War has immediate consequences for global trade, capital flows, financial markets and access to technology. International sanctions usually have long-term consequences and new elements introduced into new(er) normal.
The ongoing conflict between Russia and Ukraine may impact certain high-frequency indicators like financial markets, exchange rate and crude prices in the short-term for India. However, it noted that this moment will not have any lasting impact on the Indian economy. While with the ongoing geopolitical crisis in the northern regions of the globe, the banking sector of the country being resilient and trades insignificantly alarming, the GDP is also expected to have a negligible impact due the conflict, but India is indeed torn in between for the defence imports from Russia and the US. Meanwhile, further sanctions by the West on Russia for payments, can force India to revert to erstwhile INR/RUB exchange for whatever minimal trade.
Looking farther ahead, the decisions of oligopolies like Visa, MasterCard, Google, Apple, PayPal etc to suspend their services as part of sanctions issued in particular geographies, draws attention to the preparedness of the individual economies and financial systems of the countries or regions to deal with such denial of services. India is no stranger to sanctions or denial of services, but still in spite of the major efforts made to shield the economy from the whims and fancies of the stronger economies, we are still not completely insulated or independent as our immediate northern neighbours. In the payment world, India has built substantial capability since the launch of the RuPay and UPI infrastructures under NPCI, which at present process far more transactions in India than the multinational payments technology companies. The only speed-breaker in the overall autonomy is the segment of international transactions for credit cards, which is governed and ruled by the Visa-MasterCard duopoly.
The icing on the cake is the spurt of new age first generation entrepreneurs and disruptive startups in the fintech space which provides the impetus and cushion for financial independence and stability of the financial system.
