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6 Jun 2026Economy3 questions

PM Modi Chairs Key EAC-PM Meeting Amid Iran War: Navigating India's Economic Strategy in Global Turmoil

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Article summary

Prime Minister Narendra Modi chaired a high-level meeting of the Economic Advisory Council to the Prime Minister (EAC-PM) on June 6, 2026, to deliberate on measures to sustain and accelerate India's economic growth amid the ongoing Iran war and resultant global economic turbulence. The EAC-PM, a non-constitutional advisory body comprising eminent economists, serves as a key institutional mechanism for providing independent economic analysis and policy recommendations to the Prime Minister. The Iran conflict has triggered significant disruptions in global energy markets, supply chains, and trade routes — particularly in the Persian Gulf — raising concerns about oil price spikes, inflationary pressures, and export slowdowns for emerging economies like India. India imports a substantial share of its crude oil from the Gulf region and maintains significant trade and diaspora linkages with Iran and neighbouring countries, making it especially vulnerable to geopolitical shocks in the region. This meeting underscores the critical role of advisory institutions in crisis-time economic policymaking and is relevant for UPSC aspirants studying governance bodies, macroeconomic resilience, and India's external sector vulnerabilities.

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recallTests whether you read the article and retained key facts.
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applicationTests whether you can apply the concept to a new scenario.
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analysisTests whether you can reason across multiple related facts.
1Q

Sample questions — answers revealed after test

EconomyRecallEasy

Q1. With reference to the Economic Advisory Council to the Prime Minister (EAC-PM), which one of the following statements is correct?

AIt is a non-permanent, non-constitutional body that provides advisory, non-binding recommendations to the Prime Minister on economic matters.
BIt is a statutory body established under the NITI Aayog Act and functions as the principal economic policy arm of the Prime Minister's Office.
CIts recommendations are binding on the Finance Ministry but remain advisory in nature for the Planning Commission's successor body.
DIt was constituted for the first time in 2017 under the chairmanship of Dr. Bibek Debroy and has a fixed five-year term under executive order.
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EconomyApplicationMedium

Q2. Suppose a prolonged conflict in the Strait of Hormuz region causes a sustained 40% spike in global crude oil prices. A policymaker in India's Finance Ministry must assess the immediate macroeconomic consequences. Which of the following chains of consequence is most accurately sequenced for India?

ARising crude import prices → widening current account deficit → depreciation of the rupee → imported inflation feeding into domestic price levels.
BRising crude import prices → surplus in the trade account due to higher export competitiveness → rupee appreciation → deflationary pressure on domestic prices.
CRising crude import prices → immediate contraction in fiscal deficit due to higher petroleum tax revenues → reduced government borrowing → lower bond yields.
DRising crude import prices → reduction in remittances from Gulf diaspora → decrease in foreign exchange reserves → automatic stabilisation of the current account deficit.
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EconomyAnalysisHard

Q3. Consider the following statements regarding India's institutional and strategic responses to geopolitical energy shocks, in the context of the EAC-PM's advisory role and India's energy security architecture: 1. The EAC-PM, unlike the NITI Aayog, operates under the aegis of the Prime Minister's Office and its mandate is specifically focused on providing economic counsel to the Prime Minister rather than the broader cooperative federalism agenda. 2. A geopolitical-induced oil price spike unambiguously benefits India's fiscal position because higher petroleum product prices increase excise duty and cess collections, thereby reducing the fiscal deficit. 3. India's National Green Hydrogen Mission and the 500 GW renewable energy target by 2030 function as structural long-term hedges against geopolitical energy vulnerabilities of the kind created by Strait of Hormuz disruptions. 4. The non-binding nature of EAC-PM recommendations is a constitutional limitation derived from its status as a non-statutory body. Which of the statements given above are correct?

A1 and 3 only
B1, 3 and 4 only
C2 and 3 only
D1, 2 and 3 only
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