The Hindu : National : Government reverses foreign aid policy

Online edition of India's National Newspaper
Wednesday, Sep 22, 2004

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National

Government reverses foreign aid policy

By Our Special Correspondent

NEW DELHI, SEPT. 21. The Government has reversed the existing foreign aid policy and has decided to accept bilateral development assistance from all G-8 countries — the United States, the United Kingdom, Japan, Germany, France, Italy, Canada and the Russian Federation, as well as the European Commission. In June, the then Government had decided not to accept official bilateral assistance from any country.

In case of countries of the European Union who are not in the G-8, the new decision is to accept bilateral development co-operation from those countries which provide a minimum bilateral aid package of $25 million a year. Other countries not covered by the above policy could consider providing bilateral aid directly to autonomous institutions, universities, NGOs, etc. as before.

A simplified policy to facilitate the flow of bilateral assistance to non-governmental organisations and autonomous institutions would be announced shortly, an official note said.

Last year, the Vajpayee administration had decided that bilateral aid inflows would be restricted to bring India's repayment commitments to the minimum. It was therefore decided that the Government would no longer seek bilateral assistance and these could be passed on directly to institutions, projects and non-governmental organisations.

The then Government had stipulated that the bilateral partner would have interaction with it only at the beginning of the financial year when the total bilateral assistance would be discussed and finalised. The Government would appraise the proposals from the perspective of India's security concerns and overall developmental priorities and thereafter, the bilateral partner would be free to interact with the beneficiaries. It had also been emphasised that aid flows should normally be in the form of grants rather than loans so that the Government's commitment to repay would be the minimum.

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