Explainer: The rising tension between Russia-Ukraine will affect the economy as well as the money of the common man, complete details

India meets 80 per cent of its oil requirements and 50 per cent of its gas requirements through imports. In such a situation, its price matters a lot.

Only expensive crude oil can spoil the economy of the country.

Tension continues between Russia and Ukraine ,Russia-Ukraine crisis) has shocked the global economy and the stock market. If both countries move from the side of war country’s economy ,Indian EconomyAlong with this, the general public will have to pay a heavy price. The country’s economy is already trying to overcome the corona epidemic. Let us understand in detail about how this crisis will affect the Indian economy and the people of the country. This time rupee dollar ,Rupees vs Dollar) is at the level of 74.91 with a huge fall of 41 paise. This time crude oil ,Crude oil price) is close to $ 95, which had reached $ 97 on Monday. Gold is above $1910, while in the domestic market it is above the level of 50500.

India meets 80 per cent of its oil requirements and 50 per cent of its gas requirements through imports. In such a situation, its price matters a lot. According to the Oil Ministry data, in the current financial year between April and December 2021, India imported oil worth $ 82.4 billion. This is a jump of 108 per cent in the bill as compared to the previous financial year. In the financial year 2019-20, between April and December 2020, India imported crude oil worth $ 39.6 billion. The total oil import bill for the financial year 2020-21 was just $ 62.2 billion and for the financial year 2019-20 this bill was $ 101.4 billion and for the financial year 2018-19 this bill was $ 112 billion.

Natural gas bill increased by 61 percent

Natural gas bills have also grown by 61 per cent to $8.7 billion in the first nine months of the current financial year, while the volume has declined by 3 per cent. India imported a total of $ 7.9 billion of gas in the financial year 2020-21. In the financial year 2019-20, the gas import bill was $ 9.5 billion.

What is the effect of rising crude oil on India’s economy?

  1. According to the report, if the price of crude oil rises by 10 percent, then the wholesale inflation rate (WPI) increases by 0.90 percent. If crude oil continues to rise, then WPI for the financial year 2021-22 will be 12 percent and for the financial year 2020-23, the wholesale inflation rate will be 6 percent. Retail inflation stood at 6.01 per cent in January as against 5.66 per cent in the month of December. Retail inflation for December has been revised upwards to 5.66 per cent. Wholesale inflation stood at 13.56 per cent in December, while it was 14.23 per cent in November. It was 13.83% in the month of October. A sharp rise in the price of oil also leads to a jump in retail inflation.
  2. India imports 80 per cent of its oil requirement. The share of oil imports in the total import bill in the financial year 2018-19 was 27 percent and in the financial year 2020-21 it was 21 percent. If the import bill increases, the current account deficit will increase. A 10% rise in the price of crude oil puts pressure on the CAD by $15 billion. This is equivalent to about 0.4 percent of GDP. Due to this the value of rupee also falls. A 1.2 per cent rise in the price of oil leads to a 0.9 per cent fall in the rupee.

Crude oil expected to reach $150

According to Goldman Sachs, the price of crude oil can touch $ 100 per barrel in 2022 and can go beyond $ 105 per barrel in 2023. At the same time, JP Morgan has predicted to touch the price of $ 125 per barrel in 2022 and $ 150 per barrel in 2023. Due to the cost of crude oil, inflation will increase further. Due to this, the pressure on the Reserve Bank to change the policy will increase.

If RBI increases interest then EMI will increase

If the Reserve Bank increases the interest rate, then it will have a direct effect on the general public. Loans will become expensive. The EMI of the old loan will increase. Due to the Russia-Ukraine Crisis, apart from crude oil, the prices of many commodities including aluminum, nickel will increase. Due to this the growth of this sector will decrease. After several quarters, the pressure has increased again on the profitable airline stock.

Reserve Bank in the middle due to rising inflation

On the other hand, inflation is touching the sky. Ukraine Crisis will support inflation all over the world. In such a situation, the pressure on the Federal Reserve to increase the interest rate will increase. Apart from this, he will also stop the bond buying program (quantitative easing). The brokerage says that this year the Federal Reserve can increase the interest rate 6-7 times. Rise in crude oil prices will put pressure on the rupee. This is not good in terms of Indian currency outlook.

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