Edible oil industry assures not to make undue gains from Russia–Ukraine crisis

The edible oil industry has assured the government not to make undue gains from the Russia–Ukraine crisis. This is significant as India imports the maximum sunflower oil from Ukraine. During an interaction with Food, Commerce and Industry Minister Piyush Goyal, the industry representatives said that they had a stock of about six weeks. They would make every effort possible to look for a substitute for Ukraine.

In the domestic market, mustard oil prices have softened over the past few weeks after they crossed Rs 200 per litre. But the halting of sunflower oil imports from Ukraine and Russia may soon lead to the problem of lack of availability of edible oils, thereby impacting their prices. The industry says that Indonesia and Malaysia have surplus palm oil, which may be imported. Among edible oil imports of India, it is palm oil that has the largest share.

India consumes about 25 lakh tonnes (lt) of sunflower oil annually. But the domestic production is hardly about 50,000 tonnes. According to Commerce Ministry data, the country’s sunflower oil imports totalled 25 lt in 2019-20. In 2020-21, the imports stood at 22 lt. Ukraine accounted for 19.3 lt of imports in 2019-20 and 17.4 lt in 2020-21. During this period, sunflower oil imports from Russia stood at 3.8 lt and 2.8 lt respectively.

According to the Second Advance Estimates of the Ministry of Agriculture, the total oilseeds production in the country will be 371.5 lt in 2021-22. This is 12 lt above the 359.5 lt produced in 2020-21.

Revenue loss of 1 lakh crore in petroleum: SBI Research

The crude oil prices have also gone up in the international market after the Russian invasion of Ukraine. Brent crude has crossed $100 per barrel. SBI Research estimates that if oil prices remain above $90, the government may have to suffer a revenue loss of Rs 1 lakh crore in 2022-23. It says in a report that if the government reduces excise duty on petroleum products by Rs 7 per litre, it will suffer a loss of Rs 8,000 crore every month in terms of excise duty. Rating agency ICRA, too, estimates that if the excise duty goes back to the pre-pandemic level, the government will stand to lose a revenue of Rs 92,000 crore.

War will affect economic recovery: Sitharaman

It is in view of these circumstances that Finance Minister Nirmala Sitharaman has said that the war will affect the economic recovery not only of India but also of the world. In the Asia Economic Dialogue 2022 organized by the Pune International Centre on Thursday, Sitharaman said that no one country could plan for its recovery, particularly in an age when global value chains had already brought countries closer to each other. War-like conditions will hamper the recovery not only of India but of countries everywhere.

The heads of IMF and World Bank have also said that war in Ukraine will badly affect the economy of the region. This will have far-reaching economic and social consequences.