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Explained: Will Russia Ukraine war Impact on India? Know What it Means

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Effect of Russia Ukraine War on India: On February 24, 2022, Russia declared war on Ukraine with the announcement of a military operation in the neighboring country. With the world battling a deadly pandemic, Russia’s latest move will add further difficulties to the recovering economies of various countries across the world, including India. The Russia-Ukraine war caused a major loss in the stock market in a day that led to 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 reduce the damage caused to the Indian economy by the war.

What will be the impact of the Russo-Ukraine war on India?

India imports more than 80% of its oil requirement, however, the share of oil imports in its total imports is about 25 percent. This is worrying, as the Russia-Ukraine war could lead to a rise in oil prices, which would pose further risks to India’s rising inflation.

The rise in oil prices will also have an impact on the current account deficit. It is the difference between the prices of imported and exported goods and services.

Rise in inflation

The rise in oil prices as a result of the Russia-Ukraine war will have a direct impact on freight traffic, making food items such as fruits, vegetables, oil and pulses more expensive.

If inflation in India rises, it will exceed projected figures and India’s central bank will be forced to increase rates.

Crude oil price hike

If experts are to be believed, then the price of Brent crude oil can increase up to $105 per barrel. As India imports crude oil, it will be at higher prices, the effect of which will be seen in the form of price rise.

It is also likely to have an impact on India’s metal sector, which is exported in large quantities to Russia. However, if sanctions against Russia continue and metal imports are banned, it will result in a major economic problem for India.

India’s gas imports from Russia: what do the figures say?

According to statistics, India imports 0.20% of gas from Russia. Recently, Gas Authority of India Limited (GAIL) has also signed an agreement with Gazprom for LNG.

Under this, there has been an agreement between the two countries to import 2.5 million tonnes annually for a period of 20 years. However, which provides some relief, sanctions imposed by the United States on Russia do not include a ban on oil and gas exports.

Where is India on Russia-Ukraine dispute?

India has so far maintained a neutral stand on the Russia-Ukraine war and has also appealed to both countries to resist.

However, in a telephonic conversation with Putin on February 24, PM Modi called for a halt to violence in Ukraine and the identification of a diplomatic and peaceful path to find a solution to Russia’s conflict with NATO.

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