The crisis in Ukraine results in a serious blow to the global economy which is emerging from the pandemic. Examine (200 Words)
Refer - Business Line
Enrich the answer from other sources, if the question demands.
IAS Parliament 3 years
KEY POINTS
· The stand-off between Russia and the West over the former’s imminent invasion of Ukraine is set to deal a serious impact on the global economy mainly through trade, finance and macroeconomic channels.
· On the financial side, the standoff could lead to an inflow into safe haven assets, besides commodities, weakening currencies of emerging economies if it intensifies.
· The Reserve Bank of India should, in the event that the crisis worsens, be prepared to defend the rupee at prevailing levels.
· This situation throws into jeopardy the 8-8.5 per cent real growth projection of Economic Survey 2021-22 for the next fiscal based on oil ruling at $70-75 a barrel and withdrawal of global liquidity being “broadly orderly”.
· The Monetary Policy Committee’s inflation projection of 4.5 per cent for 2022-23 looks more optimistic than before; it has been observed that a 10 per cent rise in crude prices can lead to a 40-50 basis points rise in retail inflation.
· The Centre’s tax revenues could be dented if it is forced to take an excise duty hit on fuel in the larger economic interest. The overall picture is worrying but the only consolation is that Russia is not a major trading partner.
