FM no to aid with strings attached

Finance Minister P Chidambaram today said India would not accept "tied aid" or external aid with binding conditions.

Addressing the consultative committee meeting attached to his ministry, Chidambaram said though India was not an aid-dependent country, it should adopt a balanced approach. There was no harm in utilising aid as it provided access to improved technology and acted as a disciplining factor, he said.

Chidambaram said external assistance had played a major role in the development of the country. It had been a significant source for financing major infrastructure projects, projects in the social sector and building up institutional capacity. There were 434 ongoing externally assisted projects, of which 226 were being implemented in states.

The rest were multi-state or central sector projects, he said.

In 2005-06, India received Rs 18,464.51 crore as external assistance, of which 67 per cent was from multilateral agencies.

This included Rs 9561.29 crore from the World Bank and Rs 2645.35 crore from the Asian Development Bank. The country had not availed International Monetary Fund loans for more than a decade now.

Significant bilateral sources that offer external assistance include Japan, Germany and the United Kingdom.

In terms of policy, bilateral development assistance is accepted from all G-8 countries - the US, the UK, Japan, Germany, France, Italy, Canada, the Russian Federation - and the European Commission.