Finance Minister Jaswant Singh is likely to signal the end of India's dependence on concessional debt in the Budget this year.

He is also likely to portray India's ability to take on board substantial pre-payment of external debt.

Senior finance ministry officials told Business Standard that the government would close down its aid sections in the finance ministry including the US Agency for International Development.

This would be followed by a decision to stop availing of any fresh concessional aid from other countries.

The Centre was also planning to pre-pay an external debt of about $10 billion in the next financial year, officials maintained.

Officials said the idea was to wipe out the perception that India was dependent on concessional debt to move ahead when the ground reality was quite different.

They said the announcement by Singh 'would make every Indian proud.'

They added that while India has graduated to the rank of 'less indebted country' as per the IMF ranking, there was a need to make it more evident.

The closure of finance ministry's desks like USAID and others would therefore have a significant signalling effect, they said.

Up to March 31, 2001 India had received $11.2 billion from USAID including the PL-480 as grant. This is one of the oldest running aid programmes in the country which began in 1951.

Speaking at the World Economic Forum, Jaswant Singh said aid from the rich to the poor in today's globalising world has become irrelevant.

Instead, governments can attract private capital for promoting health and education sectors only when they guarantee reasonable returns for such investments.

During the initial periods of the independence years the government entered into soft loan and grant aid programmes with several developed countries.

These were largely meant to fill the forex gap and technological gap within the country.

But with its bulging forex coffer and the ability to buy the necessary technology at competitive rates, the Centre feels that this would be the right time to go for a psychological announcement which would also be beneficial.

In 2002-03, while the total external loans from bilateral sources amounted to only Rs 2,733 crore (Rs 27.33 billion), repayments amounted to Rs 4,617 crore (Rs 46.17 billion).