Has the Ukraine-Russia crisis impacted Indian economy: Fuel Price Surge, Market Crash, and more
Russia declared invasion of Ukraine this year and has attacked Military as well as Ukraine’s air bases and chaos unfolded from then on. Students and professionals who migrated to Ukraine from India had been stuck there mortified and were requesting our Prime Minister for aiding their safe comeback to homeland.
India values its diaspora which is spread across the globe. A phenomenal example of this was the ‘Operation Ganga’ which rescued over 20 thousand people during the Russia-Ukraine crisis. India’s foreign policy proactively prioritized and protected the safety of Indians living across the world. As war was declared on Ukraine by Russian powerful President Vladimir Putin, there were a number of debates as to how this unfortunate event would affect the economic status of India.
A break-down of Global crisis post Ukraine invasion by Vladimir Putin
The Market Crash
As soon as the markets opened after Putin declared the attack on Ukraine, the Sensex crashed down by 2700 points. This resulted in panic selling amongst investors. Rs.7.59 Lakhs Crore investor wealth was wiped out causing volatility in the market for the coming few months. It is a huge loss to recover from.
The Russian Stock Exchange dunked by 50% in a single day. This has set the tone for a lot of prospective events to come in 2022-23.
The Crude Oil Dilemma
Paul Solman, a journalist who has specialised in Economics, Business, and Politics and who is also the economic correspondent for the PBS NewsHour, in his interview with renowned author Adam Tooze covered how the crisis is a threat, globally.
Adam Tooze, a well-known author of Politics and Economics expertise states that oil, fuel, and food are the current focus of the dilemma globally. There are woes regarding the soaring prices of these commodities since Russia is a key supplier of gas and oil to most nations of the world.
Also Russia and Ukraine, together export tones of wheat the world consumes which might see a shortage and it has already started showing. Europe imports most of its fuels from Russia and Russia is the world’s 2nd largest oil exporter. As far as energy is concerned, we’re already tight on it. Adam also added how the impact is a hard blow taken by not only the rich countries, but the under-developed, economically poor countries like Kenya, whose import bills are huge. Adam warns us of shortage of supplies referred to as Stock-out where there’s possibility of running out of majorly imported fuels like diesel and petrol. Those are not only vital in transport, but also there are businesses that solely depend on transportation to reach their buyers, hence challenging the economy of the nation.
Whenever there’s an increase in fuel prices, it directly results in ‘Inflation’. Inflation refers to the rise in the prices of goods and services of daily or common use, this includes but isn’t limited to commodities such as food, clothing, housing, entertainment, transport, etc. This has not only impacted India but has already taken its toll, globally.
Key events occurred after Ukraine went under attack by Russia
Fuel Surge
Here are the Key factors that drove fuel surge-
Russia is a huge supplier of crude oil, Russia exports 1/3rd of Europe’s Oils. In the meanwhile, The United States of America has spoken about putting strict sanctions on Russia.
If the sanctions are passed, which are unlikely at the moment, the results would be unthinkable.
(Source article : Ndtv.com)
According to BBC news, the fuel prices have been rising for seven consecutive days on the known event of the energy crisis in Europe. Analysts predict that oil prices will continue to rise amid surging demand and tight supplies.
India’s stance in Ukraine crisis
UNSC– United Nations Security Council took to voting for this issue on 30th January, 2022. Tactfully, India abstained from the Ukraine vote in UNSC; Calls were made for protecting the legitimate security interests of all countries. India stood neutral in its stance. There is a reason why;
(Source: The Economic Times News)
Russia- India link: How India tactfully remained neutral in crisis
Russia is India’s long term ally, 86% of the weapons come to India from Russia. Although Russia is backed up by China; China is in support of the war situation as China would benefit and its only goal is to lead the world as a highly economically-stable nation.
The crude oil prices are surging in manifolds directly resulting in India’s hike in petrol prices; Last year in 2021, India saw a huge surge of upto Rs. 30 per liter of petrol, as sourced from Economic times E-news.
Talking of imports, India also imports $ 1.06 Billion worth of oils and minerals and approximately $832 Million worth of precious metals & stones from Russia. (View source here.)
On the other hand, is the United States of America, which also India has made a peaceful rapport with. India could not devalue either by voting for or against the countries.
It is said that there is no winner in the war, India did not want to cut ties with neither Putin nor the west hence keeping the alliance intact.
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References:
BBC news
Indian Embassy- Moscow
NDTV news
Study published by Federal Customs Service of Russia
Wiki articles
