Russia-Ukraine crisis: Impact on Indian economy

 Russia-Ukraine crisis: Impact on Indian economy


News updates: Russia-Ukraine war

Deaths-at about 15T

Non-fatal injuries-about 1.9T

Displaced-at about 30L

Buildings destroyed-at about 1.7T

Property damage-$12TCr

In Eastern EU, Ukraine: Entered 21 days the war has been going on. Affected human wealth, over 2.6 million people have been replaced from Ukraine and more than 15000 have died according to the UN tally which was estimated 2 days back. Russia’s military forces bother Ukraine’s capital region and other major cities Wednesday.

As the Ukraine-Russia conflict exaggerates, it may have an impact on the Indian economy’s growth, in the long run, economists have said.

If this happens, then in the long run the country’s economic development is also likely to slow down, Parekh noted. At the same time, he said that prices of other goods which India imports, too will rise in the international market.

Beyond the suffering and humanitarian crisis from Russia’s invasion of Ukraine, the entire global economy will feel the effects diminish the growth and raise the price. Parekh said further that all this will have a direct bearing on the Indian economy, as India imports oil from Russia and sunflower oil from Ukraine. will have an effect on the country’s import bill added Mr Sinha.

“Outstanding due to this pressure on the global economy, demand may be impacted which could affect our exports too,” Mr. Parekh observed.

India rating report says the ongoing crisis in Ukraine is set to push the country’s import bills beyond the USD 600 billion mark this fiscal, given India’s import dependence on crude oil, natural gas, gems and jewellery, edible oils, and fertilizers, which can lead to a spike in inflation and current account deficit, and a falling rupee, warns a report.

Russia and Ukraine are major cargos producers, and disruptions have caused global prices to soar, especially for oil and natural gas. Food costs have flown, with wheat, for which Ukraine and Russia make up 30 percent of global exports, reaching a record.

In its second advance evaluations of national accounts, the National Statistical Office (NSO) has projected 8.9 percent economic growth in 2021-22, which is lower than its first advance estimates released in January. At that time, NSO had projected 9.2 percent growth for 2021-22 as against a contraction of 6.6 percent in 2020-21.

In the third quarter of the current fiscal, GDP growth stood at 5.4 percent, lesser than the 8.4 percent growth seen in the second quarter.

Rating agency ICRA has also said in a report that the short-term effect of Russia’s invasion of Ukraine on India will be over inflationary pressures subsequently the country is dependent on imported oil. Some sectors like oil and gas and together ferrous and non-ferrous metals can gain through this trend, while the ones which depend on oil as a key input, like chemicals, fertilizers, gas utilities, refining, and marketing, will have a negative impact.

The ongoing geopolitical crisis between Russia and Ukraine will impact Indian economies, but the impact will be polarized across the country and also more probably all around the world.

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Megha Gadad

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