Russia Ukraine War Impact on India: Russia on February 24, 2022, declared war on Ukraine with the announcement of a military operation in the neighboring country. With the world struggling with a deadly pandemic, the latest move by Russia will only add more difficulties for the recovering economies of various countries around the world, including India. Russia Ukraine war in a day resulted in a major loss in the stock market which further prompted an emergency meeting between Prime Minister Modi and Finance Minister Nirmala Sitharaman on the evening of February 24. The Government, reportedly, is trying to come up with strategies that can minimize the loss that the war can bring on the Indian Economy.
How Russia-Ukraine war will Impact India?
India imports more than 80% of its oil requirement, however, the share of oil imports in its total imports is around 25 percent. This is worrisome, as the Russia Ukraine war can lead to rising in oil prices which will further pose risk to India’s rising inflation.
The rise in oil prices will also have an impact on the current account deficit. It is a difference between the values of goods and the services imported and exported.
Rise in Inflation
The increase in the oil prices resulting from the Russia Ukraine war will have a direct impact on the freight movement because of which food items such as fruits, vegetables, oil, and pulses, among others are likely to be expensive.
If inflation rises in India, it will increase beyond the projected figures and India’s central bank will then be forced to increase the rates.
Increase in Crude oil prices
If the experts are to be believed, the prices of Brent Crude Oil are likely to increase to $105 a barrel. As India imports Crude Oil, it will become at expensive prices, the effect of which will be seen in the form of a price rise.
The impact is also likely to be on the metal sector of India which is exported in a good amount to Russia. However, if the sanctions against Russia continued and metal imports are banned, it will result in a major economic problem for India.
India’s gas imports from Russia: What the data says?
As per the data, India imports 0.20% of gas imports from Russia. Recently, the Gas Authority of India Limited (GAIL) has also signed an agreement with Gazprom for LNG.
Under this, an agreement has been signed between the two countries to import 25 lakh tonnes annually for the period of 20 years. However, in what provides some relief, the sanctions on Russia imposed by the United States do not include a ban on the oil and gas exports.
Where is India on Russia-Ukraine dispute?
India has till now maintained a neutral stand on Russia Ukraine war and has also appealed to both countries to exercise resistance.
However, PM Modi in a telephonic conversation with Putin on February 24 appealed to stop violence in Ukraine and also asked to identify a diplomatic and peaceful path to find the solution to Russia’s conflict with NATO.