Trouble in paradise for India?

[Majestic-milf]

 It would seem that what affects a nation in any part of the world negatively or positively can also affect another. Riding on the back of the Russia-Ukraine conflict is the matter of India's GDP.
 Moving from a 6.6% contraction in the year 2020-2021 to an 8.7 then on to 8.9% growth in 2021-2022, it looked like they had cause to celebrate. But it looks like the celebration is short lived as concerns have been raised by policy makers, along with the Reserve Of India (RBI) as they regrettably announce it's first interest rate hike in at least four years.
 India, one of the countries with a high GDP, import more than 80% of its crude oil and is also the largest importer of edible oil, but with prices skyrocketing and inflation rising, it has taken a toll on their economy. According to the RBI, consumer inflation has hit a 6.95% and as a result, has slashed it's yearly growth forecast to 7.2%.
 Meanwhile, Prime minister, Narenda Modi gave an announcement earlier that plans to introduce tax breaks that will offset higher food and petrol costs are being made. https://www.aljazeera.com/news/2021/12/28/india-economy
 

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[so98nn]

The problem started kick in when they gave state to state authorities on imposing the taxes. There is at least few cents of difference between petrol and diesel prices itself within the country. This is because India's Central government and State Government incurs the taxes on the basis of GST structure. This further divides into CGST and SGST meaning (Central & State Service Tax). This is not the bad part, the bad part is this tax is entirely different from the Import duty, which gets CESS added up.

It's mind wobbling when you see the tax structure in here.

Now, further to the case, after pandemic hit hard, India's economy was hampered too as the case with entire world. With Russia Ukraine war, India being friendly nation is now in ambiguity to whom to support.

Though Russia has decreased a little charges on crude oil, government continues to recover the funds through taxes and thus everything is becoming very very costly in India.

Its fuel, then causes cost appreciation in transport, logistics, products and services. The whole circle keeps rising. 

[avikz]

Hey Majestic-milf,

keep yourself a little bit up-to-date on what's happening around the world instead of reading an outdated article that was published in December 2021. We are in 2022 for your kind information, that is too June. So wake up!

Inflation has been a problem for the entire world. But two things have recently happened,

1. Russia agreed to sell oil to India at $35 discount per barrel.
2. OPEC Plus countries have decided to increase production from July and continue in August as well

These will drastically increase the oil supply in the world market and the price of the oil will come down to a great extent. Now along with interest rate hike and cheaper oil, the high inflation should come under control by the end of the 2022.

[og kush420]

Hey Majestic-milf,

keep yourself a little bit up-to-date on what's happening around the world instead of reading an outdated article that was published in December 2021. We are in 2022 for your kind information, that is too June. So wake up!

Inflation has been a problem for the entire world. But two things have recently happened,

1. Russia agreed to sell oil to India at $35 discount per barrel.
2. OPEC Plus countries have decided to increase production from July and continue in August as well

These will drastically increase the oil supply in the world market and the price of the oil will come down to a great extent. Now along with interest rate hike and cheaper oil, the high inflation should come under control by the end of the 2022.

But that is correct - India is getting discounted oil from Russia, and USA didnot object. And I fail to understand why USA is so kind to IND - only because India is an allie? They discriminate when they give a bit extra attention to their favourite kid. I am a bit jealous. May our country get the subsidised oil too so there is some stability in the country.  Ameen

[Baofeng]

Hey Majestic-milf,

keep yourself a little bit up-to-date on what's happening around the world instead of reading an outdated article that was published in December 2021. We are in 2022 for your kind information, that is too June. So wake up!

Inflation has been a problem for the entire world. But two things have recently happened,

1. Russia agreed to sell oil to India at $35 discount per barrel.
2. OPEC Plus countries have decided to increase production from July and continue in August as well

These will drastically increase the oil supply in the world market and the price of the oil will come down to a great extent. Now along with interest rate hike and cheaper oil, the high inflation should come under control by the end of the 2022.

But that is correct - India is getting discounted oil from Russia, and USA didnot object. And I fail to understand why USA is so kind to IND - only because India is an allie? They discriminate when they give a bit extra attention to their favourite kid. I am a bit jealous. May our country get the subsidised oil too so there is some stability in the country.  Ameen

US objected and so is the EU, and they are talking to the Indian government about that. So the US-India relationship is on the rocks right now because of that move by India to buy cheap Russian crude oil when almost half of the world is condemning Russia for the war against Ukraine and US and it's ally put a sanctions on them.

And then reports surfaces that India is reselling the oil to the US and the West that comes from Russia. For sure this is going to rise the tension now and their relationship is going to be tested.

