INFLATION in India fell to an eleven-month low of 5.88 percent in November, mainly due to softening prices of food items. Finance minister Nirmala Sitharaman has expressed confidence that the government will further bring down inflation. She told parliament that the government is keeping a watch on the price situation of essential commodities. Reduction of food prices is good news for people, especially, the lower middle classes and poor sections of society, who could barely manage to get by. Early this year, soon after Russia invaded Ukraine, the prices skyrocketed, depleted savings of a large majority of people across the world, including in India reversed the economic gains made in the wake of the recovery from Covid-19 pandemic.
The year has also been tough for Indian economy. Ukraine war triggered a deceleration in growth after some robust recovery following the abating of the pandemic. Global wheat prices rose to 15-year highs. Russia and Ukraine account for 60 percent of global wheat production. They also account for 28.9 percent of global wheat exports. War disrupted the exports. But thankfully due to the agreement to unblock Ukraine’s Black Sea grain exports, the prices have since retreated to levels last seen before the Russian invasion of Ukraine.
India’s growth has been projected to decline to 6.8 percent after registering a healthy increase of 8.7 percent in the last fiscal year. The recent past has also seen a reduction in inflation and Indian Rupee has strengthened somewhat against the other currencies. This would help stabilize the economy.
The war in Ukraine thus remains a danger, though. If it drags on, the global economy, and with it, the Indian economy, is likely to come under severe stress again. Therefore it is incumbent on the world to come together to resolve the crisis in Ukraine and find a solution that addresses the concerns of all the parties involved. Otherwise, as prophesied by leading economists, the world is heading inexorably toward recession.
However, as things stand, it looks unlikely that the Ukraine war will come to an end anytime soon. It has become an unremitting tug of war between Russia and NATO, where a defeat could drastically reduce the losing side’s geopolitical influence. So, the best solution to the crisis has to be a win-win for both. But neither side has shown an appetite for it so far. One can only hope that in the coming weeks and months, efforts for peace will gather momentum.
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