The peace talks on the war in Ukraine continue despite the expiry of the deadline. It is a matter of conjectures by several analysts while Trump has initiated the peace talks for the third time and now. Whatever may be his motives or drivers, peace is an absolute necessity for the world community in terms persisting of economic conditions and social displacement and chaos. Trump is perceived as a transactional leader; but is it not the case that each country would like to have a sound economy in order to meet the needs of the people and development of the country! The economic implications of the Ukraine war has been grave across the world including India from the day the war began.

The war in Ukraine dramatically shifted the global economic landscape, and its consequences are still echoing across Continents. Over the past four years, the crisis deepened uncertainty in trade, energy and food security. Almost every country has been facing the challenges. India, with its vast population and growing economy, has been seriously exposed to the changes occurring as the war rages on. Examining these closely throws light on the challenges but India has managed to create some fresh opportunities.
Looking at the global impact, since the invasion started, there was a sharp surge in energy prices. In fact, this was the most visible effect of the war. As Russia is a major exporter of oil and natural gas, sanctions and trade restrictions imposed by United States and Europe, reduced supply and made prices soar. Way back, by the end of March 2022, European gas prices were nearly 600 per cent higher than the year before and global oil prices also increased. These increases soon drove inflation which meant that households across the world had to pay more for fuel, electricity and goods dependent on energy. Food markets were hit hard as well. Grain, sunflower oil, and other exports from Ukraine and Russia have a huge share of global supply. Disruptions led to higher prices and supply deficit, especially impacting countries in Africa and Asia which depend on these imports.
The number of people facing food insecurity globally rose to record levels – nearly 258 million in 58 countries in 2022 alone, and the number is growing worsening hunger and poverty. There was already pre-existing global issues like inflation, disrupted supply chains and slow growth during and immediately after Covid-19 pandemic. Many countries including those in European Union, saw their post-pandemic economic recovery stalled in the wake of Ukraine war. Growth forecast has been revised downward and economic volatility remains a grave concern. To make matters worse, international trade is affected by big economies that are de-globalising and turning inward for security, stability and resilience. Remember, the biggest economy United States turning to ´America First´.
Manufacturing and technology sectors suffered additional stress. For instance, Ukraine produces Neon gas, a vital component for making semi-conductors. The supply disruptions badly affected electronics and auto industries. Western countries pulled out of Russia and enmasse, impacting global business networks and opening up both risks and new areas for competitors.
The impact on India was immediate and significant. As a major importer of oil and gas, India has experienced higher energy costs for industries and consumers alike. This put a strain on household budgets and drove widespread price rise, feeding into elevated inflation rates. To cope, given India´s long-standing friendship with Russia, New Delhi continued to buy discounted Russian oil, negotiating to save money while navigating complex international diplomacy. In the Trump´s tariff regime, became a major target for buying oil from Russia.
India´s defence sector has also been directly impacted. India has historic defence ties with Russia for military equipment and technology but the war has pushed New Delhi to look for alternative sources like France and United States at higher prices.
The economic consequences of the war had notable social and political impacts felt worldwide. Millions of refugees have migrated to the neighbouring countries in Europe straining their public spending and stretching social resources. Poland which neighbors both Russia and Ukraine, felt the heaviest pinch of the war refugees. Poland has alone nearly 1 million Ukrainian refugees. The influx has prompted policy changes across the Continent. It put renewed emphasis on security reflecting in high increase in defence budgets by many countries, certainly in Poland.
The ongoing war is causing rise in costs of living which has stirred discontent among the citizens of Europe. In Poland, more than 50 per cent people want an end to the war even if Ukraine has to cede territories to Russia.
India has adopted several ways to strengthen resilience against the shocks of the war. It diversified its energy sources by investing in renewables and new overseas partners. India decided to reduce dependence on any single supplier for oil and gas. It expanded trade relations with new and emerging markets which may provide a buffer against future disruptions. Additionally, investing more in manufacturing under the policy, ´Make in India´, makes supply chains less vulnerable and generates jobs and economic growth. India has been actively participating in global diplomacy to reshape international political and economic rules like restructuring the UN and other global economic institutions.
However, India´s contribution to ending the war in Ukraine, has been less than expected by many countries. The Ukraine war has made it crystal clear just how interconnected the world economy and politics are. How such a war can make conditions difficult is felt across the world. Unless the war is brought to an end, sooner than later, India and other countries mainly the neighbouring ones to Ukraine will face increasing challenges of inflation and supply chain disruptions. Many countries including India are trying to adapt to the new conditions, build new partnerships and make forward planning. By investing in trade, energy diversification, indigenous industries India has somewhat safeguarded its economy from any collapse. Yet, the war must end.
The peace talks should conclude in a ceasefire. From the latest available reports, it appears that Putin is ready to give a guarantee in writing that Russia will not attack Europe. At the same time, Zelenskyy has vowed not to give up any territory to Putin. Donald Trump claims that Ukraine-Russia Agreement is ´very close´. While Russia is willing to negotiate on the American-drafted peace proposal, Europe is skeptical. French President Emmanuel Macron warned that there is clearly no Russian willingness for ceasefire or engaging with any Ukraine-friendly proposal. The British Prime Minister Keir Starmer also expressed cautious optimism, ”I do not think we are moving in a positive direction” and expects that the large part of the peace proposal Zelenskyy is indicating should be accepted. Zelenskyy is willing to move forward with the US initiatives if the key European partners were involved. All in all, a successful conclusion of the peace talks tests the efficacy of American and European diplomacy. However, the economies will gradually bounce back if only the war ends.

Email:------------------------------dr.dkgiri@gmail.com