The implosion of the Soviet Union had more than geopolitical consequences for India. It also had profound economic implications at a particularly difficult time. In 1990 the Soviet Union and Eastern European countries that had rupee payment arrangement for trade with India accounted for 17 per cent of India’s total external trade. This share collapsed to 2 per cent in 1992. The sharp decline in rupee trade and the Russian insistence on moving away from the rupee-rouble arrangement to hard currency payments, especially for oil, imposed a further burden on India’s balance of payments.
