The Opposition on Friday questioned Prime Minister Narendra Modi’s announcement of a $1-billion (₹7,167 crore) line of credit (LOC) to Russia for the development of the Russian Far East. This is the first time India has extended an LOC to another developing country (so far, such assistance has gone only to least developed countries). The announcement was made in Vladivostok on Thursday.
The Opposition cited the current economic scenario, and asked why India would help finance projects in a country that has ample resources.
“India needs a booster dose, not Russia,” said Congress leader and MP Jairam Ramesh, who accused the government of “headline management” just days after the RBI had transferred ₹1.76 lakh crore from its surplus reserves to the government.
“What is the rationale of India extending a loan of $1 billion for development of the Russian Far East, while our country cannot find sufficient resources for a stimulus package,” asked Kerala Finance Minister T.M. Thomas Isaac in a tweet.
Critics pointed out that while Russia’s GDP figures are far behind India’s in recent years ($1.6 trillion vs $2.6 trillion at current prices, 2017), the GDP per capita for the average Russian is five times that for the average Indian ($10,961 vs $2,014 at current prices, 2017 - IMF World Economic Outlook Database).
The External Affairs Ministry said the decision was based on a number of reasons, including the fact that there were large Chinese, Japanese and Korean investments in the region.
“The Indian line of credit will attract more Indian businesses to the Russian Far East,” said a Ministry note in response to The Hindu ’s queries. The note also said that trade resulting from the line of credit would contribute to the target set by both countries of achieving $30 billion of annual bilateral trade by 2025, which at present is less than $11 billion.
