World price rise in the wake of Russia-Ukraine war

- Aataapakarana Atapata: Dhawal Mehta

World economy in disarray: Russia's invasion of Ukraine has damaged the world economy. While the world has barely emerged from the Covid epidemic, it is in a state of war created by Russia. The economics and politics of the world are in a state of turmoil at the time of writing. In the second week of March, crude oil prices soared to ૩૯ 12 a barrel during the war. In December 2021, the price of crude oil, which was three months ago, almost doubled in just three months. Of course, now it has come down to about ડો 100. Rising crude oil prices will hurt many countries, such as India, which do not rely on fuel oil imports. The world's economy was plunged into an 'oil crisis' when OPEC (oil producing country) countries suddenly doubled and tripled fuel oil prices. The crisis gave birth to the market economy of Margaret Thatcher in Britain and Ronald Reagan in the United States. Now this ideology of market fundamentalism has given birth to a liberal and capitalist ideology with an over-emphasis on individual freedom, the ideological leaders of which were Frederick Hayek and Milton Triedman (both professors at the University of Chicago).

Economic Crisis: The 9/11 attacks on the United States and the catastrophic financial crisis of 2008 called the financial meltdown caused earthquakes in the world economy. Remember that the 19th oil crisis was caused by the Arab-Israeli war. But the Russian-Ukrainian war, which has been going on for more than three weeks now, could cause huge inflation in the world economy. The US federal (central) banking system recently raised bank rates by almost half a per cent, which is close to zero, in a bid to curb inflation. High bank rates are a powerful weapon in curbing inflation. But this weapon is like a double-edged sword. A higher bank rate can curb inflation by putting a brake on demand but at the same time over-suppressing demand can lead to a recession in the economy. In addition, the country's central bank (our Reserve Bank) can absorb inflationary money through open market operations. It is to be noted that if the price rise of nine to ten per cent or above continues for a long time (two-three years) then the central government may change in the middle or lose the election. One danger is that the world's petroleum-producing nations will hold the world's economy hostage until the world produces 100 percent of its electricity from solar and hydroelectric or inevitably nuclear energy.

India is a major importer of crude oil. Rising crude oil prices will hurt India more than any other country in Asia. The current crisis has shocked European countries as they rely heavily on Russian oil and gas for energy. Now all the non-petroleum producing countries of the world know what they relied on petrol for power generation and transportation. Why 100% of electricity generation in the country is done through renewable sources? This kind of ambiguous state is called 'Between Devil and the Deep Sea' in English. Choose any one option but each option scares us.