A resilient India amid global commodity turmoil due to Russia-Ukraine conflict

New Delhi: In an era marked by geopolitical tensions, particularly the ongoing Russia-Ukraine conflict, the global economy is facing unprecedented challenges, with essential commodities like oil and urea witnessing volatile price swings. 

Amidst this backdrop, India, led by Prime Minister Narendra Modi, has showcased remarkable resilience and strategic foresight in managing its economic stability.

India's heavy reliance on imports for oil and urea has placed it in a precarious position. The conflict between Russia and Ukraine, both significant suppliers of these commodities, has not only disrupted supply chains but also led to soaring prices. 

Yet, through adept diplomatic engagements, India has managed to keep the flow of these critical resources relatively uninterrupted.

Tenfold surge in oil imports

A striking example of India's strategic pivot is evident in its oil import data. Russia, once a marginal supplier, now accounts for over 20% of India's oil imports, a tenfold increase from pre-conflict levels. This shift highlights India's successful diplomatic efforts to secure oil supplies, ensuring that domestic fuel prices do not spiral out of control despite global market turbulence.

Uninterrupted supply of urea

The agricultural backbone of India, heavily dependent on fertilisers like urea, has also been safeguarded through strategic diplomacy. By fostering strong relations with both Russia and Ukraine, the Modi government has ensured that the supply of urea, crucial for crop yields, remains stable. 

This continuity in supply has been vital in preventing potential food security issues.

Subsidies on oil, urea

To mitigate the impact of rising commodity prices on its citizens, the Indian government has expanded its subsidy programs. 

Fuel subsidies have cushioned consumers from the full brunt of global oil price hikes, while increased urea subsidies have protected farmers from fertilizer cost escalations. 

The doubling of urea subsidies in the past year underscores the government's commitment to agricultural support.

Navigating challenges of subsidies

However, these subsidies are not without their drawbacks. The financial burden of these subsidies has led to budget reallocations, diverting funds from other developmental areas like infrastructure and social welfare. This reallocation poses long-term challenges for economic growth and development, highlighting the delicate balancing act the government must perform.

India's strategy of leveraging diplomacy to secure essential imports has been crucial in maintaining economic stability. Yet, the government recognises the need for self-reliance. Initiatives are underway to enhance domestic production capabilities in both oil and urea, aiming to reduce India's vulnerability to external shocks.

India's response to the global commodity crisis induced by the Russia-Ukraine conflict exemplifies a blend of immediate crisis management and long-term strategic planning. 

By navigating the choppy waters of international relations and economics, India under Modi's leadership has not only ensured immediate stability but is also paving the way towards greater self-sufficiency, setting a precedent for resilience in the face of global economic challenges.