While India has shown its unabashed support for Israel after the surprise terror attack launched by Palestine-based group Hamas, the Indian economy is likely to take a major blow if the crisis worsens and the war between the countries continues.
Israel is retaliating to the Hamas terror attacks by bombing Gaza in an effort to end the siege of the military group in the conflicted area, but the high defence measures is draining the economy of the country, impacting its trade and business.
Finance Minister Nirmala Sitharama said on Friday that the concerns regarding a spike in petrol and diesel prices are back in India in the midst of the Israel-Hamas war. The FM said that there are uncertainties in the global petrol market, and hinted at the prices going up soon.
As it doesn’t seem like the operation by the Israeli defences will die down anytime soon, here is all you need to know about how much the petrol prices in India can rise, and what will be its impact on the overall inflation in the country.
First Deputy Managing Director of the International Monetary Fund (IMF) Gita Gopinath, while speaking to NDTV, said that if the Israel conflict became bigger, it could have a major impact on oil prices across the globe, inflation and the world GDP.
Crude oil prices are already on the rise and experts are warning traders against investing in Indian Oil and ONGC shares in the coming days due to an expected exponential rise in petrol prices. It is expected that the prices will rise by 10 percent if the Israel conflict doesn’t get resolved.
Further, Gopinath said that a 10 percent rise in oil prices is set to reduce the world GDP by 0.15 percentage points and raise inflation by 0.4 percentage points. This means that inflation-hit countries in Europe, as well as the United States, will struggle deeply.
When it comes to India, the rise in the oil prices and the temporary impact on the import and export of goods from Israel can lead to the Indian economy taking a deep hit, which might lead to the rise in prices of basic commodities in the country.
The Israel-Hamas clash has left over 3700 people dead as the conflict entered its ninth day on Sunday. Israel has asked the people of Gaza to evacuate to other parts of the conflicted area as it is expected that the IDF will launch an on-ground military operation soon.
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