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Russia-Ukraine Crisis: India to be among the worst hit

As one air siren after another went off in almost every big city of Ukraine, their reverberation was heard intercontinentally. The existing geopolitical crisis between Russia and Ukraine will highly impact Asian Economies but the impact will be contrasted across the regions.

About 4,000-km away in India, the benchmark stock indices suffered their worst days of the year. They dropped by 4.8%. Oil prices break through $100 a barrel for the first time since 2014, which is perhaps India’s considerable macroeconomic challenge. As the world’s third-largest importer of oil, India relies on other countries for more than 80% of its crude oil constraint. The global price benchmark for crude oil, Brent, hit $105 a barrel after Russia launched an invasion on Ukraine and carried out missile strikes on its infrastructure.

While the Monetary Policy Committee in India did opt to endure with its considerate stance in the latest policy meet, expectations were that the Reserve Bank of India will soon adopt a hawkish perspective with inflation crossing the upper limit of its forbearance band in the latest reading.

Also, critically Russia is a source of all those spare parts for the weapons that it has sold to India in the past. Russia has been a military partner for decades and 70% of our weaponry is of Russian origin. Not only that, due to our long association with Russia, our military cooperation involves joint research, development, and production of the advanced defence system, all activities that now face disruption. The crisis comes precisely as India’s purchase of the Russian S-400 missile system is underway and India hopes for a waiver of US sanction on this. What’s clear is that Russia’s defence sector will be hit by sanctions imposing curbs on imports of technologies and export of finished weaponry that could affect its capacity to meet India’s export orders.

In addition to the impact on India’s economy and trade, the Ukraine crisis has a direct affect on thousands of Indian citizens. India has more than 20,000 citizens in Ukraine . Over 18,000 students from India are in Ukraine studying medicine or engineering, forming roughly 24% of total international students there. And along with students there are business professionals in the field of pharma, IT and engineering.

In the end apart from the humanitarian consequences of war, the world will also have to bear its economic cost which will lead to greater losses in future.


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