22nd India-Russia Annual Summit (GS Paper 2, Bilateral Groupings & Agreements)
Why in News?
- The 22nd India-Russia Annual Summit in Moscow brought together Prime Minister Narendra Modi and President Vladimir Putin to discuss a wide range of issues.
- The summit aimed to solidify the strategic partnership between the two nations, particularly in light of ongoing geopolitical tensions.
- In another development, Russia has been upgraded from an upper-middle-income to a high-income country by the World Bank, despite ongoing Western sanctions.
Key Highlights of the 22nd India-Russia Annual Summit
Diplomatic Achievements:
- President Vladimir Putin conferred Russia's highest civilian honour, the "Order of Saint Andrew the Apostle," on Prime Minister Narendra Modi.
- This honour is awarded for promoting the strategic partnership and friendly relations between Russia and India.
- Notable past recipients of the award include Chinese President Xi Jinping and former Kazakh President Nursultan Nazarbayev.
Economic Cooperation:
- A new bilateral trade target of USD 100 billion by 2030 was set, significantly higher than the previous target of USD 30 billion by 2025.
- Agreement to prepare a comprehensive "Programme-2030" for developing promising areas of economic cooperation, coordinated by the India-Russia Intergovernmental Commission on Trade, Economic, Scientific, Technical and Cultural Cooperation (IRIGC-TEC).
- Initiation of negotiations for a Free Trade Agreement between India and the Eurasian Economic Union on goods, services, and investments.
- Facilitation of participation of Russian businesses in "Make in India" and "Atmanirbhar Bharat" programs, and Indian companies in investment projects in Russia.
Defence and Technology:
- Transition from a buyer-seller relationship to joint research, development, co-development, and joint production of advanced defence technology and systems.
- Establishment of joint ventures for manufacturing spare parts and components for Russian-origin arms and defence equipment in India.
- Formation of a new Working Group on Technological Cooperation within the Intergovernmental Commission on Military and Military Technical Cooperation (IRIGC-M&MTC).
- President Putin accepted Prime Minister Modi's request to discharge Indian military recruits serving in the Russian military on the Ukrainian war front who wish to return to India.
Transport and Connectivity:
- Development of stable and efficient transport corridors in Eurasia, including the Chennai-Vladivostok Eastern Maritime Corridor and the International North-South Transport Corridor (INSTC).
- Enhancement of the infrastructure capacity of the Northern Sea Route to reduce transportation time and costs.
International Cooperation:
- Russia appreciated India’s non-permanent membership in the UN Security Council (2021-22) and supported India’s efforts in peacekeeping and counter-terrorism.
- Russia reiterated its support for India's permanent membership in a reformed and expanded UN Security Council.
- Close cooperation in international forums such as the UN, G20, BRICS, and Shanghai Cooperation Organization (SCO) to reinvigorate multilateralism.
- India expressed full support for Russia's BRICS Chairship in 2024 under the theme "Strengthening Multilateralism for Just Global Development and Security."
- India looked forward to Russia's joining of the International Solar Alliance (ISA), the Coalition for Disaster Resilient Infrastructure (CDRI), and the International Big Cat Alliance (IBCA).
Global Issues:
- Climate Change: Commitment to combating climate change and achieving the goals of the United Nations Framework Convention on Climate Change (UNFCCC) and the Paris Agreement.
- Multipolar World Order: Emphasis on the need for a multipolar world order and the development of an architecture of equal and indivisible regional security in Eurasia and the Indian and Pacific Ocean regions.
- Counter Terrorism: Condemnation of terrorism and violent extremism in all forms, including cross-border terrorism and terrorism financing networks.
Factors Contributing to Russia’s Status as a High-Income Country
Economic Growth Across Sectors:
- The World Bank classifies countries based on their Gross National Income (GNI) per capita. As of July 2024, the threshold for "high-income" is USD 14,005. Russia crossed this threshold in 2023 with a GNI per capita of USD 14,250.
- Russia saw notable growth in trade (+6.8%), the financial sector (+8.7%), and construction (+6.6%) in recent years, boosting both real (3.6%) and nominal (10.9%) GDP.
Impact of Military Spending:
- A substantial increase in military-related activities in 2023 bolstered economic activity, though experts suggest this growth may not be sustainable.
Trade Diversification:
- Western sanctions led to a shift in trade patterns, reducing dependence on G7 and EU countries and increasing transactions with China, India, Türkiye, Central Asia, and the South Caucasus.
Resilient Energy Sector:
- Despite sanctions on its energy sector, Russia maintained steady overall export volumes, leveraging global oil prices and strategic trade diversification.
Fiscal Stimulus and Investment:
- Government initiatives, including fiscal stimulus and increased defence spending (estimated at 7% of GDP), supported economic recovery and growth.
Job Market and Consumer Spending:
- Low unemployment, rising wages, and strong private consumption contributed positively to economic stability and growth.
Overcoming Earlier Sanctions:
- Russia adapted its economic policies and infrastructure investments to mitigate ongoing challenges since the sanctions of 2014.
World Bank's Country Income Classification
About:
- The World Bank Group assigns the world's economies to four income groups: low, lower-middle, upper-middle, and high.
- The classifications are updated annually on 1st July based on the GNI per capita of the previous calendar year.
- The World Bank's income classification aims to reflect a country's level of development, using Atlas GNI per capita as an indicator of economic capacity.
Classification Thresholds:
- Low-income: USD 1,145 or less;
- Lower-middle-income: USD 1,146 to USD 4,515;
- Upper-middle-income: USD 4,516 to USD 14,005;
- High-income: More than USD 14,005.
Regional Highlights:
- In South Asia, the share of low-income countries has fallen from 100% in 1987 to just 13% in 2023. India is a lower-middle-income country with a GNI per capita in terms of PPP of approximately USD 10,030 as of 2023.
- In the Middle East and North Africa, the share of low-income countries has increased from 0% in 1987 to 10% in 2023.
- In Latin America and the Caribbean, the share of high-income countries has climbed from 9% in 1987 to 44% in 2023.
- Europe and Central Asia have a slightly lower share of high-income countries in 2023 (69%) than in 1987 (71%).
Note: GNI measures the total domestic and foreign value added claimed by residents over a given period, usually a year, expressed in international dollars using purchasing power parity rates. It includes GDP plus net receipts of primary income from nonresident sources and provides an aggregate measure of income.
Conclusion
- The 22nd India-Russia Annual Summit highlights the depth and breadth of the bilateral relationship, covering areas such as diplomatic achievements, economic cooperation, defence and technology, transport and connectivity, and international cooperation.
- The summit reinforces the commitment of both nations to strategic partnership, addressing global challenges, and fostering economic and technological collaboration.
- Russia’s elevation to a high-income country by the World Bank, despite ongoing sanctions, underscores the resilience and adaptability of its economy.
- The summit serves as a testament to the enduring ties and shared vision for a multipolar world order, sustainable development, and regional security between India and Russia.
