Announcement of India Consortium held on June 15, 1983

FOR IMMEDIATE RELEASE ' World Bank 1818 H Street, N.W ., Washington, D .C. 20433 , U.S.A.• Telephone: (202 ) 477 -1234 PRESS RELEASE FOR IMMEDIATE PUBLICATION June 15, 1983 INTERNATIONAL MONETARY FUND JOINT LIBRARY INDIA CONSORTIUM JUN ,.; ~ 1983 I TERNATIONAL BIP"K FOR RECONSTRllCTJn!', Al"D CEVELOPMEN'T The following announcement was issued by the Woml.rd m:Ban:lcr'. si.cEu~ean office in Paris. A consortium of governments and institutions interested in development assistance to India met in Paris on June 14 and 15, 1983 under the chairmanship of the World Bank. The meeting was attended by representatives of the Governments of Austria, Belgium, Canada, Denmark, France, Germany, Italy, Japan, The Netherlands, Norway, Sweden, the United Kingdom and the United States. Also represented were the Asian Development Bank, the Commission of the European Communities, the Development Assistance Committee of the OECD, the International Fund for Agricultural Development, the International Monetary Fund, the United Nations Development Programme and the Government of Switzerland. The Government of India was represented by a delegation led by Mr. N. Narasimham, Finance Secretary to the Government of India. The meeting reviewed the current economic situation and prospects of India, discussed India's development policies and resource needs, and considered India's foreign aid requirements for its fiscal year which began on April 1, 1983. The meeting commended the Indian authorities for their management of the economy in 1982/83. The combination of drought and depressed world markets resulted in a GDP growth rate of not more than 2%. Compared with previous drought years this was a commendable performance. Although foodgrain production was expected to be less than the previous year, it was about 16-19 million tons higher ~han in 1979, a year of equally poor rainfall, and this suggested a significant upward shift in India's minimum foodgrain production base. During the past year, performance also further improved in key infrastructural sectors--power, transport, oil and coal--reflecting the government's successful efforts in the past three years to improve management and increase capacity in these sectors. The sizabte energy development program was particularly critical in reducing oil imports. I . ..  - 2 - Consortium members commended the government of India for having pursued its policy of increasing production and efficiency in the economy through a more rational and more open trade regime and for having, through appropriate demand management policies, maintained fiscal and monetary stability and succeeded in containing inflationary pressures. It was noted, however, that India's growth prospects and its adjustment effort continued to face severe challenges. The country's low income has meant that, despite high domestic savings rates and substantial resource mobilization efforts, the opportunities for productive investments in sectors essential for India's growth and adjustment still exceed the resources available. Maintaining the pace of investment in such key sectors as power, coal, railways and irrigation has therefore been most difficult. At the same time India's adjustment strategy has substantially increased the economy's access to imports, promising longer-term efficiency gains but placing short-term pressures on the balance of payments. The representatives of the Government of India emphasized the measures being taken to futher the adjustment process while accelerating growth within the framework of the sixth plan. In particular, they stressed the measures aimed at streamlining industrial policies and expanding incentives to investment, which had been further strengthened in the current year; the additional incentives provided for savings and investment; the increased encouragement being given to upgrading indigenous : echnology through technical collaboration; and the progress in the area of expansion of social services and family planning. The Indian delegation underlined the steps taken to mobilize additional domestic resources and step up investment in the key sectors, while expanding the economy's access to imports of raw meterials, components and capital goods. They also stressed the need for India to increase exports more rapidly and referred to the measures being taken in this regard but noted that export expansion would depend heavily on the recovery of the world economy and the access to markets. The delegation stressed that continued support from the consortium in the form of concessional assistance was vitally important to India's ability to continue its efforts to raise the growth rate while working toward a more efficient economic structure. The various delegations endorsed India's need for increased flows of aid on concessional terms, and indicated their support for India's strategy of adjustment with growth and social justice. - 0 -