New norms for aid mooted

The finance ministry has announced that it would formulate a new set of guidelines to govern bilateral aid to the country during a meeting with aid officials from 14 countries.

It said the new guidelines would address the country's security concerns and development priorities.

The meeting also marked the end of India's participation in the Paris Club and the renamed Aid India Consortium.

Finance secretary S Narayan met representatives of several countries, including Denmark, France, the Netherlands, Italy, Switzerland, Australia, Canada and Norway, to express the government's 'deep gratitude' to all the donors.

He said the finance minister's decision to limit the number of donors was intended to take into account the changing realities in the field of development cooperation.

Bilateral aid would be re-oriented to ensure that it did not have any bearing on sovereign debt, Adarsh Kishore, additional secretary, ministry of finance, told Business Standard.

"The aid agencies are, however, free to select their channels, partners and location of aid flow. The finance ministry will only give them the customary advise," he said.

While multilateral loans from agencies like the World Bank and International Monetary Fund totalled Rs 8,800 crore (Rs 88 billion) in the last fiscal, the bilateral aid was under Rs 3,000 crore (Rs 30 billion).

In the current fiscal, Rs 3,824 crore (Rs 38.24 billion) is estimated to come in as bilateral aid and Rs 9,378 crore (Rs 93.78 billion) as multilateral aid.

Narayan said in order to improve its standing in the global economy, India had decided to reorient its aid policies.

From now on, the government would make it mandatory for aid partners to send aid details to the government at the beginning of the fiscal year, when the total bilateral assistance package was finalised, he added.

The ministry would issue detailed guidelines on how the decision would become operational, after detailed discussions with nodal officers and representatives of bilateral partners.

However the government would insist that future aid flows to non governmental organisations should normally be grants, and government commitments to repay loans would be kept to the minimum.