Odisha News, Odisha Latest news, Odisha Daily - OrissaPOST
  • Home
  • Trending
  • State
  • Metro
  • National
  • International
  • Business
  • Feature
  • Entertainment
  • Sports
  • More..
    • Odisha Special
    • Editorial
    • Opinion
    • Careers
    • Sci-Tech
    • Timeout
    • Horoscope
    • Today’s Pic
  • Video
  • Epaper
  • News in Odia
  • Home
  • Trending
  • State
  • Metro
  • National
  • International
  • Business
  • Feature
  • Entertainment
  • Sports
  • More..
    • Odisha Special
    • Editorial
    • Opinion
    • Careers
    • Sci-Tech
    • Timeout
    • Horoscope
    • Today’s Pic
  • Video
  • Epaper
  • News in Odia
No Result
View All Result
OrissaPOST - Odisha Latest news, English Daily -
No Result
View All Result

Surge in oil prices pose considerable risk to Indian economy: Report

PTI
Updated: February 26th, 2022, 07:40 IST
in Business
0
Representational image

Representational image

Share on FacebookShare on TwitterShare on WhatsAppShare on Linkedin

New Delhi: There is no direct impact of the Russia-Ukraine crisis on India in terms of bilateral trade but a surge in oil prices poses considerable risk to the economy, an analyst report has said.

International oil prices which have surged past USD 100 per barrel “pose risks to external stability and currency movement,” a Bank of Baroda Economics Research report said.

Also Read

Bombay Stock Exchange BSE

Stock markets close lower amid caution ahead of Q1 earnings; IT, oil shares drag

12 hours ago

UAE unveils Golden Visa scheme; Indians could be benefitted

13 hours ago

Russia has launched military operations against Ukraine, stoking fears of significant disruption in the region, including loss of life. The West is ramping up financial sanctions against Russia and support for Ukraine.

The economic impact on the rest of the world is likely to come from higher commodity prices, boosting inflation but hurting growth – stagflation-lite.

“But if hostilities and tensions escalate to the point where Russia is excluded from the Western payments and fast-messaging systems, as was Iran, a severe stagflation shock could result from an interruption of energy supplies,” Invesco said in a report.

Russia supplies Europe with 40 per cent of its gas, half its solid fuel including coal and about a quarter of its oil.

So far, the US has not cut off Russia from the global payment system.

“While there will be no direct impact of the Russia-Ukraine crisis on India in terms of bilateral trade, the surge in oil prices as a result of the crisis poses considerable risks to the Indian economy,” the BoB Economic Research report said.

Both the Union Budget for the fiscal year beginning April 2022 and RBI’s monetary policy that kept interest rates steady, came much before this crisis and did not factor in the impact of the crude price shock.

“Both the Budget and RBI hence took a conservative estimate of crude prices at USD 75 per barrel which is likely to be a challenge going forward,” the report said.

India imports more than 80 per cent of its total oil requirement and is the world’s third-largest importer of crude oil. In FY21, India’s oil imports totalled USD 82.7 billion. In the current fiscal (April 2021-January 2022), oil imports have risen to USD 125.5 billion driven in part by economic recovery as well as higher oil prices.

However, with oil prices now hovering at near 8-year high, oil imports are likely to be higher.

“In 2021-22 fiscal, we estimate oil imports at USD 155.5 billion. For the next year, oil imports are likely to be higher due to improvement in economic activity. We estimate a modest 5 per cent increase in oil demand,” it said.

Ceteris paribus, it assumed the trade deficit to increase to USD 165 billion.

Further, a sustained increase in oil prices will push imports higher.

“We estimate that for every 10 per cent increase in oil prices on a permanent basis, oil imports are likely to inch up by USD 15 billion or 0.4 per cent of GDP. This will get reflected in higher current account deficit,” the BoB report said.

The rupee too has come under pressure due to higher oil prices, which lead to a burgeoning trade deficit and hence adversely impact the external stability.

Crude oil-related products carry a weight of 7.3 per cent in the wholesale price inflation (WPI) basket. Hence the direct impact of a 10 per cent increase in oil prices is estimated to be around 0.7 per cent on WPI. Adding the indirect impact, the overall effect can be around a 1 per cent increase in WPI inflation.

The impact on CPI inflation will be both direct and indirect – 0.15 per cent increase in retail inflation (CPI) because of a 10 per cent increase in oil prices and 0.25-0.35 per cent due to indirect impact on supply chains and price push on other commodities and services.

The report said Russia is not a major trade partner for India. In FY21, India’s exports to Russia were USD 2.7 billion or 0.9 per cent of India’s total exports. These are mainly pharmaceuticals and electrical machinery.

India’s imports from Russia were USD 5.5 billion or 1.4 per cent of total imports. Petroleum products form half of India’s imports from Russia and can be easily replaced with other markets.

“Hence impact on India’s bilateral trade with Russia is not likely to be significant,” it said.

Stating that the fiscal response to the crude oil price needs to be monitored closely, the report said the government is walking on the narrow road of fiscal consolidation and already elevated borrowing programme and thus the fiscal space for an increase in subsidies or cut in excise duty on petrol and diesel is limited.

Several developed countries including the US, UK and European nations have imposed sanctions on Russia to deter further increase in hostilities by Moscow. These have ranged from sanctions on banks as well as individuals and also export controls.

US has been at the forefront and announced sanctions on Russian banks (Sberbank and VTB Bank), export control measures (which will more than halve Russia’s high-tech imports) as well as sanctions on wealthy Russians and their families.

