{"id":222384,"date":"2023-01-13T21:00:04","date_gmt":"2023-01-13T15:30:04","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=222384"},"modified":"2023-01-13T21:00:04","modified_gmt":"2023-01-13T15:30:04","slug":"india-may-be-in-better-economic-shape-to-create-a-rupee-trade-zone","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/india-may-be-in-better-economic-shape-to-create-a-rupee-trade-zone\/","title":{"rendered":"India may be in better economic shape to create a rupee trade zone"},"content":{"rendered":"\n

Source<\/strong>– The post is based on the article \u201cIndia may be in better economic shape to create a rupee trade zone\u201d <\/strong>published in the Business Standard <\/strong>on 13th January 2023<\/strong>.<\/p>\n

Syllabus: <\/strong>GS3- Economy<\/p>\n

Relevance:<\/strong> Issues related to trade<\/p>\n

News- <\/strong>The article explains the possibility of the rupee becoming a trade zone.<\/p>\n

What was the situation in the past?<\/strong><\/h5>\n

In the early 1990s<\/strong>, the\u00a0modus operandi was to prepare export shipment documents from\u00a0India\u00a0in the name of Russian importers.<\/p>\n

Goods were switched to some other destination and then Russian were paid 70-80% of the consignment value in hard currency.<\/p>\n

It was easy money. <\/strong>But as more traders piled in; the commissions shrank to 5%. As a result, the trade fizzled out.<\/p>\n

What does the statistics reveal about trade with Russia?<\/strong><\/h5>\n

A\u00a0Business Standard\u00a0analysis<\/strong> found that India\u2019s merchandise terms of trade from\u00a0Russia\u00a0has been worsening.<\/p>\n

In 1992, as the Russian Federation was rebuilding after the breakup of the Soviet Union, India was a net exporter of goods.<\/p>\n

The situation reversed in 2003-04<\/strong>, and terms of trade have worsened since.<\/p>\n

India\u2019s exports to Russia have tripled<\/strong> in the last two decades, but\u00a0imports\u00a0from<\/strong> Russia have grown faster.<\/strong><\/p>\n

What is the journey of rupee trade so far?<\/strong><\/h5>\n

In the past, India did not make concessions on investment in government securities. Then, starved of foreign exchange, India proposed bilateral rupee trade agreements.<\/strong><\/p>\n

These agreements enabled India to import critical defence goods, often on easy rupee payment terms.<\/p>\n

Agreements concluded between 1953 and 1958 accepted the rupee as the unit of account<\/strong>, but imbalances were settled in sterling or convertible currency.<\/strong><\/p>\n

From 1959,<\/strong> payments for all transactions were to be affected in inconvertible rupees<\/strong>, and contracting countries agreed to hold rupee balances.<\/p>\n

The value of the rupee was fixed in terms of gold <\/strong>for the purpose of these agreements until the devaluation of the rupee in 1966<\/strong> created issues with Russia over the rate of the currency.<\/p>\n

Why is a rupee trading zone distinct possibility?<\/strong><\/h5>\n

Unlike in the past, India can supply many goods, commodities and medicines to Russia to better balance the rupee trade. Russia is facing western sanctions<\/p>\n

Such an arrangement may not be easy due to China\u2019s growing influence. In 2001,\u00a0China<\/a>\u00a0accounted for 3.9% of Russia\u2019s total imports, whereas India\u2019s share was 1.3 per cent. In 2021, a quarter of Russia\u2019s imports were from China<\/strong>, whereas India\u2019s share had barely changed to 1.5 per cent.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Source– The post is based on the article \u201cIndia may be in better economic shape to create a rupee trade zone\u201d published in the Business Standard on 13th January 2023. Syllabus: GS3- Economy Relevance: Issues related to trade News- The article explains the possibility of the rupee becoming a trade zone. What was the situation… Continue reading India may be in better economic shape to create a rupee trade zone<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[10503,216],"class_list":["post-222384","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-business-standard","tag-gs-paper-3","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/222384","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=222384"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/222384\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=222384"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=222384"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=222384"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}