IMPACT OF WAR ON INDIAN ECONOMY

The recent war outbreak between Russia and Ukraine has both positive and negative effect on
the Indian Economy. Due to war between Russia and Ukraine, there is the challenge on
Indian economy on its nascent recovery after war. The war has impacted Indian Economy by
rise in the crude oil prices after Russia attacked Ukraine. India imports more than 85% of its
brunt crude oil. Russia exports a substantial portion of crude oil and natural gas around the
world, by various international trade restriction on Russia, it had led to supply chain
disruptions and surge in the international crude oil prices in the international market. The
major impact on Indian economy due to war is rise in the crude oil prices.

IMPACT ON THE CRUDE OIL PRICES

The price of brent crude oil has increased from November, 2021, $81 per barrel to above
$100 in month of April,2022. The rise in the crude oil prices is due to the ongoing war
between Russia and Ukraine. As Russia is the third largest manufacturer of crude oil and
second largest importer of crude oil. Due to the sanctions imposed on Russia in International
Markets, there is the rise in price of crude oil in globally. The supply of crude oil was already
low, because of covid pandemic, and then due to war, the is rise in demand and thus, resultant
it led to increase in crude oil prices. In India, the crude oil prices have risen to highest in the
history and due to which petrol and diesel prices are daily rising. Resultant, of all these, there
is rise in basic commodity of eating like vegetables, eatable product and the transportations
cost etc.

Impact on edible oil prices in India due to war

The price of edible oil and vegetable oil have increased by 10-15% due to war between
Russia and Ukraine, this has negatively impacted Indian Economy. India imports around 90%
of its sunflower oil from these two countries, which accounts for 14% of its total imports of
edible oil. The total consumption of edible oil in India is 240 lakh tones, the domestic
production of edible oil in India is 90 lakh tones, the deficit demand of 150 lakh tones is met
through import. India import soyabean oil, palm oil and sunflower oil. To supplement the
demand and supply, India is importing more quantity of soyabean and palm oil, because of
increase global demand, the exporting countries have raised the prices of edible oil. Thus
resultant, there is increase in price of domestically produced oil like mustard oil and rice bran
oil. Together with this, there is also rise in prices of groundnut oil and peanut oil and because
of all these it has affected Indian household.

IMPACT ON FERTILIZER IMPORT OF INDIA

The war has impacted the import of fertilizer in India. India imports substantial portion of
fertilizer like Potash, Phosphate Diammonium and Uria from Russia and Ukraine. Due to
war, there in less supply of the fertilizers in India and this will affect the agriculture sector.
As, India produce 368.2 metric tonnes of fertilizer and import 141.6 lakh tone of fertilizer.
The price of fertilizer has increased, but this will be managed by the government subsidy on
fertilizer. In, the coming days if there will be shortage in the supply of fertilizers, it will affect
the agriculture production. Our Indian agriculture is heavily relying on use of fertilizers for
increase in the crop production, due to low supply it will affect the crop production. This too
gives opportunity for India to switch slowly to organic farming, in the long term.

Opportunity for India During the war

India, has the opportunity to become one of the biggest suppliers of wheat in International
Markets. India is the second largest producer of wheat in the world and Russia is the third and
Ukraine is the fifth largest producer of wheat in the world. Russia and Ukraine export total of
35% wheat around the world. Due to war, the export of wheat has drastically affected. The
buyer countries are avoiding to deal in black sea shipments. This presents an opportunity for
India, to capture the wheat market globally, being the second largest producer of wheat in the
world. The effect of war, is seen as there is rise in wheat prices in India, which are exported.
There is increase in export of Indian wheat around the world and India should use this
opportunity to export Indian wheat to those countries importing Russian wheat. Indian
granaries are flooding and this has too increased the export of wheat. India is ready to export
nearly 7 million of wheat in the upcoming month and till February,2022 it exported 6.6
million tons of wheat.

STAND OF INDIA IN THE WAR

India, has a neutral stand in the ongoing Russian-Ukraine war. India is continuing to impot
the Russian oil at discounted prices, since it has been removed from the international money
payment system. There, has been various sanctions on the Russia but India continued to
Import goods from Russia. Presently, there is not a vary major impact in the Indian economy
due to war. There is rise is crude oil and edible oil prices and the Indian government is
looking of various alternatives to manage the supply-chain disruptions.