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Under the new agreement, the 1993 repayment is offset by a loan granted to the Russians for the purchase of Indian goods. And from 1994, Russia will buy Indian products worth Rs 2,500 crore with the funds it receives. This will mean paying off The Russian debt with goods. But beyond that, the exchanges will be in dollars. In fact, the agreement, which was in effect before, offers a good model with some minor optimizations. It may therefore be useful, at this stage, to briefly describe the rupee exchange regime in its current version. The USSR undertook to sell to India, under a bilateral annual trade protocol, a fixed volume of certain goods (mainly oil) in a given year.12 The price to be paid by India for this delivery was the dollar rate in force at the time of the influence of the deliveries on international markets13 These values were converted to the rupee/dollar exchange rate in rupees and to the Soviet account of the Ban reserve. k of India (RBI). The USSR would then allocate these rupees to Soviet trade organizations for the purchase of goods from India. Since the rupee was not convertible, these funds could not be used for purchases from third countries, but there were no restrictions on what could be imported from India. But now it is survival that is at stake. Russia needs money to buy scarce vital goods.

India needs the Russian market, which contracted in April-November 1992 during the same period in 1991, resulting in a 53% drop in Indian exports to rupee-trading countries. In 1990. Before the difficulties began, the trade was worth Rs 8,819 crore. It fell on Rs 2000 crore in 1992. For 1993, Yeltsin guaranteed a value of Rs 7,500 crore. On these two points, Russia will therefore benefit from a revival of the trade agreement on the rupee. What about India? There are two small positives and one big minus. The first plus is that, as the shadow price of the dollar remains higher than the official rate, any essential import that switches from paying the dollar to the rupees is a gain. The second is that while the rupee is the medium of trade with Russia, there is some seignoring for India.11 The decline results from the overvaluation of the rupee against the ruble, which encourages India`s increase in significant imports from Russia and the diversion of Indian exports from the world market to Russia.

However, this negative can be addressed by an Indo-Russian agreement designed accordingly. The second condition under which the agreement on the rupee was beneficial for the USSR is more complex and depended on the nature of the products exported to India by the USSR under the agreement. It has been shown that if the goods exported by the USSR to India were in such a way that both international demand and supply were not very sensitive to short-term price changes, and if the USSR retained control of the quantities delivered to India, the USSR clearly benefited if it carefully calibrated its supply. . . .