Given our high dependence on Russia for oil as well as defence equipment, it has become difficult for India to take a strong stand against Russia’s attack on Ukraine.

Although the Russian attack on Ukraine is happening thousands of kilometres away from India, the ripple effect of the attack would be felt not only on the country as a whole but would also impact every citizen in one way or the other.

With the Indian economy suffering setbacks in the recent past starting from the ill-advised demonetisation and poor roll out of the GST and then the prolonged Covid pandemic, it was expected that the economy would get back on the rails. The latest official figures show that the actual growth of GDP was not as good as expected.

While there is hope of a steady growth in the long run of various sectors which contribute to the economy, what would surely get impacted with the ongoing attack on Ukraine and the reaction by the western countries, is the spike in inflation.

India imports over 80 per cent of its petroleum products and the likely sharp increase in its global prices is expected to touch all aspects of life.

Global food prices have already risen high as the Russia-Ukraine conflict threatens to disrupt the supply of wheat and corn. The two countries account for 29 per cent of global wheat exports and 19 per cent of corn exports.

They also contribute 80 per cent of the world’s sunflower oil exports. The impact in the form of higher inflation, weaker current account and fiscal balances, and a squeeze on economic growth will be felt mostly through commodities, especially food and fuel.

The international price of crude oil has already crossed 115 dollars per barrel and is likely to go further up. Although the prices of petroleum products have not been increased over the last few weeks, these are expected to sharply go up after the end of polling in Uttar Pradesh. The increase in its price is bound to shoot up cost of transportation which in turn would impact the prices of all essential commodities.

Experts believe that the price of crude oil is likely to come down after the Ukraine crisis gets over but it is generally seen that the increased prices of other commodities don’t come down.

According to an expert report, every ten per cent rise in crude oil price will lead to a loss of 0.2 percentage points of GDP in India. This, in turn, would contribute to inflation.

In addition to the steep hike expected in petroleum prices, the Ukraine crisis would have major adverse impact on other imports. For instance over 75 per cent of Sunflower oil requirements of the country was being imported from Ukraine. International trade is also likely to get affected with the western countries putting restrictions on financial transactions with Russia.

As per the data released by the National Statistical Office (NSO) earlier this week, the growth in GDP during 2021-22 is estimated at 8.9 per cent as compared to the projected 9.2 per cent growth for the current year.

The data shows that the economic recovery had slowed down even before the Ukraine crisis. The war would further dampen the prospects of growth.

Given our high dependence on Russia for oil as well as defence equipment including fighter aircrafts, armoured vehicles and assault rifles, it has become difficult for India to take a strong stand against Russia’s attack on Ukraine.

The Ukraine crisis has once again underlined the need for India to become atmanirbhar and see to it that its dependence on other countries is minimised. The likely increase in inflation with the rising unemployment is bad news for the country.

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