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India opposes preconditions for loans

India has opposed World Bank proposal to link the International Development Association consessional loans to the submission of Poverty Reduction Strategy Paper by the beneficiaries.

The WB has sought to make it mandatory for all low-income countries to prepare PRSP in consultation with non-government organisations, faith and citizens groups to avail the concessional IDA loans.

India has its own planning process to tackle issues like poverty and the bank need not superimpose another scheme on the country, an Indian official said.

Finance Minister Yashwant Sinha told the Joint meeting of International Monetary and Financial committee and the Development Committee in Washington, ''the views of a democratically elected government accountable to citizens should form the basis of its PRSP and nature of the modalities of consultation process should be left to the national authorities.''

Making it clear that India was not very comfortable with the explicit linkage the bank has proposed between all concessional lending and the preparation of the PRSP, Sinha said, ''this may be necessary in case of highly indebted poor countries in view of the special circumstances, but we remain unconvinced on the need for blanket application of the process for all lending to all low income countries.''

Countries, which have no balance of payments problems, should be kept out of the process; he said adding that needless expansion of the role of the IMF should be avoided.

In case of heavily indebted poor nations Sinha suggested that development assistance has a far greater impact when directed towards public expenditure in general rather than individual projects.

Fight against poverty is not going to be short nor can it be won by being dogmatic or prescriptive, the finance minister said.

''While low income countries have the responsibility to implement sound policies, the developed countries should open up their markets while simultaneously increasing aid volumes,'' he said.

He also emphasised that efforts to reduce global poverty would not succeed unless there was an adequate and focussed flow of additional development assistance to countries, which have managed their economies prudently and have met their debt obligations despite difficulties.

UNI

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