US won’t object

The first loan that is expected to be cleared under the new policy pertains to $ 300 million funds for India’s hydroelectric power programmes. The Bank has said it will probably move quickly.

The Clinton adminitration had blocked four World Bank development loans to India for electricity and highway projects worth $ 1.6 billion under the sanctions imposed in the aftermath of 1998 nuclear tests.

This is the first concrete positive economic impact of the highly successful Clinton visit to India last month. Under the post-nuclear sanctions, the US and its allies permitted loans related to "basic human needs" which they interpreted narrowly, knowing that in developing countries like India, all such international projects relate to basic human needs.

Earlier Clinton lifted similar restrictions againstIslamabad on the ground that Pakistan’s economy would collapse unless the sanctions were lifted while India could bear such pressure.

From the very beginning, India pointed out that theserestrictions were against the charters of the World Bank (WB), the International Monetary Fund (IMF), the Asian Development Bank (ADB) and other multilateral Financial bodies. The charters clearly enjoin the donors to take decisions on projects purely on economic basis, leaving politics outside their doors.