In this Russia-Ukraine ongoing war situation, India is adopting a balanced approach on the similar lines of non-alignment during the cold war. India abstained from United Nations Security Council voting on 30 January 2022 against the Russian invasion.
Nevertheless, according to strategic experts, it will be a danger to the foreign policy narrative of India. In this globalized world, India cannot escape this crisis. The most affected areas are Petroleum, Gold, Natural gas, Oil and Stock Markets.
Nowadays crude oil prices spike to 115$ because Russia is the third-largest producer of crude oil is 13% of global crude oil production. India imports 80% of crude oil.
As a result of high prices in the world, petroleum prices will surge in a few days. International flight prices may shoot by 25-45% more expensive.
When Russia declared war against Ukraine on 24 March, Sensex crashed by 2700 points, people started panic-selling and in a few minutes, 7.5 lakh crore of investors’ wealth was wiped out from the market. The next few months are going to be volatile for the market.
Sunflower oil prices are also on a spike because last year India imports 1.89 million tons of sunflower oil and 74% of this comes from Ukraine. Also, Ukraine contributes as a top importer of Indian pharmaceutical products.
This scenario makes a spike in inflation and the current account deficit. 10% increase in petroleum prices and currency depreciation will lead to 42 basis points (bps) increase in retail inflation and 104 bps in wholesale inflation.
There is a slim positive in a trade world that Ukraine and Russia are huge grain producers. The vacuum from this conflict can be filled by India by selling wheat in the international market.
Published by – Kiruthiga K
Edited by – Kritika Kashyap
