With India poised to play a greater role in world affairs, government on Wednesday announced setting up of a department specifically for extending funds to other developing countries for their development.

The external affairs ministry was allocated Rs 4433.60 crore (Rs 44.33 billion) for the year 2007-08, up by Rs 338.55 crore (Rs 3.38 billion) from last year, while the allocation for Overseas Indian Affairs Ministry was raised from Rs 26 crore (Rs 260 million) to Rs 50 crore (Rs 500 million).

The formation of India International Development Cooperation Agency was proposed in the General Budget presented by Finance Minister P Chidambaram in Parliament.

Pointing out that India extends development cooperation to the tune of $1 billion per annum through a number of ministries and agencies, he said the intention of creating the IIDCA was to bring all such activities under single umbrella.

The IIDCA will have representatives from the ministries of external affairs, finance and commerce and other stake holders, he said.

"In keeping with India's growing stature in international affairs, we must willingly assume greater responsibility in promoting development in other developing countries," Chidambaram said while presenting the proposal.

The allocation for technical and economic cooperation with other countries and advances to foreign governments has been increased from Rs 1536.74 crore (Rs 15.36 billion) in 2006-07 to Rs 1768.55 crore (Rs 17.68 billion) for 2007-08.

Interestingly, the allocation for evacuation of Indians due to war or civil disturbance has been reduced from Rs 2.03 crore (Rs 20.3 million) last financial year to Rs 200,000 for 2007-08.