Announcement of India Consortium on June 20, 1984

FOR IMMEDIATE RELEASE World Bank 1818 H Street, N.W ., Washington , D.C 20433 , U.S.A. BANK NEWS RELEASE Contact: P.B. Sison June 20, 1984 (202) 477-3573 INDIA CONSORTIUM The following announcement was issued by The World Bank's European Offie in Paris: A consortium of Governments and institutions interested in development assistance to India met in Paris on June 19 and 20, 1984 under the chairmanship of the World Bank. The meeting was attended by representatives from the Governments of Austria, Belgium, Canada, Denmark, France, Germany, Italy, Japan, the Netherlands, Norway, Sweden, the United Kingdom and the United States. Also represented at the meeting 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. P.K. Kaul, Finance Secretary to the Government of India. The meeting reviewed progress in India's economic development, key development issues, and the country's assistance requirements for the forthcoming year. The meeting noted the encouraging developments in the Indian economy in 1983/84, particularly the growth in agricultural production of 10%-12% which had brought foodgrain production to record levels of about 150 million tons. Overall GDP growth will likey exceed 7%. Industrial growth of 5.4% was achieved notwithstanding sluggish demand and input supply constraints. Export performance improved in 1983/84, while a substantial decrease in petroleum imports and prices contributed to a modest reduction in the trade deficit. India had contiued the successful implementation of an economic adjustment program aimed at improving its external equilibrium and substantially accelerating economic growth without endangering its high credit-worthiness, despite continued infrastructure constraints and an international recession. The representatives of the Government of India noted the significant gains made by the economy since the commencement of the Sixth Five-Year Plan, particularly in terms of savings and investment. Recognizing the challenges that lie ahead in the Seventh Plan period (1985-1990) principally in the areas of food production, employment and productivity, they emphasized their efforts to increase domestic resource mobilization, promote further programs to curb population growth and to tailor special programs to alleviate poverty. Additions to capacity in key sectors such as energy and irrigation would be bolstered by improved productivity, enhanced utilization of existing capacity and more efficient management. While commercial borrowings would continue to be undertaken to  -2- finance elements of India's investment program consistent with the maintenance of the country's credit-worthiness, the Indian delegation stressed the important role to be played by concessional assistance in supplementing external capital flows to support India's development effort. Consortium members conunended the Government for the excellent performance of the economy and for having continued to pursue trade liberalization and some relaxation in industrial licensing. At the same time, it was recognized that significant hurdles need to be overcome if these steps are to be sustained under the Seventh Plan, due to commence in 1985. Most significant will be the need to sustain efficiency in resource allocation and utilization and to achieve profitability in public sector enterprises, enhanced operational efficiency in the industrial sector and improved export performance. The meeting noted that India's ability to continue attaining its development objectives will require larger foreign capital flows including, in particular, concessional assistance provided by the Constortium. The consortium members endorsed India's need for continued resource transfers on the most favorable terms possible and indicated their continued support for India's investment priorities aimed at increasing economic growth and alleviating poverty while maintaining external equilibrium.