After the United States led Western countries to impose a price cap on Russian oil, it was unexpected that India continued to import a large amount of crude oil from Russia, which caused strong dissatisfaction from the United States.

In recent days, India's stock market has experienced a significant decline, and the exchange rate has also seen a rapid depreciation.

Is India's continued role as a middleman for Russian oil likely to lead to the United States accelerating its financial exploitation of India?

01, Stock and Currency Plunge

Yesterday, stock markets in various Asian countries performed normally, with the Hong Kong stock market continuing to rise significantly. However, the Bombay Stock Exchange index in India fell by more than 1,200 points at its highest, marking a decline for three consecutive trading days.

On Tuesday, the Bombay Stock Exchange index reached a high of 61,263 points, but yesterday it fell to a low of only 58,974 points, with the largest drop in three trading days approaching 2,300 points.

Advertisement

Compared to the high of 63,583 points in December last year, in just a month and a half, India's index has fallen by nearly 5,000 points.

At the same time, over the past week, the Indian Rupee has experienced a continuous decline against the US Dollar, depreciating from 80.88 to 81.78, reversing the trend of four consecutive weeks of appreciation.

It seems that overnight, India's financial markets have once again been shrouded in a dense cloud.

02, Economic Growth SlowdownIndia's financial year runs from April of each year to March of the following year. The growth rate in the previous financial year reached as high as 8.3%, making it the leader among major economies.

However, from April 2022 to March 2023, India's GDP growth rate showed a significant slowdown, estimated at only 6.8%, which is far below the previous financial year and also lags behind the 7.6% growth rate achieved by Saudi Arabia. India is no longer the champion of growth.

The rapid development of India's economy in the past was related to several reasons, one of the main reasons being India's ability to attract foreign investors. Amidst a global economic crisis and a saturation of markets around the world, the still-developing India became a "gold rush" for many large companies.

Thus, behind the rapid economic development lies a rapid increase in investment and consumption, as well as GDP growth accompanied by inflation.

However, as the Federal Reserve turned off the tap and stopped the printing press, India's economic development also encountered difficulties.

Especially in the current situation, the restrictions imposed by the United States on Russia seem to be ineffective and are likely to scapegoat India.

If the Federal Reserve continues its tightening policy and more funds are withdrawn from the Indian market, India will need to find new ways to cope.

03, Can high-speed growth continue?

Modi stated that India will become a wealthy nation during the period from 2022 to 2040, completing the historic leap from a developing country to a developed one.

India's current economic development can be described as thriving. Compared to other countries, the ruling party in India has a solid position domestically, and the political influence led by Modi has penetrated from the center to the local level, which is a solid guarantee for India's economic development.The Indian government, in cooperation with other countries, has become India's second-largest mobile phone producer. India is striving in areas such as new energy vehicles and pharmaceuticals, attempting to shift companies from India to other countries.

However, it is clear that these efforts alone are not sufficient. The above endeavors have contributed to India's rapid economic growth in the past, but they do not guarantee continued growth in the future.

04, Middlemen

After the European conflict in 2022, and especially as the energy crisis in Europe intensified, India found a new growth point.

Currently, India has become the largest importer of Russian crude oil, and India has indicated that it will import more crude oil as long as the price is right.

On the one hand, India itself is the third-largest global consumer of oil, and on the other hand, it is because India has discovered that there is a huge profit margin involved.

At present, India's refineries are continuously importing Russian crude oil at low prices, then processing it into diesel and other finished products, and exporting them to Europe in large quantities, earning a super high profit.

However, for India to continue making this money, it must constantly face pressure from the West.