CONFIDENTIAL
Total Aid Framework
for India
Indian alloca- tion as % of
Disburse-
ments
Maintenance Aid element
total UK
(cash prices) (constant
bilateral aid
1976 prices)
£M
£M
%
£M
£M
1972/73
65
138
25
67
433
includes
some
1973/74
68
123
24
70
44) debt
refinan-
1974/75
74
112
22
62
39) cing
1975/76
99
119
23
79
55)
1976/77
117
117
24
60
1977/78
140
122
26
65
1979/80
1978/79 L1657 2007
Lī227
[29]
LĪ427
[32]
[707) these
two
1807) years'
figures are not
yet agreed
32 In the DOT view, the pre-emption of a significant and increasing proportion of our aid for India (now approaching a third of the total bilateral aid) severely restricts the opportunities of achieving trade benefits in other developing countries. Further, as the table shows, about half our aid to India has been maintenance aid, a form of balance of payments support. Although our aid is tied this type of aid does not in itself generate further business, and has resulted in the financing through aid of a wide variety of goods and services which
The size of would in any event have been bought from Britain. disbursements on maintenance aid would be explained if, as Sir Michael Walker has noted in his valedictory despatch, India is finding difficulty in absorbing in projects the aid which we have so far committed. However this may be, there is much to be said from the commercial point of view for diverting aid money to other areas where there is more scope for trade benefits, and for seeking a progressive switch within the Indian allocation from maintenance aid to aid for projects of a high import content which will create demand for further on-going business.
33
In the ODM view this would cut across the objectives of our aid strategy. In developmental terms, an increase in aid to India makes good sense. There are many millions of the world's poorest people in India; and, as the World Bank have recognised, India is under-aided Moreover, the if aid programmes are assessed on a per capita basis. experience of all donors has shown that new projects in India which are satisfactory in developmental terms are not easy to identify, and the consequence of giving less maintenance aid could on present criteria, be not more project aid, but less aid altogether. the DOT, the ODM do not consider that there is a direct conflict between increasing aid to India and our commercial interests; indeed, they feel that a more rapidly developing India offers considerable potential commercial benefits and that aid finance serves to retain a traditional market. ODM believes, moreover, that some aid-financed
9
Unlike
No comments yet.
Private notes are available after approval.