ELECTIONS '98
COMMENTARY
SPECIALS
INTERVIEWS
CAPITAL BUZZ
REDIFF POLL
DEAR REDIFF
THE STATES
YEH HAI INDIA!
ARCHIVES

'Investors make their calculations according to the Moody's survey rather than by what Clinton says'

V A Pai Panandiker

In relation to whatever aid India receives, American aid is miniscule. Comparatively, Japan gives more than $ 1 billion in aid. Unlike the US, which has a law through which it can impose sanctions -- Japan is not mandated by law, and has applied these sanctions as its reaction to the stance.

Strictly speaking, what we receive as aid does not form a large percentage of our GDP. India's GDP is $ 400 billion. Out of which the World Bank Aid Consortium amounts to $ 6.7 billion, which approximately amounts to 2 per cent of our GDP. A bulk of this aid goes back in repayments.

American aid does not fund commercial ventures. So that is a different issue all together and unless US banks are instructed to stop these commercial loans -- there should not be any setback on that front.

This reduction in aid will not be detrimental to India, unlike Pakistan which has a 40 per cent dependence on aid. Countries with low savings and high expenditure are more vulnerable, and India is not in such a position.

Since America is the largest contributor to the World Bank it can put pressure to stop aid, but we must realise it is still not certain whether the World Bank will relent. After all, India was one of the founders of the World Bank and International Monetary Fund.

It would create create certain problems in the balance of payments, but first the consent of all member countries has to be received before this aid is stopped.

We must understand that India is basically a self reliant economy. Such damage is not disastrous for us. No doubt they will hurt us, but it will not cripple the Indian economy. This is because we are not dependent on any foreign country for food; and because of the 28 per cent investment rate, 26 per cent is from domestic sources.

I think these sanctions will die down in less than six months. After completing the series of tests, India is now in a position to discuss the signing of the CTBT and NPT. This could help in reducing international temperature. If the Government of India makes the right moves, this could happen in the next two-three months. What the government needs to do is give these signals in our Budget.

We must also understand that investors are not worried about nuclear explosions and tests. What they want is political stability and a viable economic situation. Investors make their calculations according to the Moody's survey rather than by what Clinton says. And India is not unsafe for investors.

Indeed there has been widespread international criticism, led by the United States. Yet, a large number of people in the US has also begun to realise that India's security concerns have not been looked at properly so far. This has been done to safeguard India's security, and one billion Indian people are behind the Government of India -- compared to 250 million Americans, 155 million Britishers and 18 million Australians.

Having done all that they had to, I think they should underplay all this and promptly join the signatories of the CTBT and NPT. India should then influence US and other nuclear powers to dismantle their nuclear weapons. By 2050 all nuclear arsenals in the world should be destroyed.

V A Panandiker, director, Centre for Policy Research, Delhi, spoke to Archana Masih.

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