Sensitive to the West's sanctions against Russia, says RBI governor

No decision yet on Rupee-Rouble trade

The Reserve Bank of India (RBI) on Friday said they will be sensitive to the sanctions imposed on Russia by the western countries for its invasion of Ukraine amid a growing demand of rupee-rouble from domestic traders to bypass the sanctions.

“…the importers and exporters have an issue…both have represented to the government and RBI. We are in discussion with the government,” RBI governor Shaktikanta Das said during the post monetary policy media interaction.

He, however, clarified that no decision has been taken so far on the rupee-rouble trade demand.

“We are sensitive to the sanctions and the entire thing is under examination. No decision has been taken. If and when a decision is taken you will come to know about it,” the RBI governor said.

After Russia invaded Ukraine late February 2022, European countries and the United States imposed stiff sanctions against Moscow in a move to cripple Russia economically. While India does not have much trade dependence on Russia, the policymakers have opened the door for importing crude oil after Russian firms offered deep discounts.

The Russia -Ukraine war resulted in international crude oil prices surging past $100/bbl for the first time since 2014. India, which imports over 80% of its crude requirements, will bear the cost in terms of inflation and current account deficit, if crude oil prices stay elevated.

“We will not do anything which goes against the sanctions,” deputy governor T Rabi Shankar said, echoing Das’ view.

“The war has disturbed all stakeholders. We are talking to all stakeholders and remaining sensitive to sanctions,” he said.

After Russia offered a 25-27% discount on crude oil prices, Indian Oil had contracted 3 million barrels from Rosneft while BPCL and HPCL had booked 2 million barrels each from the Russian state-owned oil company.

RBI has assumed crude oil prices at $100/bbl while making projections for consumer price inflation and GDP growth for the current financial year. While growth projections for the current financial year were lowered by the central bank, inflation projection was sharply revised upward.

On reports that an exclusive payment platform is being built for India-Russia trade, Rabi Shankar said, “In the Indo Russian trade there is no platform that I am aware of.” There were reports of a payments platform to facilitate transactions after Russia was cut off from accessing the Swift payment network.

India has taken the policy of non-alignment when it comes to voting in the UN General Assembly while emphasising the need for a dialogue to end the geopolitical tensions.

On Thursday India abstained in the UN General Assembly on a vote moved by the US to suspend Russia from the UN Human Rights Council over allegations that Russian soldiers killed civilians while retreating from towns near the Ukrainian capital Kyiv. At the same time, India unequivocally condemned the “deeply disturbing” reports of civilian killings in the Ukrainian city of Bucha and supported the call for an independent investigation.