The Russo-Ukrainian war is all set to pickpocket Indians.
The war started between Russia and Ukraine is now becoming a matter of great concern for India. According to SBI's research report, there is a possibility that if this ongoing war between the two countries continues, then the prices of crude oil will increase further, after which India may have to suffer a revenue loss of about one lakh crore rupees.
A Bloomberg report said, “For the first time since 2014, the price of oil has jumped to $100 per barrel, which has dealt a big blow to the global economy”. This is worrying for the US Federal Reserve and its fellow central banks asthey are now facing another crisis without recovering from the pandemic. Inflation has already become a big headache due to Corona. India's benchmark stock market index, BSE S&P, has fallen 4.7 percent on February 24, 2022.
There has already been an uproar over oil shortages amid the elections being held in five states of India. Now the Russia-Ukraine crisis has added to this difficulty. Petrol-diesel prices have been kept stable since November 2021, when India's crude oil price was $80 per barrel. This year's Economic Survey has estimated that crude oil prices will remain in the range of $ 70-75 per barrel in the next financial year.
If crude oil prices remain at current levels, fuel prices will have to increase by more than Rs 10 per litre unless the government is ready to reduce union excise duty or increase petroleum subsidy. Both these decisions can mess up the calculations done in the budget on a large scale. A steep rise in prices is likely to lead to inflation, an economic crisis, and political discontent. A single ray of light, or to say hopefully, is India's foreign exchange reserves, which are about $630 billion.
The impact of the increase in the price of petrol (Russo-Ukraine War) will be only on the individual users of the vehicle. At the same time, the price of diesel will make transportation expensive. This is bound to increase the price of everything that is used for transportation of raw materials for production and then for delivery of final products. That is, its effect can be seen almost everywhere. In the research report of the State Bank of India (SBI), Chief Economic Adviser Soumyakanti Ghosh has claimed, “due to the long stretch of the war, there may be a decrease in the revenue of the government by Rs 95 thousand crore to one lakh crore in the next financial year”.
The report said that from November 2021, the price of crude oil in the international market has been skyrocketing. Let us tell you here that if the price of crude oil remains in the range of 100 to 110 dollars, then according to the structure of VAT, the price of petrol and diesel will be 9 to 14 rupees more per litre than the current rate. If the government stops the price hike after cutting the excise duty, according to this, the government will have to bear the loss of revenue of Rs 8,000 crore every month.
Japan's research company Nomura has said in the report that “India is a big oil importer and this is the reason that problems will increase for India if the war prolongs”. According to the report, with every 10 percent jump in oil prices, the growth rate of the Indian economy will decline by about 0.20 percent. Apart from this, the wholesale inflation rate may increase by 1.20 percent, while the retail inflation rate may increase by 0.40 percent. Apart from this, the pressure on the government will also increase regarding the supply of domestic coal.
India is dependent on imports from other countries for everything from oil to essential electric goods and machinery as well as mobile-laptops and other gadgets. Most mobiles and gadgets are imported from China and other East Asian cities and most of the business is done in dollars. If the rupee continues to depreciate in the same way during the war, imports will become expensive in the country. Due to import from abroad, their prices are fixed, which means inflation on mobiles and other gadgets will increase and you will have to spend more.
India supplies Ukraine a large number of items including medicines, boiler machines, oilseeds, fruits, coffee, tea, spices and many more. There are about 80 to 100 such factories in Ghaziabad, UP alone, whose direct business is from Ukraine. Nothing is being imported or exported due to the war. The Russo-Ukraine war will not only make petrochemicals expensive, but may also deepen the supply crises that are directly related to our food and agriculture. For edible oil and certain fertilisers, we rely on imports only.
India buys 80 percent of its crude oil from abroad. The main fundamental crisis is of edible oil and its continuous supply. India imports about 98 per cent of the sunflower oil requirements and consumption. About 93 percent of that is also imported from Ukraine and Russia. India needs around 23 million tonnes of edible oil, while the domestic production is only around 9 million tonnes. The crisis of wheat and maize is not in front of India, but the basic concern is about the crisis of edible oil and fertilizers, manure.
The country has imported vegetable oil worth $14.02 billion till December 2021. The bill for edible oil imports could jump to around $18 billion or more in the wake of the Russian war and conflicts with other important countries, including Ukraine. If the supply of natural gas from Russia is reduced, then the supply of ammonia and urea will also be affected, hence their prices will increase. These fertilizers have been used as manure for agriculture.
India has been importing more than 63 percent of its defence equipment and weapons from Russia. Like the stock markets around the world, Indian markets are also falling victim to the fear of a war-like situation, in such a situation people are suffering there too.
So, for the time being, Indians have been seeing this phrase "One slays other pays aka Kare koi bhare koi", so India should become self-reliant and learn to save itself from the adverse consequences of globalization adopted under compulsion.