Announcement of Sixty-Five Million Dollar Credit to India for Industrial Imports on December 23, 1966

, • . INTERNATIONAL DEVELOPMENT ASSOCIATION 1818 H STREET. N.W .. WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 IDA Press Release No. 66/21 Subject: $65 million credit to India th•cember 23, 1966 for industrial imports The International Development Association (IDA), an affiliate of the World ~~nk, has approved a credit equivalent to $65 million to India. Like the $150 &illion credit ext-.nded to India last August, the proceeds of the credit anneunce1 t~ay will prttvide foreign exchange for imports c,f components and materials necd•::::1 by manufacturers, principally of capital goods, to maintain and expand productiv.:1. ·rfor· industries which were selected for IDA assistance are these producing comr:.e=- cinl vehicles and automotive components, machine tools and cutting ta.ls, elec- trical equipment, including cable and wire, agricultural tractors, ball and •. ~Qller bearings, industrial and mining machinery, fertilizers and pesticidea, e~,d basic non-ferrous metals. The two credits, totaling $215 million, represent IDAes contributi~n to th~ $~00 million ~f this type of aid being made available during the current fiscal year (ending March 31, 1967) by the members of the Indian censertium. Thia 9~sistance will support measures for the easing of import controls and •ther policy chan.ges initiated by the Government ef India earlier this year. With the introduction of these measures in June 1966, foreign exchange has been made available to many manufacturers in pri•Tity industries in mere ampl~ quantities than fttr some time heretofore. Foreign exchange licenses for those industries· being a.ssiated by the IDA credits had been issued for the equivalent of $180 million by the end of September 1966. •• The new import policy emphasizes the Government's intenti•n to establish a ~egime of continued availability •f f•reign exchange and should eliminate much ,.:.. . ..• -,:;·•,,  • - 2 - of the uncertainty associated with past controls, enable rationalization of inven• toriea. and make possible a substantial increase in production from existing plants. While it ia still too early to assess the full effects of this policy, there has already been some increase in the annual rate of production of cer• tain industries. Production of automotiv~ ancillaries, agricqltural tractor• and of most types of electrical equipment, including cables and wires, has shown a marked impro!'vement since June 1966, as has the output of nitrogenous Substantial progress has also been noted in other fields. To accelerate agricultural development the Government is following a prograw to provide larger supplies of agricultural inputs (mainly improved seed, fertilizer, pesticide• and water) along with the necessary credit facilities for farmers. Family planning is alao gaining momentum through increased financial support and a far more vigorous and effectively conducted program than heretofore. The $65 million credit to India will be for a term of SO years. Repayment • of principal will begin October 15, 1977 1 after a 10-year period of srace. There- after, 11 of the principal will be repayable annually for 10 years and 3% will be repayable annually for the remaining JO years. The credit will be free of interest but a service charge of 3/4 of 11 per annum on the amount withdrawn and outstanding will be made to meet IDA's administrative costs. •