Question

Owning to political considerations, Russia has banned the import of seafood from the European countries. How would you analyse the impact of this decision

(i) on the export of seafood from the Indian market, and

(ii) on the domestic supplies of seafood in India?

Answer 1

The effect of the decision will be in the following ways:

(i) If Russia has banned the import of seafood from the European Countries, it generates an opportunity for the Indian exporters to send supplies of seafood to the Russian market. India can earn foreign exchange which can be used to import military hardware from Russia.

(ii) If seafood is exported to Russia, domestic supplies will reduce in India. Supply curve of seafood in the Indian domestic market will shift to the left. Other things remaining constant, it would lead to increase in price in the domestic market.