NEW DELHI: “Nyet” was the word that the Indian delegation heard most often in Moscow during its trip in January. One senior commerce ministry official put it rather succinctly when he said: “Since I do not belong to the IFS. I do not really understand what my colleagues at the ministry of external affairs (MOEA) mean when they say Boris Yeltsin has warmed up towards India. We did not have any evidence of that during our trip.
In fact the Indians have returned virtually empty-handed. Absence of any agreement protocol or joint communiqué at the end of the visit was a proof of that.
The Russians stood their ground on almost everything First technical credit proved to be the most continuous issue. India wanted the Russians to square the account as it is reflecting on the country’s already dismal fiscal scenario The Russians like the proverbial be a would not budge. According to them the total Indian debt to the erstwhile Soviet Union stands at Rs.38000crore and is rising. They told the Indians with seeming nonchalance that the country can adjust the technical credit against that.
“We understand their problems too say the senior government official he adds. “They are busy with the acute shortages in the country. On top of that they cannot even be sure about the reactions of the other republics to the various aspects of Indo-Soviet trade.”
Adds another commerce ministry mandarin “they are themselves suffering from a severe existential problem The Russian economists who are framing Yeltsin’s polices doubt their survival.”
While that highlights the ferment that has engulfed the newly born Common wealth of independent States (CIS) it doesn’t help uplift the bleak Indian prospects. For sectors like defense steel power and coal machinery there seems to be no light at the end of the tunnel The Indian delegation has returned with no promises about resumed supplies. Even if the supplies resume Indians are not sure how they will pay.
Russians were given three options by the Indians on rupee-ruble trade. One the old rupee account system can prevail on the core sector supplies while the rest of the trade can be converted to hard currency with immediate effect two the rupee trade can be allowed to run its course for two years following which there will be complete switch to convertible currencies and three the whole trade can be transformed into hard currency trade.
Russia reacted to the set of option with stoic silence. Instead they have asked their traders to do 40% of their business in rupee and the rest in hard currency (read dollars).
India’s tale of woes thus is just beginning observers say. Even with 60% hard currency wade India will have to spend scarce dollars to get spare parts for its heavily Soviet technology-dependent core industries. In addition Indian bulk purchases of Soviet petroleum will now have be paid in dollars. Plus the safety net of priority supplies on crucial commodities has disappeared. Now India will have to stand in a line like other importers as the CIS embraces the market.
Article extracted from this publication >> February 21, 1992
