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Sinha pleads with World Bank to restore lending cut

C K Arora in Washington

Finance Minister Yashwant Sinha has urged the World Bank to restore the cut it had made in its lending programme for India in the wake of the nuclear-related sanctions, affecting the funding of infrastructure projects, a prerequisite to sustain a path of higher growth.

Sinha, after meeting World Bank President James Wolfensohn, told the Hindi service of Voice of America last night that the impact of the reduction, as of now, had been marginal. But if it became established policy and was pursued down the line, it was bound to have an adverse impact, he admitted.

In reply to a question, Sinha said he had discussed with Wolfensohn the situation arising out of the sanctions imposed by the United States and other countries on India after its nuclear tests in May 1998. Through discussions, efforts are being made to see that the bank reconsiders its policy and restores the funding as early as possible, he said.

The World Bank sanctioned a loan of only $1.05 billion for India in fiscal 1999, which ended on June 30, as against $2.1 billion in the previous year. Also, this time it approved only seven projects while in 1998 it had funded 11.

India was expecting $3 billion in loans. The shortfall is stated to be due to the lending agency's policy not to consider infrastructure projects in view of the sanctions.

Sinha said India had always had a very productive relationship with the World Bank and was keen on maintaining it. At his meeting with Wolfensohn, they exchanged views on the lending agency's developmental policy for the future.

Sinha sounded upbeat, hoping to convince the World Bank to discontinue its present policy and restore the cut in the lending programme.

The minister urged the bank president to widen the scope of the definition of "human needs projects", which the Group of Eight developed nations, led by the United States, had exempted from sanctions.

He argued that basic human needs include development of energy sources and roads. It did not appear reasonable to deny loans for such projects, putting them in the category of infrastructure sector, which is currently barred from funding.

According to informed sources, Wolfensohn is sympathetic to India, having publicly praised the progress the country had made in developing its economy despite all odds. A via media is expected to be found soon. Last year, the bank approved one infrastructure project in Andhra Pradesh.

UNI

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