India will continue to be a key partner of the Germany's development cooperation even though the new government is planning some of the most far-reaching changes in the country's aid policies.
Minister for Economic Cooperation and Development Dirk Niebel, in a newspaper interview, said he intended to enhance the effectiveness of Germany's development cooperation and to give its development aid funds "only to those countries which need them most."
However, he holds the view that India must be treated differently in spite of rapid economic growth, considerable poverty existed in that country as before, a ministry spokesman said. Germany's Federal Ministry for Economic Cooperation and Development is in the process of drawing up a new development policy for the threshold nations, which envisages involvement of the private sector in a triangular cooperation and financing the projects with credits on market conditions.
The government wants to stop completely or to reduce drastically Germany's financial assistance for the threshold countries and instead provide them credits on market conditions to finance development projects.
India and Germany had agreed to intensify their cooperation in the field of energy, environment and sustainable development aimed at combating poverty during annual inter-governmental negotiations on development cooperation held in New Delhi on October 28 and 29 this year.
At the meeting, the German government had pledged a grant totalling 68 million euros for financing new projects in 2009. In addition, the German government also agreed to provide India a financial credit of 287 million euros on market conditions.
The new commitments are intended to support projects in the areas of protecting the climate and environment by promoting the use of renewable energy for electricity supply in the rural areas as well as for the development of measures to adapt to the changes brought about by climate change in north-east India.
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This project is also intended to make a contribution to the global efforts to combat climate change. The two nations agreed to set up a financing facility for the promotion of environment relevant urban infrastructure development programmes.
The German side agreed to continue its support for India's finance sector in order to improve the access to financial services for the poor and disadvantaged sections of the population and small industries as well as to increase the efficiency and effectiveness of India's promotional programme for small and medium-level enterprises.
Until now, India was one of the nine "Anchor Nations" of Germany's development cooperation. German Government also wants to strengthen the private sector and seeks their active involvement in the implementation through public-private sector partnerships.
The new development policy concept is still being worked out and no final decision has been taken regarding future cooperation with India, spokesman said.
Promotion of constitutional state, environment and climate protection and cooperation in the field of science will be the main focus of future cooperation. Niebel had ordered a review of Germany's development cooperation with the threshold nations to set new priorities and to ensure that the development aid funds will be used more effectively.
He wants to further develop cooperation with the threshold nations as a "strong partnership for an effective shaping up of globalisation in mutual responsibility, in particular to promote involvement of the private sector.