Impact of Russian War on India

“To be an enemy of America can be dangerous, but to be a friend is fatal.”

- Henry Kissinger

All of humanity's humanitarian laws are condemned to death by the word "war," a word that brings humanity to its knees and condemns any great organization with a diverse range of viewpoints to promote harmony among people to the deathbed by violating each and every law that stood in the way. Asia will bear the brunt of the consequences of the Ukraine crisis, which will have repercussions not only on those countries directly involved in the conflict, but also on those around the world. Sanctions are a part of every war in the modern world, and Russia has been no exception. However, it is not clear if these sanctions have had a significant impact on Russia or if they are simply a step to cool the political climate.

The First Day of War

Russia's President Vladimir Putin declared war on the United States at a time that corresponded to Indian Standard Time on February 24, 2022. (IST). With all of the world's most powerful leaders completely taken aback by the news, this sparked worldwide tensions. As a result, stock market indices across the globe have plummeted, with the Russian index falling nearly 50%. Major EU countries announced their intention to impose sanctions on Russia, which would have a devastating impact on Russia's economy as the day came to a close A series of modest sanctions were then applied by the United States in the hopes that Russia would desist from attacking Ukraine. The United States began to tighten sanctions after failing to achieve any results. On the other hand, does the Russian economy suffer as a result of these sanctions?

About one-third of the world's total energy supply passes through Ukraine on its way from Russia, the third largest crude oil supplier in the world. Russia is also the world's largest supplier of neon gases, which are used in the production of semiconductor chips. Russian monopolies control a large portion of the domestic market as well as the international market for major metals supplies. As a result, the global supply chain will be disrupted by such sanctions.

Affects India

Russians have become the world's most despised country ever since the invasion, which is a once-in-a-century event. Because it would be detrimental to India to take a side in the conflict between the United States and Russia, India has chosen to remain neutral.

Some procurements have been postponed because of sanctions imposed by many countries. Energy imports from Russia account for a sizable portion of India's overall energy consumption, which is 80% dependent on the international market. For security reasons and in order to comply with US and EU sanctions, India's payment route to Russia is via State Bank of India (SBI) (SBI). SBI, on the other hand, has already stated that it will not process payments to Russia. Indian oil producers will face significant challenges in the future as a result of this development. Also noteworthy is the threat of US Countering America's Adversaries Through Sanctions Act (CAATSA) sanctions against India, which would impose sanctions on any country that purchases major defence hardware from Russia, including the S-400 missile defence system, which is currently in operation.

India would have to deal with a significant rise in inflation as a result of rising crude oil prices. For every increase in the price of crude oil, there is an increase in the price of edible oil, which in turn has a negative impact on the economy as a whole. The Reverse Bank of India plans to raise the interest rate by 90-100 basis points in the near future in order to keep inflation in check. Due to the increased cost of obtaining a loan, this will have a significant negative effect on the expanding economy.

The chips crunch has already had a significant impact on the global electronic economy, and it is already being felt around the world. Because of Russia's significant involvement in this industry, the situation will only get worse if sanctions are imposed against it. If the global economy continues to contract and global supply chains are further stressed, the price of electronic commodities will soar. Indian households will feel the effects of this significantly.

Metals, that make major part in our daily, has also major impact by this war as most the metals are either produced or refined in Russia or Ukraine, is also witnessing a great price hike globally. That has resulted in a significant drop in operating profits for the auto industry, as well as an expected rise in prices in the coming quarters.

Adding insult to injury is the fact that travel costs are expected to rise in the near future, making the situation even more difficult. If the price of crude oil continues to rise, airlines are preparing to raise ticket prices because it is having a negative impact on operating costs.

Pharmaceutical companies will be forced to raise prices as a result of the Russian invasion in the days ahead. Considering that the pandemic is still raging, this could lead to the collapse of the Indian family unit.

India must be cautious at this time because of the numerous sanctions imposed on Russia and the fact that Russia is a close ally of India. India may be playing it safe internally, but sanctions will have a significant impact on the economy as well as on the long-term impact on India's national security. In spite of the many challenges India faces, the country stands to benefit greatly from this crisis. Everyone on the planet has a role to play in the deaths of Ukrainians.

(Disclaimer: The views of the writer do not represent the views of WION or ZMCL. Nor does WION or ZMCL endorse the views of the writer.)

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