Sanctions dampen FIRE project

NEW DELHI, AUG 4: The United States will pull out all its staff from India connected with the stock market upgradation8217; programme on August 14 following its decision to terminate the project as part of sanctions imposed after the Pokhran nuclear tests. The stock market upgradation programme formed a part of the Financial Institutions Reforms and Expansion FIRE project funded by the United States Agency for International Developement USAID.

Consultancy major, Price Waterhouse, was doing the projects for FIRE, the USAID official said adding that chief of projects in India, Dennis Grubb would also leave the country on August 14. The USAID official said that a key area hit following fire pulling out of the country would be the development of an active secondary debt market. The urban infrastructure development, which formed part of FIRE, however, will continue as the US administration has decided to treat it as a humanitarian aid project which is exempt from the purview of sanctions, a top official inUSAID said. quot;We have decided not to wind up our operations entirely as the urban infrastructure and sanitation projects fall within the definition of humanitarian aid,quot; the official said.

Various institutions and stock markets including market regulator Securities and Exchange Board of India SEBI, Bombay Stock Exchange and National Stock Exchange benefitted from the consultancy and inputs given by the project since 1993. Ahmedabad Municipal Corporation, which was only the second civic body in the world to mobilise funds through a public issue of bonds, after Shanghai Municipal Corporation in China was also assisted by FIRE, the official noted.

Under the FIRE project, USAID has so far pumped in over 20 million of which more than 13 million were used in the development of stock market infrastructure in India. About 7 million was put in assisting various municipal corporations including Ahemedabad Municipal Corporation in their development plans.

He said FIRE was instrumental in the formation ofFixed Income Money Market Derivatives Association which has as its members major public sector and foreign banks. The organisation, which came into effect in June 8217;98, was assisted by FIRE to develop an active debt market for government securities and other debt instruments.