Announcement of India Consortium on July 8, 1980

. FOR -IMMEDIATE RELEASE .. f ... .VorldBank mm H Street, N.W., Washington, D.C 20433, U.S.A. • Telephone: (202) 393-6360 BANK NEWS RELEASE July 8, 1980 INDIA CONSORTIUM The following announcement was issued by the World Bank in Paris. The Consortium of governments and institutions interested in develop- ment assistance to India met in Paris on July 3 and 4, 1980, under the chairman- ship of the World Bank. The meeting was attended by representatives of the Governments of Austria, Belgiumt Canada, Denmark, France, Germany, Italy, Japan, the Netherlands, Norway, Sweden, the United Kingdom and the United States. Also represented were the International Monetary Fund, the United Nations Development Programme, the Development Association Committee of the OECD, the Commission of the European Communi~ies, and the Government of Switzerland. The Government of India was represented by a delegation led by Mr. R.N. Malhotra, Secretary to the Government of India, Department of Economic Affairs, Ministry of Finance . • The meeting reviewed the current economic situation in India, discussed the dir~ction of development pol icy, and considered foreign aid requirements for the fiscal year which began on April 1, 1980. The members of the Consortium noted with concern the deterioration in the performance of the Indian economy in the past year, when Gross Domestic Product fel 1 by about 3%. A serious rlrought caused a fal 1 in agricultural output and severe constraints emerged in the supply of goods and services - particularly power, coal, and transport - which in turn adversely affected industrial output and contributed to inflationary pressures. Moreover, increased oil prices resulted in a current account deficit and a halt in the growth of foreign exchange reserves. The members of the Consortium commended the Government of India's foodgrain produc- tion strategy including supportive pricing policies, the supply of essential inputs, and the rapid growth of irrigated area, which has resulted in a heartening upward trend in output despite weather-induced setbacks. They also noted with satisfac- tion the success with which the Government of India has managed to mitigate the impact of last year 1 s drought on the Indian people through a large food distribu- tion program, and through an accelerated "Food for Work" program to provide rural employment, while maintaining foodgrain stocks at comfortable levels. The representatives of the Government of India outlined the measures being taken to overcome the supply constraints in the economy, to accelerate the rate of growth 1 and to reduce the rate of inflation through improved performance • of public sector enterprises, imports of goods in short supply, and higher levels of public investment in critical sectors. They also described the program to ·., alleviate the balance of payments situation through increased exports and in- I creased production of goods now imported. The members of the Consortium welcomed the efforts of the Government to combine its investment program with a direct .. ./  - 2 - attack on the problems of India's poor. They also emphasized the importance of the family planning program and commended the recent improvements in its implem- entation. The meeting endorsed India's need for increased flows of aid. • - 0 - • •