In perhaps the largest ground operation since the Second World War, Russia sent two lakh troops into Ukraine on February 24 last year, unleashing a war that has killed over 8,000 civilians and led to the fleeing of an estimated eight million refugees.

A year later, the war has turned into a quagmire for Russia, Ukraine, the US and EU. Ukraine hangs on grimly with the aid of Western weaponry, even as its troops are outnumbered by Russia’s.

The war initially disrupted supply chains, trade and growth, but India has managed rather well, economically and in strategic terms. It remains the fastest growing economy, while maintaining a strategic neutrality between Russia and the Western bloc. India should continue in this vein, while pushing for de-escalation.

Meanwhile, the economic storm of the mid-2022 period has passed, even as inflation in the West remains higher than central bankers’ comfort level. Curiously, economic sanctions on Russia are not being harshly imposed, as a result of which commodity prices are off their mid-2022 peaks.

This is because the US and EU are not keen to enforce sanctions in a manner that would hurt their economies. As the US Congressional Research Service concedes in its December report: “In addition to its oil and natural gas exports, Russia has been a key global supplier of several metals (titanium, aluminum, and nickel), chemical gases used in semiconductor production, wheat, and fertilisers, among other commodities.”

Faced since December 2022 with a price cap of $60 a barrel on its crude exports, Russia is selling its oil at a deep discount, with China and India emerging as major buyers since the onset of the war. India purchases 1.2 million barrels of crude a day from Russia, 33 times more than a year earlier.

Russia has emerged as India’s fourth largest import partner after China, the US and the UAE, its fuel-driven imports at $37.2 billion for April-January of FY23, 384 per cent over the previous year.

According to a report in this newspaper, steel imports from Russia were up five times in volume terms during this period.

As for the impact on growth, the IMF’s January update of its World Economic Outlook projects Russia’s $2 trillion economy to grow 0.3 per cent in 2023 and 2.1 per cent in 2024 — whereas the US and Euro Area are expected to grow by 1.4 per cent and 0.7 per cent respectively in 2023 and 1 per cent and 0.6 per cent in 2024. India’s growth has been pegged at 6.1 per cent and 6.8 per cent, respectively, for these two years. This does not point to an overly disruptive impact of the war.

However, India must be serious about ‘de-dollarisation’ of trade, which has not taken off on the ground with respect to Russia. Volatility arising out of geo-political stability can be hedged.

The Reserve Bank of India could bolster gold reserves, which have remained flat at just over $42 billion between April 1 last year and February 10 this year. Above all, the war needs to stop if only for its impact on countries dependent on fuel and food imports.