The days when people in warring countries were the only victims of battle are long gone. At present, each country is interdependent to carry out its daily activities. Therefore, the ongoing war between Russia and Ukraine has inevitably affected the global supply chain in such a scenario. Ukraine is known as the wheat bowl of the world, and the two countries together supply almost a quarter of the world’s wheat supply. The wheat crop in Russia and Ukraine would mature in September and August; however, prices rose from ₹20,000 to ₹25,000 per ton due to the war.
Opportunities ahead of India
However, even if geopolitical tensions in any region of the world are a matter of concern, India is likely to benefit from the economic specter of war. After supply chains from Russia and Ukraine were disrupted, the world turned to India, the second-largest wheat exporter, to fill the gap and maintain supplies. Thus, India has a huge opportunity to increase its wheat production and exports and reap maximum economic benefits. India produces about 107.59 million tons of wheat annually, a significant portion of which is for domestic consumption.
Industry executives say India can quickly meet short-term wheat supply challenges this year due to its surplus in store. Although India has traditionally not been an active exporter of wheat, it has massively increased its non-basmati rice and wheat exports over the past two years.
On the global front, India’s statement that it was closely monitoring the situation in Ukraine and its call for maintaining a balance between the United States and Russia and demanding a peaceful resolution is the way which India is balancing on the thin line of balance between the two superpowers. However, no diplomatic stance can counter the fact that India will inadvertently bear the brunt of the tense situation. According to the Dun & Bradstreet report, “Businesses around the world continue to grapple with pandemic-driven inflation as well as commodity price increases driven by supply chain disruptions.”
A diplomatic tightrope at the UNSC
Even though Ukraine and Russia have urged India to take a clear stance on the global front, Delhi’s first statement to the United Nations Security Council (UNSC) did not name any country. Still, he said he was calling for peace in the international community. Indian representatives refrained from criticizing Russia on the global forum. Before the UNSC voted on the draft resolution condemning the Russian invasion of Ukrainian territory, Delhi faced calls from the US, Russia and Ukraine to ‘do the right thing’ .
Global crude oil prices are already at a 13-year high as European and Russian authorities consider banning Russian crude oil and tightening repeat sanctions against Moscow. The sanctions pose a significant risk to other economies around the world, including India. Brent crude, a key component of India’s energy needs, jumped to $139 a barrel, the highest rate since July 2008. The sharp rise in the price of oil hurt stock markets as senses slumped 1,500 points to hit a seven-month low. Moreover, it was the first time that the rupee almost crossed the 77 mark by closing at 76.97 rupees to the dollar. Currently, the Rupee is the worst performing Asian currency.
Rising commodity prices across the globe are raising concerns about inflation and declining economic returns for countries. Inflation has already hit its highest level in 40 years, with investors predicting a lasting impact from lingering geopolitical tensions between the two countries. A similar economic situation last occurred in the 1970s, when the combination of weaker economic growth and higher inflation, or stagflation, weighed on stock market returns.
Lessons for India from the Russian-Ukrainian crisis
However, the Russian-Ukrainian conflict was a revelation for the rest of the world and for India. First and foremost, by now India must have understood that no one would come to India’s aid in case military tensions got out of hand with our eastern neighbor China. A similar case is good for India if Pakistan and our Western neighbor start acting, and the West is unlikely to go to war with China for India’s sake. While many international condemnations are expected, as is the case against Russia, no one would provide military support or go to war for the good of another country.
Along the same lines, even though Russia has been a close ally of India for decades, the growing closeness between Moscow and Beijing is public. Therefore, any possibility of Russia playing the active role of mediator between India and China is unlikely. Moreover, even though India has managed to adopt a neutral global stance so far, it may not be able to continue for long. The United States, Russia and China are among the most important powers, and even if India did not join a bloc, it would have to accept which country it was closest to.
After Prime Minister Modi came to power, his vision was of a self-sufficient India. In dynamic times, India would reap benefits if she strives to attain ‘Atmanirbharta’. Tomorrow’s Indian wars should be fought with Indian hardware only. The Russian-Ukrainian crisis has clearly shown the vulnerability of depending on another nation for military equipment.
In the recent budget, the Narendra Modi government has created a huge research and development field for domestic defense goods manufacturers by allocating 68% of the capital. The Ministry of Defense has already set up new mechanisms for promoting research and has been careful not to do so independently and not through the Defense Research and Development Organization (DRDO) .
Modern warfare is more technologically friendly. Therefore, massive investments to boost technology in the country would be one of the essential steps, rather than reinventing the old wheel.
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