As for the rate hike, I think it's inevitable, countries economy has been devastated by the effect of the Covid-19 and it will take sometime for any government to recover from that. And now is the time to start and obviously, government's treasure chest is empty now and they have to find ways to bring money again thru new tax measures.

[Darker45]

Well, that has always been the case in this globalized era. One problem somewhere in the farther part of the world could create ripples that could affect in a number of ways many other countries. Sometimes it is surprising that it still surprises us. At least that's my reaction when I bought a small butane canister a month or two ago and the price was around 25% higher. It was said to be an effect of Russia's invasion of Ukraine. I was taken aback knowing that I'm living in a small Southeast Asian country far away from Europe. But then...

[avikz]

And then reports surfaces that India is reselling the oil to the US and the West that comes from Russia. For sure this is going to rise the tension now and their relationship is going to be tested.

Lol! From where did you get this information? India's internal oil consumption is so high that they have to import almost 94% of their consumption from other countries. India is buying Russian oil because They are getting it cheap. They are not reselling it to any other countries. read the below,

https://www.thehindu.com/news/national/india-is-not-a-conduit-for-russian-oil-sales-jaishankar/article65491475.ece

Buddy, try to understand US gameplan. US is the only country who has violated the human rights number of times. The countries like Syria, Afghanistan, Iraq are devastated due to their attacks. US is responsible for most number of wars in the history of humankind. US devastated the economy of Venezuela by imposing ban on them so they can't sell their oil to anyone.

US has now looked at Europe and trying to bring down the Euro dominance. UK is supporting in this effort. Don't US know what will be happening in Europe if Russia stops oil and gas supply there? These commodities will become pricey so will the inflation and in turn the consumer goods will become pricey. The GDP will reduce so will the Euro dominance and its value.

Whoever trust US and their actions, may God save them!

[davis196]

The inflation is India is 6-7% and you consider this bad?
The inflation in my country is 14% and my country is a member of the EU.
I know that India is importing cheap Russian oil, but this cannot save the Indians from the global inflation. The trillions of dollars and euro, that were printed in the last decade are finally leading to big consumer inflation.

Hey Majestic-milf,

keep yourself a little bit up-to-date on what's happening around the world instead of reading an outdated article that was published in December 2021. We are in 2022 for your kind information, that is too June. So wake up!

Inflation has been a problem for the entire world. But two things have recently happened,

1. Russia agreed to sell oil to India at $35 discount per barrel.
2. OPEC Plus countries have decided to increase production from July and continue in August as well

These will drastically increase the oil supply in the world market and the price of the oil will come down to a great extent. Now along with interest rate hike and cheaper oil, the high inflation should come under control by the end of the 2022.

There will be an increase of the oil supply, but I wouldn't call it "drastic". The oil price won't be dropping at levels below 100 USD anytime soon. The fuel prices will stabilize, but that doesn't mean that the fuels will become cheap and affordable.
The Russians didn't  agree specifically to sell oil at discounted price to India, they are just selling it to whoever is buying.
My country is consuming lots of Russian oil, but the gasoline and diesel prices are high and they keep going up, despite the cheap Russian oil.

[laredo7mm]

Hey Majestic-milf,

keep yourself a little bit up-to-date on what's happening around the world instead of reading an outdated article that was published in December 2021. We are in 2022 for your kind information, that is too June. So wake up!

Inflation has been a problem for the entire world. But two things have recently happened,

1. Russia agreed to sell oil to India at $35 discount per barrel.
2. OPEC Plus countries have decided to increase production from July and continue in August as well

These will drastically increase the oil supply in the world market and the price of the oil will come down to a great extent. Now along with interest rate hike and cheaper oil, the high inflation should come under control by the end of the 2022.

Hmm, India is buying oil at a discount rate but they are selling those oil by refining to European countries when oil price in their own country is skyrocketing. When people are suffering because of these price hikes then govt is making a hell lot of money.

They can not reduce oil prices in their country when they are already buying it at a discount rate then how OPEC countries increased oil supply will decrease the oil price?

[Fortify]

It would seem that what affects a nation in any part of the world negatively or positively can also affect another. Riding on the back of the Russia-Ukraine conflict is the matter of India's GDP.
 Moving from a 6.6% contraction in the year 2020-2021 to an 8.7 then on to 8.9% growth in 2021-2022, it looked like they had cause to celebrate. But it looks like the celebration is short lived as concerns have been raised by policy makers, along with the Reserve Of India (RBI) as they regrettably announce it's first interest rate hike in at least four years.
 India, one of the countries with a high GDP, import more than 80% of its crude oil and is also the largest importer of edible oil, but with prices skyrocketing and inflation rising, it has taken a toll on their economy. According to the RBI, consumer inflation has hit a 6.95% and as a result, has slashed it's yearly growth forecast to 7.2%.
 Meanwhile, Prime minister, Narenda Modi gave an announcement earlier that plans to introduce tax breaks that will offset higher food and petrol costs are being made. https://www.aljazeera.com/news/2021/12/28/india-economy
 

