War's impact on commodity prices to dent GPD, demand growth

New Delhi, March 12 The Russia-Ukraine war is expected to dent India's GDP growth as well as demand recovery.

The crisis has led to a global spike in international prices of crude oil, natural gas, coal, nickel, copper, aluminium, titanium and palladium.

The high commodity costs will impact manufacturing and infrastructure sectors, which are key contributors to growth and job creation.

Already, the manufacturing sector is reeling under expensive commodities costs due to rise in their international demand and supply constraints.

Moreover, India is a major importer of these precious as well as industrial commodities.

Besides, lower manufacturing growth will have a direct bearing on the country's GDP growth as well as job creation.

"We had expected India's GDP to grow by 8 per cent in FY2023, boosted by a low base in H1, albeit contingent on the government's budgeted Capex kicking off early," said Aditi Nayar, Chief Economist, ICRA.

"However, protracted geopolitical tensions and high commodity prices pose large downside risks, with margin compression set to squeeze value added growth during the period of the conflict, and price rises to compress disposable income," Nayar added.

Earlier, the seasonally adjusted IHS Markit India Manufacturing Purchasing Managers' Index