Development funds lie unused in India

There is something paradoxical, indeed pathetic, about a country with a severe need of resources for building infrastructure allowing concessional development funds to lie unutilized.

Particularly so when these funds are accumulating expensive commercial debt. This is what is happening in India today.

The finance ministry estimates unutilized aid stood at nearly US$16.2 billion as of March 1, 1996, against $12 billion the year before.

Nearly a quarter of the undisbursed aid is provided by the IDA, the World Bank's soft loan window.

Much of the unutilized external assistance was destined for projects in the infrastructure sector, which is particularly starved for funds.

The energy sector tops the list of most needy sectors, accounting for nearly half the undisbursed aid; the irrigation and road sectors follow not very far behind.

Sitting on large amounts of unutilized aid is clearly counter- productive, so why this tendency to waste?

One reason is the slow implementation of aid projects.

Delays in supplying equipment, archaic procedures and the general tardiness that characterizes government projects, all ensure that the money simply sits around.

More importantly the inability of the Center and the states to match the funding, a requirement of most project assistance, contributes to this delay.

Added to this is the failure to put in place policy changes promised as part of the loan package.

While the precarious financial condition of many state governments prevents adequate allocation for developmental work, populist concerns continue to retard progress in vital sector reforms.

-- Times of India, New Delhi