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WB 1998-99 aid to total $2 billion before June 30, claims India

C K Arora in Washington

The World Bank is likely to grant India loans totalling about $ 2 billion for development projects in its current fiscal year which ends on June 30, in spite of G-8 imposed nuclear-related economic sanctions.

An Indian delegation, led by the Reserve Bank of India governor Bimal Jalan, made this claim after its meeting with World Bank president James D Wolfensohn and International Monetary Fund.

The government's chief economic advisor Dr Shankar Acharya and additional secretary (external finance) V Govindarajan said the bank had already sanctioned $ 1.3 billion to India and the remaining $ 700 million would be available in the next two months.

Govindarajan said the proposals for credit of $ 700 million were in advanced stage of consideration. The $ 2 billion that India hoped to secure this year, would include about $ 800 million from the International Development Association, the bank's concessionaire lending affiliate.

India had submitted loan proposals worth about $ 3 billion for the current year. But it would not get the full amount because the World Bank had stopped lending for India's infrastructure projects in protest against its May nuclear tests.

Jalan urged the World Bank president for the restoration of the normal World Bank lending for India. It had recently sanctioned aid for two power projects in Andhra Pradesh, both in the banned infrastructure sector.

He said the World Bank was sanctioning loans only for ''human need-related'' projects. The category was being widened to include loans for road construction and power distribution. They were earlier placed in the banned infrastructure category.

Jalan was critical of the World Bank deciding loans on political considerations which militated against the specific provision of its charter calling for disposal of such applications purely on economic considerations.

Both Wolfensohn and Camdessus sought clarification from Jalan on the political instability in India and about the elections expected to take place soon.

Jalan tried to assure them that the current political situation would not adversely affect the economy. The Vajpayee government had made three major policy statements before it was voted out. These are annual Budget, promulgation of Exim Policy update on April 1 and the announcement of the Monetary and Credit Policy by the RBI on April 20. They will take care of the economy.

Jalan also listed steps that India had of late been taking to open up its financial sector. India has adopted a gradual approach to avoid the kind of process that east Asia faced.

UNI

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