NEW DELHI: India and Russia further narrowed down their differences over the longstanding issue of the rupee rouble exchange rate to be applied for the payment of India’s debt to the former Soviet Union at a meeting on Jan.22 Finance Minister Manmohan Singh and Russian Deputy Prime Minister Viadimir Shumeiko explored various approaches to the problem during the meeting.

Official sources said further discussions on the issue would be held at the official level so as to resolve it all the earliest.

Dr.Manmohan Singh and Shumeiko had held two rounds of discussions on the problem on Wednesday, which was followed by an official level meeting the next day.

During Wednesday’s discussions, Russia had agreed to the need for revaluation of India’s huge debt to the former Soviet Union but felt it should not be based on a revised rupee rouble exchange rate.

Instead, Shumciko felt such revaluation should be based on “some other formula” and in the perspective of long term economic cooperation between the two countries.

The finance minister had reiterated India’s position that the exchange rate imbalances in the 1978 protocol had to be corrected so as {o reflect the strengths and weaknesses of both the rupee and the rouble,

He called for a settlement of the outstanding issue, saying the provisions of the protocol had been concluded by economic changes.

Shumciko is leading a high level delegation to India in preparation for President Boris Yeltsin’s three day visit to the country from January 27.

India had raised the issue of renegotiating the exchange rate formula long before the dissolution of the Soviet Union.

At the meeting, Dr.Manmohan Singh was assisted by Economic Affairs Secretary Montek Singh Ahluwalia and other senior officials.

Russia has been seeking an alternative to the exchange rate formula to settle the problem.

According to one estimate, India owed about Rs 38,000 crore to the former Soviet Union. A change in the exchange rate, keeping in view the changed conditions, could Substantially reduce India’s liability.

The issue is also likely to figure during Yeltsin’s discussions with the Indian leadership.

Article extracted from this publication >>  January 29, 1993