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payments will be denominated in rubles, although many Indian companies still pay for oil shipments in rupees that Russian exporters cannot withdraw from the country.
The talks concerned plans to raise mutual trade to $100 billion a year by 2030 and to increase both Russian investments in India and Indian investments in Russia, especially in the Far East, which is a development focus for the Russian government. To increase mutual trade, the countries agreed to open a maritime corridor between Vladivostok and Chennai. Rosatom also offered to build a number of new nuclear reactors in India. Additionally, Rosneft is “in talks” with Indian refineries about long-term oil supply deals—but these agreements have not been signed yet. However, the two leaders managed to settle a tense point in the relationship when Putin promised the early release of Indian citizens from Russia’s army, specifically those who were lured there to sign contracts when domestic recruitment efforts flagged.
2.10 Russia’s unrelenting labour shortfall
After two-and-a-half years of fighting in Ukraine, Russia’s labor shortage has emerged as the root of most of the country’s economic problems. President Vladimir Putin might boast that Russia has “almost no unemployment” as he did during a visit to China in May. But for many officials, it’s a cause for concern, not pride. Russia’s economy, which has been overheated by military spending, is desperate for more workers. The result is rampant inflation and, ultimately, weaker economic growth and lower standards of living.
War-driven demand
Since the full-scale invasion of Ukraine in 2022, Russia has dramatically increased spending, particularly on the military. Even if the budget passed last year anticipates that this spending will start to fall in 2025, in reality, such an outcome is deeply unlikely. And that means demand for workers in the defense industry will continue to rise.
The defense sector is short of about 160,000 specialists, Deputy Prime Minister Denis Manturov said last month – and this is despite 500,000 workers switching from the civilian sector to defense-related firms over the last 18 months.
In a bid to attract workers, defense sector companies have hiked salaries, which fuels consumer demand across the whole economy. Salaries are increasing fastest in Russia’s industrial regions on the Volga, and in the Ural Mountains, where there is a large concentration of arms manufacturers. But the labor shortage affects all Russian regions, and almost every industry. There is “a significant shortage of highly-qualified specialists and low-skilled workers alike” all across Russia, the Central Bank stated in a May report.
Nobody to work
The shortfall is not only due to increased demand, but also dwindling supply. Prior to the war, Russia already had a declining number of workers. In June, Deputy Prime Minister Dmitry Chernyshenko said a decrease in the number of
32 RUSSIA Country Report August 2024 www.intellinews.com