Lok Sabha Question No. 3409 (UNSTARRED), answered on 2015-12-18
Subject: Norms for Accepting Bilateral Aid
Ministry: FINANCE
Asked by: SUNIL BALIRAM GAIKWAD, NARANBHAI KACHHADIA, GAJANAN CHANDRAKANT KIRTIKAR, ASHOK SHANKARRAO CHAVAN, SUDHEER GUPTA

## Govemment  of India Ministry of Finance Department of Economic  Affairs

## LOK SABHA TINSTARRED OUESTION No. 3409

To be answered  on the 18th December. 201 5

## Norms for Accepting  Bilateral Aid

## QUESTION

3409. Dr. Sunil Baliram Gaikwad:

Shri Naranbhai  Kachhadiya:

Shri Gajanan  Kirtikar:

Shri Ashok Shankarrao  Chavan:

Shri Sudheer Gupta:

## Will the Minister  of FINANCE be pleased to state:

- (a) whether  the Govemment has eased norms for accepting  bilateral aid from other countries;
- (b) if so, the salient leatures  thereoft
- (c) whether  the Govemment  proposes  to enhance the list of such countries  and if so. the details thereof;  and
- (d) the benefits which are likely to accrue therefor?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY  OF FINANCE (SHRI JAYANT SINHA)

(a) to (c): In terms  ofthe guideiines  on development  cooperation  with bilateral  partners issued  by the Ministry of Finance  in January  2005, bilateral  development assistance  is accepted  from G-8 countries,  namely USA, UK, Japan, Germany,  France, Italy, Canada and the Russian Federation as well as from the European commission. European union countries  outside  the G-8 can also provide  bilateral development  assistance  to India provided  they commit a minimum annual development assistance  of USD 25 million. India has a requirement  to accelerate  growth though creation  of additional infrastructure which requires  extensive capital investment. It has, therefore,  been decided that besides the existing bilateral  partners,  Official  Development Assistance  may be accepted from other countries  also. Finance Minister and External Affairs Minister, with the approval of Prime Minister, have been authorized  to accept  any such proposal for bilateral assistance.  It has also been decided  to accept  offers for bilateral assistance  in the form of special loans (i.e. loans which  have conditions for sourcing  of procurement  or executing agency from the funding country) in addition to the assistance on the normal route. Salient feature for acceptance ofSpecial Loans are as follows:

- i) The minimum assistance  from the bilateral partner shall be USD 1 billion in a year, of which at least 50% shall be normal untied  loans (not special loans).
2. ii) Not more than 30% of the total value of goods and services should be insisted to be sourced  from the funding country.
3. iiD The rate of interest and tenor ofthe loan will be more concessional in comparison to the interest rate of normal loans and will be mutually agreed between  the bilateral partners. However, the tenor of the special loan shall not be less than 40 years with not less than 10 years moratorium for repayment.
4. iv) The annual rate of interest on special loan should not exceed 0.3% (including all other applicable  charges).
- v) Individual  projects with a minimum project cost of USD 250 million will only qualify for such special  loans.

The policy guidelines  on Official  Development  Assistance for Development Cooperation with bilateral partners  have accordingly  been suitably  modified.

- (d): Benefits  which are likelv to accrue:
- a) Capital  augmentation for funding ofprojects in the infrastructure sector and in sectors of strategic importance  will fast track projects  in these sectors.
- b) Collaboration between  bilateral partners  shall provide impetus to  'Maks in India' programme  and promote  transfer oftechnology.
- Economic activity generated  may boost employment  and development of infrastructure. c)
- d) Bilateral  ties and economic  engagement  with funding countries  will improve