As the Ukraine-Russia conflict intensifies, it may have an impact on Indian economy's growth in the long run, economists have said.
Well known economist Mr Kirit Parekh told NDTV that already crude oil prices have touched $100 per barrel even before Russia's invasion of Ukraine. Now, after the Russian invasion, crude oil prices are under more pressure and they are likely to remain at high levels for a long time to come.
This, Mr Parekh said, will have an impact on the country's import bill.
If this happens, then in the long run the country's economic growth is also likely to slow down, he noted. At the same time he said that prices of other commodities which India imports, too will rise in the international market.
“Due to this pressure on global economy, demand may be impacted which could affect our exports too,” Mr Parekh observed.
Research director and principal economist at India Ratings, Mr Sunil Sinha said that due to Russian offensive on Ukraine, uncertainty has risen in global trade and this will also impact oil and other commodities.
He further said that all this will have a direct bearing on Indian economy, as India imports oil from Russia and sunflower oil from Ukraine.
“As prices are on the rise in global commodity markets, this will impact our import bill and lead to inflation,” added Mr Sinha.
In its second advance estimates of national accounts, the National Statistical Office (NSO) has projected 8.9 per cent economic growth in 2021-22, which is lower than its first advance estimates released in January. At that time, NSO had projected 9.2 per cent growth for 2021-22 as against a contraction of 6.6 per cent in 2020-21.
In the third quarter of the current fiscal, GDP growth stood at 5.4 per cent, lesser than 8.4 per cent growth seen in the second quarter.
Rating agency ICRA has also said that the short term impact of Russia's invasion of Ukraine on India will be through inflationary pressures, since the country is dependent on imported oil.
Some sectors like oil and gas and both ferrous and non-ferrous metals can gain through this trend, while the ones which depend on oil as a key input, like chemicals, fertilisers, gas utilities, refining and marketing, will have a negative impact, ICRA said in a report.