Mumbai: Due to the ongoing crisis in Ukraine, the country’s import bill may increase to US$ 600 billion in the current financial year. This is because of India’s dependence on imports of crude oil, natural gas, gems and jewelry, edible oil and fertilizers, and the depreciating rupee. This is expected to increase inflation and the current account deficit. Rating agency India Ratings said this in a report on Tuesday.
The impact will be felt more on inflation, a widening current account deficit, and a falling rupee, its chief economist Devendra Pant said in the report, adding a $5 per barrel increase in crude oil prices will translate into a $6.6 billion increase in trade/current account deficit.
According to the report, geopolitical risks arising out of the Russia-Ukraine war will push up the prices of commodities such as mineral oil and gas, gems and jewelry, edible oil, and fertilizers. Due to this, the import of goods in the financial year 2021-22 is likely to cross the USD 600 billion mark, which was USD 492.9 billion in the first 10 months of the current fiscal.
India Ratings Chief Economist Devendra Pant said in the report that this would lead to an increase in inflation, a widening of the current account deficit, and a fall in the value of the rupee. He said a $5 per barrel increase in the price of crude oil increases the trade or current account deficit by $6.6 billion.
