New fund likely to hold foreign aid

The Centre is likely to ask all bilateral donors except Japan to pool their aid into an India Fund.

The plan comes on the back of an assessment of the size of aid the country receives.

An office will also be set up to deal with the aid that India will be giving, which is expected to cross $1 billion per annum soon.

In the Budget for 2003-04, Finance Minister Jaswant Singh said India would rework its aid programme "to provide relief to certain bilateral partners with smaller assistance packages".

Officials said since the country received over 90 per cent of its aid from the multilateral institutions, the European Economic Community and Japan, it was meaningless to continue with the other programmes with the elaborate disbursal programme sections in the government.

In terms of sheer size they made up about $600 million which was almost similar to the aid that India gave to the heavily indebted poor countries.

Since there was little possibility that the donor countries would accept such a pooling, it would give India the chance to ease out of these programmes.

The officials added that the aid programmes "were too much bang for the buck", which the country could do without.

Instead to focus on the aid that India was shelling out a new office under the India Development Initiative would be set up.

They said that it was not being appreciated that despite being a much smaller economy than many of the developed countries, India would soon be one of the 10 largest donors of the world.

Outlining the scope of the India Development Initiative, in the budget speech Jaswant Singh said the government would discontinue the practice of extending loans or credit lines to fellow developing countries.

Instead the India Development Initiative would provide grants and project assistance to countries in Africa, South Asia and elsewhere.

An office will also be set up to deal with the aid that India will be giving, which is expected to cross $1 billion per annum soon.

Budget stated India would stop giving loans to developing countries, and instead focus on poor nations.