Further, restrictions have also been placed on the new debt and equity issue of 13 critical Russian financial entities. Also, the sale of all US items and any item using US technology/software/equipment to the Russian military and Ministry of defence has been prohibited.

Similar restrictions have been placed by the UK. This includes freezing the assets of Russian bank VTB (and 5 other banks) and arms manufacturer Rostec, sanctions on 5 more oligarchs (in addition to sanctions announced on 3 billionaire businessmen earlier) and banning Aeroflot from British airspace.

European Union has also announced sanctions against the 351 members of the Russian parliament who voted in favour of recognition of the two separatist states (Donetsk and Luhansk) and also against 27 individuals and entities. A travel ban applicable to the listed persons prevents these from entering or transiting through EU territory.

EU members also introduced export controls targeting Russia’s energy and transport sectors, and plan to choke its trade and manufacturing.

PTI 

Tags: Fuel priceUkraine crisis
ShareTweetSendShare
Suggest A Correction

Enter your email to get our daily news in your inbox.

 

OrissaPOST epaper Sunday POST OrissaPOST epaper

Click Here: Plastic Free Odisha

#MyPaperBagChallenge

Spinoj Pattnaik

December 12, 2019
#MyPaperBagChallenge

Lopali Pattnaik

December 12, 2019
#MyPaperBagChallenge

Sisirkumar Maharana

December 12, 2019
#MyPaperBagChallenge

Swarit Praharaj

December 12, 2019
#MyPaperBagChallenge

Smitarani Sahoo

December 12, 2019
#MyPaperBagChallenge

Diptiranjan Biswal

December 12, 2019
#MyPaperBagChallenge

D Rama Rao

December 12, 2019
#MyPaperBagChallenge

Adrita Bhattacharya

December 12, 2019
#MyPaperBagChallenge

Anshuman Sahoo

December 12, 2019
#MyPaperBagChallenge

Rajashree Pravati Mohanty

December 12, 2019
#MyPaperBagChallenge

Tapaswini Mallick

December 12, 2019
#MyPaperBagChallenge

Archana Parida

December 12, 2019
#MyPaperBagChallenge

Praptimayee Biswal

December 12, 2019
#MyPaperBagChallenge

Ankita Balabantray

December 12, 2019
#MyPaperBagChallenge

Kamana Singh

December 12, 2019
#MyPaperBagChallenge

Faiza Firdous

December 12, 2019
#MyPaperBagChallenge

Matrumangal Jena

December 12, 2019
?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
#MyPaperBagChallenge

Dibya Ranjan Das

December 12, 2019
#MyPaperBagChallenge

Manas Samanta

December 12, 2019
#MyPaperBagChallenge

Priyabrata Mohanty

December 12, 2019
#MyPaperBagChallenge

Pratik Kumar

December 12, 2019
#MyPaperBagChallenge

Adweeti Bhattacharya

December 12, 2019
#MyPaperBagChallenge

Jyotshna Mayee Pattnaik

December 12, 2019
#MyPaperBagChallenge

Anup Mahapatra

December 12, 2019
#MyPaperBagChallenge

Chinmay Kumar Routray

December 12, 2019
#MyPaperBagChallenge

Surya Sidhant Rath

December 12, 2019
#MyPaperBagChallenge

Akshaya Kumar Dash

December 12, 2019
#MyPaperBagChallenge

Pragyan Priyambada

December 12, 2019
#MyPaperBagChallenge

Pratik Kumar Ghibela

December 12, 2019
#MyPaperBagChallenge

Archit Mohapatra

December 12, 2019

Archives

Editorial

Toll Sucks Life

Nitin Gadkari
July 9, 2025

Union Road Transport and Highways Minister Nitin Gadkari took everyone by surprise when at a function in Nagpur, where the...

Read more

Bloodline

BJP-Shiv Sena
July 8, 2025

The coming together of the Thackeray cousins – Raj Thackeray, chief of the Maharashtra Navnirman Sena (MNS) and Shiv Sena...

Read more

Acknowledge Failure

Deputy Chief of Army Staff Lieutenant General Rahul R Singh
July 7, 2025

Deputy Chief of Army Staff Lieutenant General Rahul R Singh’s candid revelations about Operation Sindoor at a FICCI event ‘New...

Read more

Politics of Philosophy

AAKAR PATEL
July 6, 2025

The BJP’s constitution (Article 3) says, “Integral Humanism shall be the philosophy of the party.” The party’s membership form has...

Read more
  • Home
  • State
  • Metro
  • National
  • International
  • Business
  • Editorial
  • Opinion
  • Sports
  • About Us
  • Advertise
  • Contact Us
  • Jobs
Developed By Ratna Technology

© 2024 All rights Reserved by OrissaPOST

  • News in Odia
  • Orissa POST Epaper
  • Video
  • Home
  • Trending
  • Metro
  • State
  • Odisha Special
  • National
  • International
  • Sports
  • Business
  • Editorial
  • Entertainment
  • Horoscope
  • Careers
  • Feature
  • Today’s Pic
  • Opinion
  • Sci-Tech
  • About Us
  • Contact Us
  • Jobs

© 2024 All rights Reserved by OrissaPOST

    • News in Odia
    • Orissa POST Epaper
    • Video
    • Home
    • Trending
    • Metro
    • State
    • Odisha Special
    • National
    • International
    • Sports
    • Business
    • Editorial
    • Entertainment
    • Horoscope
    • Careers
    • Feature
    • Today’s Pic
    • Opinion
    • Sci-Tech
    • About Us
    • Contact Us
    • Jobs

    © 2024 All rights Reserved by OrissaPOST