Tense situation between Russia and Ukraine, many are skeptical of the consequences for India if the two countries go to war.
Russia-Ukraine problem has been around for a long time. The issue escalated in 2014 when Russia occupied the Ukrainian-owned Crimean peninsula. Currently, the Russia-Ukraine issue is causing a stir day by day.
The two regions in eastern Ukraine are Tonstek and Lahnzhak. Both are ruled by two rebel groups, the Tonstek People’s Republic and the Lahansk People’s Republic. The Ukrainian government has been using both groups as terrorist organizations. Russian President Vladimir Putin has recognized the two areas as independent.
In addition, Russia has sent troops and artillery to the two cities as part of a peace operation. This has created an environment where war can break out at any time. A war between the two countries would have an impact internationally. In India too, the prices of many of the products that make up the impact could rise sharply and affect the general public. Currently the stock markets are suffering severely.
Petroleum prices have risen sharply in the international market due to Russia-Ukraine tensions. The price of a barrel of Brent crude rose to $ 96.7. This is the largest increase since September 2014.
Russia is the largest producer of crude oil in the world. The price of crude oil could go above $ 100 a barrel due to the current tension. If crude oil prices rise so will international GDP.
JPMorgan predicts that if the price of crude oil is set at $ 150 a barrel, GDP will fall by 0.9 percent.
Gas cylinder, kerosene subsidy will be increased Subsidies on LPG and kerosene are expected to increase due to higher crude oil prices.
Petrol and diesel prices will go up
Rising petrol and diesel prices across India in the past have been attributed to the rise in crude oil prices. The country saw an unprecedented rise in fuel prices in 2021.
Petrol and diesel prices have not been raised in the country for more than 100 days now. Their prices are expected to rise after the 5 state election polls. If the Russia-Ukraine crisis persists, petrol and diesel prices in India are likely to rise further.
Oil accounts for 25 per cent of India’s total imports. India imports more than 80 per cent of its oil demand. Rising oil prices will affect the current account deficit.
Wheat prices may rise
Experts fear that an interruption in the flow of grain from the Black Sea will have a major impact on inflation and fuel food inflation.
Russia is the world’s leading exporter of wheat, and Ukraine is the fourth largest exporter of wheat. Both countries account for almost a quarter of the total global exports of wheat.
A recent United Nations report has already said that food prices are at an all-time high due to the impact of epidemics on supply chains.
The price of metals will rise
Prices of palladium, a metal used in automotive and mobile phones, have risen in recent weeks due to fears of an economic embargo on Russia. Russia is the largest exporter of palladium.