The Russia-Ukraine crisis will dent India’s household budget. The first day of the conflict has already skyrocketed the fuel price. It will come as a setback to Indian consumers as Putin’s military action will end the short respite in local fuel prices. It needs to be mentioned here that there has not been any hike in fuel prices since November.4
World diplomacy has failed to deter Putin from his plan of invading Ukraine. This will naturally soar up oil and gas prices putting pressure on India’s oil-importing budget.
Finance minister Nirmala Sitaraman warned that the global crude oil price hike will negatively affect India’s financial stability. After attending the FSDC meeting she warned that the Centre was considering certain options to deal with the emerging situation. As per the RBI governor, one option was to roll back easy money to put prices in check. Another way to reduce the taxes was done last year which helped put a sort of balm on consumers’ pain. She, however, said that the policies will be made public at the proper time.
But the Centre has major spending plans for the next fiscal, in view of this, it is a question as to how far the government steps will be plausible because any tightening of the rate will put it in a difficult position.
The oil price has already gone up to a 7-year high followed by the gas prices by 60% in just one day of conflict. Russia is the largest natural gas exporter besides being the second biggest exporter of crude oil. What is being feared is that Russia will be constrained to use these natural resources as weapons by reducing supplies of gas to Europe in order to send a very strong response to the host of crippling sanctions imposed by the US and UK. Apart from oil and gas, the conflict will also have an impact on food, investment and the cost of living in Europe, the US and the UK negatively.
The Russia-Ukraine crisis comes as a challenge to India’s external policymakers. India has to tread very cautiously as the tensions escalate further. New Delhi has good relations with both countries, hence, it needs a fine balancing of its responsibility to maintain the bilateral relation unharmed with each country.