The War In Ukraine Will Put The Brakes On Economic Growth, Lead To Inflation
Linus tackles things head-on. He takes sides in his analysis and it fits excellently with our editorial policy. No 'maybe's' and 'allegedly' for him, only things in black and white.
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By Linus Garg
First publised on 2022-02-24 15:03:27
About the Author
Linus tackles things head-on. He takes sides in his analysis and it fits excellently with our editorial policy. No 'maybe's' and 'allegedly' for him, only things in black and white.
View all posts by this Author
After days of speculation whether he will actually send troops into Ukraine, Russian President Vladimir Putin took the plunge and Russia today invaded the neighbouring country with full force by land, air and sea. As per latest reports, Russia claims to have destroyed over 70 military targets including 11 air bases. Indian nationals in the nation were caught in the crossfire and were left looking for bomb shelters. Some even went to the Indian embassy in Kyiv.
The effects of the invasion were felt worldwide. Crude rose to $105 per barrel and is expected to rise even further if the war goes on for more than a few days. In India, the stock markets crashed big time. While the Sensex went down by 2702 points in its biggest fall since March 2020 and the fourth biggest in history, the broader Nifty fell by 815 points to end at 16247. The carnage resulted in the erosion of Rs 13.44 lakh crore of investor wealth in a single session.
Prime Minister Modi held a meeting with Home Minister Amit Shah and Defence Minister Rajnath Singh over the Ukraine situation. Officially, India's position was that it was closely watching the developments and this drew a sharp response from Ukraine's envoy to India who said Ukraine was "deeply dissatisfied" by India's stand. Calling PM Modi a "strong global leader", envoy Igor Polikha was of the opinion that a stronger stand by India would have made Putin "think".
The Indian economy and the common citizen will have to bear the brunt of the effects of the war as crude prices will rise further leading to inflation. With food inflation already very high, further price increase will put ordinary citizens to a lot of hardships. Also, pump prices were set to rise after the end of elections in UP. Now the increase will be huge unless the government reduces taxes to cushion the shock. The economy was constrained due to low demand. It will now suffer more as, on the one hand demand will not rise as expected and on the other, it will be burdened with rising cost of inputs.
