As the evolving Russia-Ukraine situation keeps the world at tenterhooks, India is closely watching the surge in crude oil prices and extreme volatility in financial markets.
India’s concerns were voiced by Union Finance Minister Nirmala Sitharaman after steering the 25th meeting of the Financial Stability and Development Council in Mumbai. She said India was hoping for a diplomatic resolution of the Ukraine crisis and the External Affairs Ministry was in contact with all countries in the region so that Indian trade remained unaffected.
As international oil prices are surging close to $100 a barrel, India has so far kept the prices of petrol and diesel on freeze. These prices are likely to increase once assembly elections get over on March 10. Domestic fuel prices have not been revised for a record 110 days in a row.
Russia makes up for about 10 per cent of global oil production. If tensions between Russia and Ukraine prolong, experts say that various commodities could see their prices soaring over the next few weeks. The biggest cause for worry is the spillover effect which the rising prices of crude, metals and natural gas will have on global GDP, severely hampering economic growth. If crude prices increase, the LPG and kerosene prices will also head upwards. India imports about 80 per cent of its oil requirement and oil forms about 25 per cent of India’s total imports.
So far as foodgrain supply is concerned, Russia is the world’s top wheat exporter and Ukraine is the fourth largest wheat exporter. Already, the pandemic has dealt a crucial blow on the supply chains over the past two years and any more volatility would only worsen the situation. Experts say that the after-effect of sanctions being imposed on Russia would also be felt.