Economists say the conflict between Russia and Ukraine will have a direct impact on India’s economic growth
As the conflict between Ukraine and Russia intensifies, it could have a long-term impact on the growth of India’s economy, economists say.
Renowned economist Kirit Parekh told DailyExpertNews that the price of crude oil had already hit $100 a barrel even before the Russian invasion of Ukraine. Now, after the Russian invasion, crude oil prices are under more pressure and are likely to remain at high levels for a long time to come.
This, Parekh said, will have an impact on the country’s import bill.
If this happens, the country’s long-term economic growth is likely to slow as well, he noted. At the same time, he said that the prices of other goods that India imports in the international market will also rise.
“Due to this pressure on the global economy, demand could be affected, which could also affect our exports,” Parekh noted.
Research director and chief economist at India Ratings, Mr. Sunil Sinha, said that as a result of the Russian offensive in Ukraine, uncertainty in world trade has increased and this will also affect oil and other commodities.
He went on to say that all of this will have a direct impact on the Indian economy as India imports oil from Russia and sunflower oil from Ukraine.
“As prices rise in global commodity markets, this will affect our import bill and lead to inflation,” added Mr Sinha.
The National Bureau of Statistics (NSO) in its second advances on national accounts is forecasting economic growth of 8.9 percent in 2021-22, which is lower than the first advances released in January. At that time, NSO had projected a 9.2 percent growth for 2021-22 against a 6.6 percent contraction in 2020-21.
In the third quarter of the current fiscal year, GDP growth was 5.4 percent, down from 8.4 percent growth in the second quarter.
Rating agency ICRA has also said the short-term impact of Russia’s invasion of Ukraine on India will be inflationary pressures, as the country relies on imported oil.
Some sectors such as oil and gas and both ferrous and non-ferrous metals could benefit from this trend, while sectors that rely on oil as their main input, such as chemicals, fertilizers, gas utilities, refining and marketing, will be negatively impacted, it reports. ICRA in a report.
