Chapter 27



27.1 The Government of the former USSR has extended financial and economic assistance to India from 1955 to 1989.They had committed State credits on an aggregate amount of Roubles 9966.60 million. These credits have been used for public sector projects in basic and heavy industries and for other development projects included in the Five Year Plans.

27..2 Until April 1977, the credits were repayable in 15 to 16 years, inclusive of a grace period of 3 to 4 years, with interest at the rate of 2.5% per annum. Repayment of credit given after that date is over a period of 20 years, inclusive of grace period of 3 years and carry a interest of 2.5% per annum.

27.3 The Soviet Credits were denominated in Roubles but repayment of principal and payment of interest was made in non-convertible Indian Rupees which were utilised by the Soviet authorities for purchase of Indian goods for export to the USSR.

Repayment of former USSR credits
27.4 To address the issue of the rupee-rouble exchange rate following the dissolution of the USSR, bilateral arrangements were entered into between India and Russia in 1993.

27.5 The agreement provided for the principal amount of the Rouble denominated debt as on 1.4.92 being converted from roubles to rupees using the exchange rate on 1.1.1990 as denominated by the old 1978 Protocol (Rouble 1 = Rs. 19.9169). The amount of the principal debt as on 1.4.92 was also converted from roubles to rupees using the exchange rate on 1.4.92 as determined by the 1978 Protocol (Rouble 1 = Rs.31.7514). The difference in the two rupee amounts as calculated above was rescheduled to be repaid in annual installments over a period of 45 years. This rescheduled portion carries no interest. It had no protection against any fluctuation in the value of the rupee for a period of 5 years. Thereafter, it was to be indexed to the SDR if the average annual depreciation of the rupee exceeded 3 percent over this 5 year period. Similar review was to be conducted at the end of every five year period. The non-rescheduled portion of the debt is the amount in rupees corresponding to the conversion of the rouble debt at the exchange rate as on 1.1.90. This amount is now denominated in rupees and repayments of the principal and interest on this portion of the debt are being effected by India in accordance with the schedule in force for each of the relevant Inter-Governmental credit agreements. The rupee payments in respect of principal and interest of this non-rescheduled portion of the debt are ,however, protected by adjusting the rupee amounts in line with changes in the rupee value of the SDR basket of 5 currencies. The rupee debt as above is being repaid through the export of goods and services from India to Russia.

27.6 The details of loans are given in Annexure-I.