World Bank clears 743-million loans to India

US officials deemed that infrastructure projects dealing with power, roads etc come under non-basic human needs and therefore were subject to sanctions that were imposed after the nuclear tests. Indian officials strongly contested this with considerable support from the Bank and numerous US lawmakers.

The matter was also raised directly with President Clinton and other high US officials with New Delhi describing the selective sanctions as quot;unfair and counterproductive.quot;

But on Tuesday, the UP loan too came up before the World Bank boarddespite the US making it clear it had not changed its position on thedefinition of basic human needs.

Typically, issues are not brought before the board unless there is a consensus. Evidently, the Bank pushed the envelope this time following President Wolfensohn8217;s assurance to Finance Minister Yashwant Sinha last week that the loans would be cleared.

US officials declared there had been no change in policy, and acknowledged that Washington did not have enough votes to block the loans had it come to call. Although such matters rarely come to an up and down vote, the official admitted the US may have been outweighed on the board by India8217;s persistent lobbying.

quot;The loans went through despite the fact US position has not changed,quot; the official admitted.

If India manages to swing things its way in the manner it did 8212; or if the US relents 8212; the Bank is set to clear nearly 1.6 billion in infrastructure loans that Washington has declared to be non-basic human need.

Tuesday8217;s loan amount includes 467.38 million equivalent of soft loans through the International Developmental Association IDA and two World Bank projects worth 276.30 million. Most of the loans will benefit the rag-tag state of Uttar Pradesh, one of India8217;s largest and poorest.

A 150 million power restructuring project loan will support the initiation of the power sector reform process in the state through the establishment of a new legal, regulatory and institutional framework, the creation of new power corporations and framing of guidelines for privatization of the distribution business.

Another 250 million loan is aimed at helping the state implement comprehensive reforms in public expenditure management, tax policy, civil service, anti-corruption, deregulation, decentralization in local bodies, public enterprise, privatization, financial management and accountability. A further IDA credit worth 110 million has also been sanctioned for the Uttar Pradesh State Health Systems Development Project to help establish an effective and sustainable health system in Uttar Pradesh.