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Explained: Economy in time of war

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While markets will likely remain volatile in the near term in line with geopolitical developments, experts feel that since India is not party to this external event and is not impacted directly, its medium- to long-term economic prospects are not altered — and investors should not sell in panic.

However, there are some concerns.

Inflation risks

Brent crude shot past the $100 per barrel mark for the first time in eight years on concerns over supply. Russia is the world’s second largest oil producer.

Rising oil prices could speed up already rising inflation. India imports more than 80% of its oil requirement, but the share of oil imports in its total imports is around 25%. Rising oil prices will also impact the current account deficit, which is the difference between the values of goods and services imported and exported.

While increases in domestic fuel prices have been put on hold as five…

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