Gas crisis in Europe to create fresh round of inflationary pressures

Agencies | New Delhi

The Daily Tribune – www.newsofbahrain.com

The current gas crisis in Europe is expected to create a fresh round of inflationary pressures in food and transport prices, said SBI Research in its latest report, adding that the prices of fertilisers and other raw materials would remain elevated during the financial year 2022-23.

The galloping gas prices in Europe have made the world pause and catch a breath in mid-August, amidst a war seemingly entering a deceptively 'deadlocked zone', as benchmark gas prices spiked five times their prices at the start of the year (and, almost 14 times their 10 years average prices) with gas supply through the Nord Stream1 pipeline drying up fast, the report said while describing the overall energy situation. At the same time, Russian exports to the EU are now down by roughly 60 per cent compared to June 2021 and further downward escalation is a reality. Notably, 90 per cent of the gas consumed in the region is imported. 

The Eurozone and the UK are currently battling runaway inflation, the SBI Research report said, adding that the worst was yet to come. In the UK, the new political dispensation led by Prime Minister Liz Truss has frozen the gas and electricity bills for the average households at £2,500 a year for the next 2 years, it said adding that its financial implications were expected to reverberate through not only the UK but also the Eurozone. 

"Seems, the beleaguered Eurozone is the new axis of unpredictable uncertainty in a world rife with unknown unknowns," it added. Against this backdrop, the research report underlined the benefits of the Atmanirbhar Bharat initiative taken up by Indian policymakers and said it was always better to build one's own capabilities. "It is always better to build our own capabilities rather than depending on others, that makes Europe so vulnerable now."

Aatmanirbhar Bharat Abhiyaan, the report said, is the vision of a new India envisaged by the government. Energy security and energy efficiency are the key themes under the self-reliant India ambit, as the country gears to make a shift towards transitioning to greener and cleaner sources of energy, also to meet its obligations under COP26.

For the record, at the COP26 summit at Glasgow in late 2021, Indian Prime Minister Narendra Modi committed to an ambitious five-part "Panchamrit" pledge, including reaching 500 GW of non-fossil electricity capacity, to generate half of all energy requirements from renewables, to reduce emissions by 1 billion tons by 2030.

India also aims to reduce the emissions intensity of GDP by 45 per cent. Finally, India commits to net-zero emissions by 2070.