BY Priti Naik
Amid the ongoing crisis between Russia and Ukraine, Indian government officials started preparing contingency plans to combat the possible spike in inflation because of rising oil prices. This will have a large impact on the country’s external trade. However, there is no immediate fear of supply disruption or blockage in trade routes, the soaring oil prices have a short- and medium-term impact on the economy.
Finance Minister Nirmala Sitharaman said she will be meeting Prime Minister Narendra Modi to review the situation following Russian President Vladimir Putin authorising a ‘special military operation’ that saw his forces firing missiles at several cities in Ukraine and landing troops on its coast.
A daily revision in prices of petrol and diesel and the monthly change in cooking gas LPG rate was halted as five states including Uttar Pradesh went to the polls. The over three-month hiatus combined with the spike in international oil prices on which domestic rates are dependent has widened the gulf between cost and selling price.
While the petroleum ministry detailed the oil supply situation, the finance ministry officials were busy assessing the broader impact and the fiscal measures the government may have to unleash, such as a cut in excise duty. A separate assessment was being done on the impact of sanctions the US and other countries have imposed on Moscow, on India’s trade with Russia and Ukraine.
India, the world’s third-largest oil consumer, depends on imports to meet 85 per cent of its needs. The imported oil is converted into products like petrol, diesel and LPG. Saudi Arabia, Iraq and other Middle East nations account for 63.1% of all imports. Africa is the second biggest supplier, accounting for close to 14 per cent of all supplies while North America gives 13.2%.
Major export items from India to Russia include pharmaceutical products, electrical machinery and equipment, organic chemicals and vehicles.