India has taken neutral stance in Russia-Ukraine conflict. According to the news on national media, Delhi faced calls from Russia, the US and Ukraine “to do the right thing”. In addition to this, UK Foreign Secretary Liz Truss, who visited India on March 31 urged to maintain distance from Russia. But, India has its reasons to take a neutral stance.
Apparently, the present conflict between Russia and Ukraine has great impact on Indian. Mostly, financial market, exchange rates and crude prices are influenced immediately. The influence should be kept in control as India is dependent on Russia in various sectors.
Experts say
Earlier, the economists of State Bank of India submitted a report. According to the report, the influence of prices is short term. Later, Finance Minister Nirmala Sitharaman expressed her concerns on the after affects of Russia-Ukraine war.
Sitaraman said “India’s development is going to be challenged by newer challenges emanating in the world. She added “Peace is being threatened and after the Second World War, a war of this significance, this impact, on the globe is not felt.”
Banking Sector
So far, the banking sector has remained strong to Russia-Ukraine war. However, State Bank of India has decided not to process any transactions involving Russian entities on hold till the conflict ends.
Defense supply
A congressional research service (CRS) has submitted a report in October 2021. According to the report, Indian Military services cannot operate effectively without Russian-Supplied equipment. The report said,” Delhi views Russia as a reliable ally that provides India with military equipment and technologies denied to it by Western suppliers, and that has broadly aligned itself with India’s regional policies.”
Trade
With Russia-Ukraine war going, exports decline while imports increase. Thus, India runs a trade deficit with Russia. However, the impact through trade channel would be limited. The economists at SBI explained that corporates have taken measures to keep their balance sheet in shape.
Crude oil
90percent of crude oil imports in India is from Russia and Ukraine. RBI governor foresaid, “oil crisis caused by Ukraine issue will push us more speedily towards renewable energy.” Despite of the war, India is importing more oil from Russia. The global energy prices have been rising. According to the BBC reports, “India has taken advantage of discounted prices to increase oil imports from Russia”.
Agriculture
In spite of financial fluctuations, there is a silver lining. Ukraine is largest global exporter of wheat, barley, rapeseed, maize and sunflower. Russia also has its share in global exports of wheat and sunflower. Due to the war, the global Agri commodity chain is disrupted. A report by Prabhudas Lilladher said, the export demand can lift prices 20 percent for wheat, once the harvest is over.
Conclusion
In brief, our reserves are diversified and in good position. RBI are taking necessary measures to maintain the stability of Indian Rupee. Sometimes risks have to be taken. Our Financial experts have ensured the stability and sustainability while looking at growth. Thanks to all these measures, India has remained resilient to the conflict until now.
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