1 year of Russia-Ukraine war: Economic impact on India

24th February marks exactly one year since Russia's invasion of Ukraine. The global economic shocks caused by the war were a huge setback to the recovery from the covid pandemic.

The Indian economy too faced the repercussions of the war on multiple fronts.

On the geopolitical front, the Indian govt had a difficult balancing act to play in an effort to maintain a neutral stance between the west and Russia. This, especially considering its long-standing ties with Russia as well as a strengthening of ties with the U.S.

The Indian economy, like the rest of the world, faced high inflationary pressures. As a result of the disruption to global supply chains, both food and energy prices shot up. This led to inflation staying well above the upper limit of the Reserve Bank of India's tolerance band of 4% to 6%.

Heavy sanctions from the west on Russia, supply chain disruptions all led to global crude prices shooting up to around $139 a barrel. Importing about 85% of crude oil requirement, India was hit hard. And in April 2022, India's retail inflation jumped to an 8-year high of 7.79%.

However, while Russia was facing sanctions from the west, India has been buying crude at a discounted rate from Russia.

As per a Reuters report, in January, Russia was the top crude oil supplier to India, with crude imports from Moscow jumping to 9.2% on a monthly basis to a record 1.4 million barrels per day.

Indian equity markets crashed nearly 5% on 24th February last year, with the Nifty falling over 800 points. As per reports, it was the 4th worst fall ever for the Sensex. The markets have since recovered, and even touched new highs last year. Indian markets have once again turned extremely volatile, which has largely been the fallout of the Adani-Hindenburg controversy.

However, India is in a relatively better position as compared to other economies. Both the World Bank and the IMF have called India as 'a bring spot' and expect it to be one of the fastest-growing economies in the world.