India's Finance Minister Nirmala Sitharaman leaves the Finance Ministry to present the annual budget in parliament in New Delhi on February 1, 2021. Photo: AFP / Sajjad Hussain

The Indian government has expressed concern over escalating Ukraine-Russia tension and its impact on global crude prices. The country’s economy contracted 6.6% in the year 2020-21 and is showing signs of a gradual recovery from the Covid-19 induced slowdown.

Finance Minister Nirmala Sitharaman said rising crude oil prices posed a challenge to India’s financial stability and the government was monitoring the situation. She said the situation was worrisome and called for a diplomatic solution.

“Crude (is) one of the most important considerations … we will keep a watch,” she told Indian media.

Sitharaman said trade has not been impacted because of geopolitical tensions, but the government was keeping a close watch. She said the government was careful that exporters should not suffer.

Global crude prices are close to US$100 a barrel, but gasoline and diesel prices in India have remained frozen for more than 100 days as elections are in progress in some states. It is expected to climb once the polling is finished on March 7.

LIC IPO

Regarding the proposed initial share sale of state-owned insurer Life Insurance Corporation, the minister said market feedback was positive. However, she declined to answer when asked if the IPO would be delayed due to volatile capital markets.

The state-owned insurer recently filed draft papers with market watchdog the Securities and Exchange Board of India for the sale of a 5% stake for an estimated 630 billion rupees ($8.36 billion). This will be the biggest public offering in the country’s stock market history.

Equity indices on the Bombay Stock Exchange and National Stock Exchange have been falling in the past few sessions as investors fear an escalation in Russia-Ukraine tensions could push up oil prices and inflation.

Life Insurance Corporation’s share sale was initially slated to be in March, but now market observers fear it may get postponed due to choppy markets.