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Russia-Ukraine war to hit India’s economy
March 14, 2022
Domestic market began the week feeling bearish but appeared to be regaining lost ground as tensions between Russia-Ukraine began to de-escalate. While the worst may seem to be over, a pro-longed rise in inflation could be lurking around the corner as multiple sanctions put on Russia have ignited an unbridled rally in commodity prices.
India, however, is better equipped, is certainly not immune on these occasions. According to the third quarter GDP statistics, Indian industry developed at a tepid rate, mainly attributed to
sluggish domestic demand.
sluggish domestic demand.
Slower government investment and weak rural demand hampered growth, with agriculture being a key dragger as it recorded the lowest growth over the past 11 quarters. In fact, as a huge portion of our population is battling with stagnating or decreasing incomes and rising living costs, the present visible private demand is emanating from the top of the pyramid.
This, combined with sustained high inflation, may indicate the evolution of a stagflationary situation where the economic growth momentum slows.
If the un-abating rise in commodity prices were to go on, it would force the organizations across sectors to give a few hikes to the end consumer to safeguard their margins. This would end up being a double whammy for them as the price increases can dent demand, impacting the top-line alongside the already trimming bottom line.
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