It's hard to take much away from comparisons over the last 2 years of Covid, because it caused a lot of erratic and unprecedented responses across the world. The Prime minister is clearly aware of these issues after he has made deals to take on extra Russian oil at the now cheaper prices, however there is limited room for maneuver when you are in charge of the second most populous nation. India does produce a lot of exports in the form of food, but any imports will hit it hard because the average citizen is still fairly poor. It'll get little sympathy from places like Europe and America in future after being so duplicitous and failing to stand up for the free people of Ukraine.

[Hydrogen]

Moving from a 6.6% contraction in the year 2020-2021 to an 8.7 then on to 8.9% growth in 2021-2022, it looked like they had cause to celebrate. consumer inflation has hit a 6.95% and as a result, has slashed it's yearly growth forecast to 7.2%.

There is controversy as to whether post 2020 economies are experiencing growth. Or merely returning to pre-pandemic levels.

It closely parallels the ongoing discussion as to whether global economies truly recovered from the 2008 crisis. A significant percentage of united states economic growth post 2008 was caused by the federal reserve injecting liquidity into stocks and bonds under QE (quantitative easing) programs. A high percentage of claimed economic growth in that era occurred in financial markets and was described by some as merely representing an expansion of the fed's balance sheet.

It is possible that global economies have been caught in a bubble since the 2008 economic crisis. And later the global pandemic crisis. I'm certain we've all heard plenty of doom and gloom of the past 10 years predicting disaster. Its nothing new under the sun.

I for one have to admit current era markets and economies are much more robust and durable than expected. India itself is no exception. I thought india's economy could be devastated by their rupee recalls. Tensions on the india china border which had some predicting future war, certainly did not help. But somehow economic disaster in india does not appear to have occurred.

It is possible that modern day economies are more durable than equivalent economies in the 1920s. Improvements in communications, productivity, shipping, infrastructure and the internet could all contribute towards economies being more diversified and impregnable. I would guess india will be ok.

[TimeTeller]

Hmm, India is buying oil at a discount rate but they are selling those oil by refining to European countries when oil price in their own country is skyrocketing. When people are suffering because of these price hikes then govt is making a hell lot of money.

They can not reduce oil prices in their country when they are already buying it at a discount rate then how OPEC countries increased oil supply will decrease the oil price?

I recently read a thread also pertaining to this situation, India buying at a discount rate from Russia.
And selling it at a very good price in EU after refining it. A very smart move from this country.
With this advantage, they can lower their oil price because they are getting it cheaper because of this war situation.
At least help their countrymen on this aspect. It is understandable if other countries are increasing their fuel prices.
But if India is buying it at a discounted price, why not share this benefit to its people?

[crzy]

Hmm, India is buying oil at a discount rate but they are selling those oil by refining to European countries when oil price in their own country is skyrocketing. When people are suffering because of these price hikes then govt is making a hell lot of money.

They can not reduce oil prices in their country when they are already buying it at a discount rate then how OPEC countries increased oil supply will decrease the oil price?

I recently read a thread also pertaining to this situation, India buying at a discount rate from Russia.
And selling it at a very good price in EU after refining it. A very smart move from this country.
With this advantage, they can lower their oil price because they are getting it cheaper because of this war situation.
At least help their countrymen on this aspect. It is understandable if other countries are increasing their fuel prices.
But if India is buying it at a discounted price, why not share this benefit to its people?

Just like what you’ve said, they are selling it on a good price to EU so why they will sell it at a discounted price to their own people while they can have more money if they will sell it abroad? This is how money talks and most probably, sadly those companies are preferred to earn more money. Anyway, India is not the only country who are experiencing high cost of food and petroleum, it looks like this is the problem of many countries as of the moment.

[Kakmakr]

Well India is going to have more problems soon, if they keep on undermining western sanctions, by buying Russian Oil and then refining it and selling it back to European nations.    The US President has already warned them that there will be consequences for their actions, but they are simply ignoring it.

India’s external debt was US$ 570 billion at the end of March 2021. It recorded an increase of US$ 11.6 billion over its level at end of March 2020. The external debt to GDP ratio increased to 21.1% at end of March 2021 from 20.6% an year ago. Source : https://en.wikipedia.org/wiki/External_debt_of_India   (What happens when that faucet is closed) 

[og kush420]

Hmm, India is buying oil at a discount rate but they are selling those oil by refining to European countries when oil price in their own country is skyrocketing. When people are suffering because of these price hikes then govt is making a hell lot of money.

