INSUBCONTINENT EXCLUSIVE:
India's economy faces a potential stagflation risk from the Ukraine warThe Indian economy faces a potential threat of stagflation from the
ongoing Russia-Ukraine war, driven by trade disruptions and rising oil prices which will push already high inflation further up, which will
hurt growth prospects.Gross Domestic Data released on Monday showed the economy slowed in the October-December quarter, even before the
third-largest economy, just when the restrictions from the latest coronavirus wave have started to ease across the country.Finance minister
going to have a bearing on our immediate imports and equally on our exports to Ukraine, we are rightly worried about what comes from there
But I am more worried about what will happen to our exporters who are doing very well, particularly to the farming sector," the finance
minister said on Monday, interacting with industry captains at an event in Chennai.IndiaRatings and Research, suggested the geopolitical
risks arising from the Russia-Ukraine conflict would push the import bill higher for items such as mineral fuels - oils, gems - jewellery,
economy will be felt through inflation, an increase in the current account deficit and rupee depreciation
Sunil Kumar Sinha, Principal Economist at IndiaRatings and Research."The ramifications of the Russia-Ukraine conflict on the Indian economy
will be felt via higher global commodity prices as India is a net commodity importer
Crude oil has been on a boil, surging to $103.15 last week," he added.While there is no clarity on how long the Ukraine crisis drags on,
what is clear is that rising oil prices will push up Indian inflation as the country imports nearly 80% of its energy needs.Global and
Indian forecasting agencies have warned in their latest assessment reports that the Russian Invasion of Ukraine will hurt the Indian
of Ukraine, and other commodity prices also pushing higher, India's growth is likely to remain relatively subdued throughout most of
2022," according to analysts at Oxford Economics.That suggests the risk of stagflation in India remains high.Stagflation is when economic
growth slows and, at the same time accompanied by rising inflation
Stagflation can be alternatively defined as a period of high inflation combined with GDP decline."Stagflation could be a potential threat,
though not a real threat currently
In case of persistence of high oil and commodity prices requiring a much more aggressive response by Western central banks, especially the
Federal Reserve, and the feedback loop could be challenging," said Kunal Kundu, India economists at Societe Generale.
