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India's self reliance policy 'Aatmanirbhar Bharat' is worth its cost in a globalised world where the interest of nations can trump well laid plans, said State Bank of India (SBI) in a research report.

Citing the rising cost of living, inflation, tightening of policy rates, slowing down of the economies and recession may be in the offing in Europe, the SBI report states in hindsight Aatmanirbhar Bharat is worth the cost.

"It is always better to build our own capabilities rather than depending on others, that makes Europe so vulnerable now. Puritans cite the classic case of Germany not building a single LNG (liquified natural gas) terminal all through 2006-22 and instead purely depending on gas supply from Russia," the report notes.

The military conflict between Russia and Ukraine has widened to include economic measures as weapons among the warring sides.

"Russian pipeline flows to Europe have been dropping since the second half of 2021 and following recent cuts in deliveries, Russian exports to the EU are now down roughly 60 per cent compared to June 2021 and further downward escalation is a reality," the SBI said.

According to the research report, the 27 countries in the European Union (EU27) are almost fully dependent on gas imports with more than 90 per cent of the gas consumed in the euro area being imported.

Unlike petroleum products, gas is the primary energy source most consumed in the industrial sector and has a high proportion in household final consumption.

A significant increase in natural gas prices dampen economic activity through both the consumption channel and the intermediate goods channel.

The shortage in gas supply is expected to impact the production of fertilizers, steel, aluminium and zinc.

Fertilizer crunch is in fact deepening with more than two-thirds of production capacity halted by soaring gas costs as gas is both a key feedstock and a source of power for the sector. Thus EU may become a net importer of fertilizers in the current year, SBI report states.

It is estimated by European Central Bank (ECB) that the direct and indirect impact of a hypothetical 10 per cent gas rationing shock on the corporate sector is estimated to reduce euro area gross value added (GVA) by about 0.7 per cent.

Further a 10 per cent reduction in consumer demand due to higher energy bills is expected to cascade to other sectors with loss of value added in the range 0.1 per cent to one per cent. Real estate services, public administration, health and education will be impacted the most.

Given this situation, Aatmanirbhar Bharat Abhiyaan is the vision of new India envisaged by the Indian Government to make the country and its citizens independent and self-reliant.

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.