Will Russia-Ukraine War Affect Indian Economy? Know More

This news had an impact on the Indian stock market as the Sensex fell 1,800 points as soon as the market opened. The Nifty too fell by over 500 points.

Economy_Effect

Ukraine-Russia War: The fears have come true with Russia today launching a military attack on Ukraine.

This news had an impact on the Indian stock market as the Sensex fell 1,800 points as soon as the market opened. The Nifty too fell by over 500 points.

During all this, India’s concerns have also increased amid the scare of a third World War.

Asian markets also fell sharply today:

According to reports, Russia fired bombs on several areas, including a ballistic missile attack on Ukraine.

Ukraine too responded to the Russian attack and claimed to have shot down five Russian planes and a helicopter in the Luhansk region.

Amidst all this, the global markets are apprehensive due to fear of the Third World War and the Asian markets are also trading in the decline since this morning.

It will have a huge impact on the Indian economy.

The profound impact of this war can be seen on the Indian economy because if this fight escalates towards the third World War, then there will be a negative impact on business activities.

Firstly, the price of crude oil, which has already gone up to $101 a barrel, may shoot up further and this will prove to be unfavorable for India.

The country’s import expenditure will increase due to which the trade deficit will also go up further.

The oil and gas marketing companies have currently not put the burden of rising crude oil prices on the customers, but the reason for this is internal.

It is believed there will be a steep increase in the prices of petrol and diesel after March 10.

Inflation will increase in the country:

The increase in oil prices will also affect the freight movement and due to this the food items like vegetables, fruits, pulses, oil, etc. are all likely to be expensive.

The war between Russia and Ukraine is expected to increase inflation in India. If inflation rises, it will increase beyond the Reserve Bank's projected figures and the country's central bank will then be forced to increase the rates.

Impact on exchange rate:

If the Russia-Ukraine war continues, the exchange rate will also be affected as the rupee may depreciate further. India's total trade spending will also increase due to the impact on the exchange rate.

Crude will be expensive:

The commodity experts believe the prices of Brent crude oil are likely to increase to $105 a barrel. Due to this, the crude oil imported into the country will come at expensive prices, the effect of which will be seen in the form of a price rise.

The country’s auto sector will also be affected.

The impact of the war will also be seen on the metal sector as India has a good amount of metal exports from Russia. If there are more sanctions on Russia and metal imports are banned then it can be a big problem for India.

Besides, the auto sector costs may also increase and effect of the same can be seen in the form of an increase in the prices of vehicles.

Know the data of import-exports from Russia:

If you look at the import-export figures from Russia, India's exports amounted to a total of $550 crores to Russia and the imports of $260 crore have come from Russia last year.

Understand the statistics of thermal coal, crude imports:

In 2021, India’s thermal coal imports to Russia fell from 1.6 percent to 1.3 percent. It now seems likely to decrease further.

Apart from this, India also imports crude oil from Russia. Earlier in 2021, India imported 43,000 BPD of crude from Russia. India's crude imports from Russia account for only one percent of the total imports.

Data on gas imports from Russia:

India receives 0.20 percent of gas imports from Russia. The Gas Authority of India Limited (GAIL) has recently signed an agreement with Gazprom for LNG.

Under this, an agreement has been signed to import 25 lakh tonnes annually for 20 years. The sanctions imposed by the United States on Russia do not include a ban on oil and gas exports.

In what provides some relief, Russia will continue to export oil and gas. Most of the foreign units of oil of a company like India’s ONGC are in Russia.

What is India's stand on Russia-Ukraine dispute?

India currently has a neutral stand on the Russia-Ukraine dispute and has appealed to both countries to exercise restraint.

However, it is clear this will negatively impact India and its economy. This is because India also has trade relations with the two countries.

If the geopolitical situation deteriorates further, the Indian economy is expected to get another blow after the Covid-19 pandemic.