Rice-for-oil agreement between India and Iran is not Modi-magic

National In-charge of Social Media- BJP Mahila Morcha, Priti Gandhi posted this on her Twitter timeline on Monday, “Starting 4th November 2018, India will send rice to Iran in the exchange of crude oil. With this modern form of the old fashioned barter system, our dependence on the American dollar will be less and our Indian rupee will get a new life. Modi magic transforming India!”

The website which only propagates fake news, Postcard News, also published an article claiming how this rice-for-oil agreement is a masterstroke of the “chaiwala” (Prime Minister Narendra Modi).

Several Facebook users also posted similar messages on their profiles with the aim of putting this entire system as a unique initiative by the Modi government.

How this system works:

First, this is not barter in the literal sense. Under this system, Iran can agree to accept rupees in terms of payment in exchange for oil. The Indian currency earned by Iran can then be used to import goods and commodities from India including rice, tea etc.

This is not something unique:

For all those who think it is Modi government’s brainchild, this rupee-based trading system was first introduced in 2012 when economic sanctions had been imposed upon Iran by the Western nations.

In fact, a report by Live Mint in February 2012, quoted the then Iranian ambassador to India as saying, ” A mechanism has been found. One of the proposals was that part of the payments must be made in Indian rupees into Indian banks… This was proposed by India and we accepted this.”

Why is it used now?

Since U.S. President Donald Trump has reimposed the economic sanctions upon Iran after the latter withdrew from the nuclear deal framework agreement reached in 2015, the Indian government is mulling upon resorting to the same rupee-based trading system.

The sanctions will come into effect from November 4, and thus this date has been mentioned by people in their posts.

Credit: AltNews

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