They can not reduce oil prices in their country when they are already buying it at a discount rate then how OPEC countries increased oil supply will decrease the oil price?

There is so much drama involved in it - why have EU not thought once before putting the sanctions on Russia.
Did they believe that Russia will do as they demand and beg EU to remove the sanction. Russia is the power they have fuel. Now half of the world is in trouble and IND are clever enough to cash this game.

[KennyR]

Well India is going to have more problems soon, if they keep on undermining western sanctions, by buying Russian Oil and then refining it and selling it back to European nations.    The US President has already warned them that there will be consequences for their actions, but they are simply ignoring it.

India’s external debt was US$ 570 billion at the end of March 2021. It recorded an increase of US$ 11.6 billion over its level at end of March 2020. The external debt to GDP ratio increased to 21.1% at end of March 2021 from 20.6% an year ago. Source : https://en.wikipedia.org/wiki/External_debt_of_India   (What happens when that faucet is closed) 

USA will try to be hard over India, but it won't be making any big impact. We need to keep USA at the position of India and think, surely USA will try to make the best profit out of this process. Even after buying oil at a much lower price there is a no big change in the fuel price of India. USA will try to give some pressure, beyond certain point India will strike back. Now beyond this India is facing a serious problem that have arisen out of the speech from ruling party spokesperson. This is gonna make India down.

[STT]

Owing Dollars not your own currency is a double burden and downside to strong dollar, hence they have little choice with these interest rate rises.

Both India and China have little to no oil but China at least has the exports to exchange with greater ease for the limited oil and gas.   China is already bound to buy up Russia energy, India wants to process all the worlds oil as I understand it and so profit that way.
   India has GDP growth like China that will remain even under pressure but it has a greater need to gain every year to close the gap towards the western nations with their standing advantage.  Every nation has some comparative advantage and India has the growth of one of the 'youngest' large nations.  They have to find a way to utilize that natural asset to support the currency and nation generally.   Main problem India has is a weak currency and poorly organized trade, I have great faith in their ability to find the best path forward and become far better off then presently as some of that will come from technologys progress also.

[laredo7mm]

Hmm, India is buying oil at a discount rate but they are selling those oil by refining to European countries when oil price in their own country is skyrocketing. When people are suffering because of these price hikes then govt is making a hell lot of money.

They can not reduce oil prices in their country when they are already buying it at a discount rate then how OPEC countries increased oil supply will decrease the oil price?

There is so much drama involved in it - why have EU not thought once before putting the sanctions on Russia.
Did they believe that Russia will do as they demand and beg EU to remove the sanction. Russia is the power they have fuel. Now half of the world is in trouble and IND are clever enough to cash this game.

EU knows Russia won't beg to remove sanctions because it is not the first time the west put sanctions on Russia. Actually, the most benefited from this conflict is the USA. They force EU countries to put sanctions on Russia so that they can not buy fuel from them. Now the USA is selling oil and gas to the EU at a high price. The USA announcing billions of dollars in arms deals with Ukraine. On the other hand, many Ukrainian soldiers are talking about shortages of ammunition and their dire situation on the battlefield. Where are all these weapons going? This is all about the business that the USA and UK are playing with the EU.

[og kush420]

EU knows Russia won't beg to remove sanctions because it is not the first time the west put sanctions on Russia. Actually, the most benefited from this conflict is the USA. They force EU countries to put sanctions on Russia so that they can not buy fuel from them. Now the USA is selling oil and gas to the EU at a high price. The USA announcing billions of dollars in arms deals with Ukraine. On the other hand, many Ukrainian soldiers are talking about shortages of ammunition and their dire situation on the battlefield. Where are all these weapons going? This is all about the business that the USA and UK are playing with the EU.

USA is always trying to keep countries in their control, But one thing is for sure - if by any means Russia is able to start Ruble trade for the oil and break the petrodollar deal. Than surly Russia will be unstoppable and USA is in trouble.

[kryptqnick]

India decided that profit is more important than morality, and they've been benefiting from trading with Russia when many others are cutting their ties because of not wanting to sponsor a war. Apparently, this plan was flawed and India will still suffer from the consequences of the war. Well, it's only fair if it does.
The way I see it, if the democratic world (and India prides itself on being world's largest democracy) truly united in a joint action with a radical principle of cutting all ties with Russia, Russian economy would collapse because it is built on selling their products, and largely selling them to democracies. That would exhaust the resources Russia can spend on the war very fast, they'd lose the war, be in a terrible economic position, and then Western countries could demand trial for war criminals and build new economic relations with the new Russia. That could all be over very fast, and that would in the end have had a smaller negative impact on global economy.