The Opposition on Friday attacked the government for Prime Minister Narendra Modi’s announcement to extend a line of credit worth $1 billion (nearly Rs 7,100 crore) to Russia for the development of the country’s Far East region, The Hindu reported. The prime minister made the announcement at Eastern Economic Forum summit on Thursday in Vladivostok.
Opposition leaders questioned the Centre on why India would help finance projects in a country that has ample resources, especially after fall in growth and during a current economic slowdown in the country.
This is reportedly the first time India has extended a line of credit to another developing country. Earlier such assistance was given only to developed countries.
“India needs a booster dose, not Russia,” said Congress leader and MP Jairam Ramesh. Ramesh had recently accused the government of “headline management” after two consecutive quarters of low Gross Domestic Product growth.
Kerala Finance Minister TM Thomas Isaac also attacked the government for the decision. “India’s per capita income is only one tenth of that of Russia,” the minister said on Twitter. “What is the rationale of India extending a loan is $ 1 billion for development of Russian Far East while our country cannot find sufficient resources for the stimulus package?”
“Even if it argued that the the credit of $1 billion to Russia is a tied loan to Indian companies, how will it help to stimulate our domestic economy,” he added. “The deal is yet another way of transferring public resources to corporates.”
The Ministry of External Affairs 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,” a ministry note to The Hindu said.
The ministry also added that trade from the line of credit would also 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.
According to International Monetary Fund’s World Economic Outlook Database, the GDP per capita for the average Russian is five times that for the average Indian, even as it was pointed that Russia’s GDP figures are far behind India’s in recent years.
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