janata Party’s seat share dropped to 41.

Could 1977 happen again?

The 1977 election remains the most striking example of a united opposition defeating a major ruling party at the national level.Ahead of the 2024 Lok Sabha elections, opposition parties attempted a similar consolidation under the Bharat Alliance.Despite coordination between more than two dozen parties, the BJP returned to power.Nearly five decades after Desai was sworn in, the country has again entered a phase of dominance, this time with the BJP raising a familiar question: Can a fragmented opposition repeat the unity of 1977?History offers both hope and caution. While 1977 proved that electoral waves can topple a strong regime, it also showed that it is not just victory but cohesion that determines longevity.1977 was a reminder that democratic systems can be reset, but only if voters, opposition forces, and institutions unite in a single moment.