Announcement of Consortium Communique on Financial Aid to India on June 2, 1961

HOLD FOR RELEASE WORLD 8ANK ' 1818 H STREET, N.W., WASHINGTON 25, D. C. TELEPHONE: EXECUTIVE 3-6360 Press Release No. 690 For release at 12 noon, E. s. T. SUBJECT: Consortium Communique on Friday, June 2, 1961 Financial Aid to India The Consortium of Governments and Institutions i.nterested in development assistance to India resmned its discussions in Washington on May 31, and the meeting was concluded on June 2. At this fourth meeting the members of the Consortium undertook c-..,,nmitments of aid to India totaling over $2,000 million. These large commitments should enable India to launch her Third Five-Year Plan of economic development with • confidence in the ultimate achievement of its objectives • The meeting was attended by representatives of the Governments of Canada, the Federal Republic of Germany, Japan, the United Kingdom and the United States &nd by representatives of the International Bank for Reconstruction and Develop- ment and the International Development Association. France joined the Consortium a~ a member during the meeting. The Governments of Austria, Denmark, Norway and Swede'!.'l and the International Monetary Fund sent observers. The Consortium was encouraged by the economic progress made by India during the Second Five-Year Plan and recognized the importance of maintaining the moroentwn of India's development. It considered that, in relation to India's needs, the broad objectives of the Third Five-Year Plan (1961-1966) were :reasonable, that the Plan itself was well conceived and that India had demon- .r;trated a capacity to make effective use of foreign aid. • The Consortium recognized that, in order to carry out the Plan, the very considerable resources which India herself is able and prepared to devote to its  • - 2 - • financing, together with vigorous efforts to increase India's export earnings, will have to be supplemented by a substantial inflow of foreign capital, both private and public. The Consortium reviewed India's eA-ternal financial requirements for the period of the Third ?lan and considered what addition.al aid should be committed by its members during the first two years of the Plan in order both to provide immediate support for India's balance of payments and to enable India to proceed in an ornerly manner with the placing of new overseas orders for the Third Plan. With the object of meet:.ng both these needs and thereby furthering the :implementation of the Plan, the following commitments were indicated at the meeting, subject as appropriate to legislative act.ion or other necessary authorization: • Year of commitment: $ million Indian fiscal years 1961/62 1962/63 Two-Year 1963/64- Total Total 1965/66 Conunitment Canada 28 28 56 '· - 56 France 15 15 30 30 Germany 225 139 364 61 425 Japan 50 30 80 80 United Kingdom 182 68 250 250 United States 545 500 1,045 1,045 I.B.R.D. and I.D.A. 250 150 400 hOO Total 1,295 930 2,225 61 2,286 --- In addition to the above commitments, the United States has already under- taken to asoist India's Thi:r d Plan by making av·ailable surplus commodities in 1 t,he amount of about :~>l,300 million. India is also receiving grants of wheat • from Canada.  C ,'t • - 3 - Estimated disbursements of aid under the commitments indicated at the meeting, together with other funds likely to be available to India (including a substantial carry-over of aid committed by members of the consortium during the Second Plan), should approximately cover the prospective balance of payments deficit for 1961/62 and go a long way towards covering the deficit in the follow- ing year. Stress was laid at the meeting on the need for aid to be extended in a form which would add as little as possible to India's foreign exchange repayment obligations, and the members of the Consortium undertook to give due considera- tion to this point in deciding the terms on which aid would be made available. It was understood that the connnitment indicated for the United States in 1962/63 was related to the prospects for additional aid commitments by other • countries which are already members -- or might subsequently become members -- of the Consortium, in amounts which would raise the total contributions of these countries in that year to a level comparable with the proposed United States contribution. Accordingly, it was agreed that the member Governments and Institutions, together with such other Govern.ments as might be prepared to participate, should meet again in the fall of 1961 to review the position and to consider what further resources might be made available. The Consortium reaffirmed the continuing interest of its members in India's economic development and agreed that, in addition to another meeting this year, a further meeting would be necessary at a later date to review the progress of the Third Plan and to consider India's financial requirements during the last three years of the Plan • p. •