The Indian government is “not insulated” from how states react to the West Asia crisis, Chief Economic Advisor (CEA) V Anantha Nageswaran said, adding that demand for more funds due from fiscally-stretched states at a time of external shock adds to the Centre’s own challenges. Speaking at a seminar on state finances organised by the Institute of Economic Growth on Monday, Nageswaran said any honest assessment of state finances must be against the challenging global backdrop. And while the shocks don’t originate at the state level, that’s where they are absorbed, with stress landing on areas such as food and fuel subsidies, fertiliser allocation, agricultural support, and employment programmes. “In other words, states are not insulated from what happens in the Strait of Hormuz.…