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India seeks $ 3 billion loan from WB to ensure 6 pc growth this fiscal

India has asked for a loan of $ 3 billion from the World Bank in the current fiscal year, hoping that the nuclear-related sanctions, which might come in the way of its demand, would disappear in due course.

Finance Minister Yashwant Sinha, who made the request during his bilateral meeting with World Bank president James Wolfensohn in Washington, made out a strong case for the enhanced funding to enable India retain higher growth path it had achieved over the past few years.

Despite adverse financial climate, affecting both the large and small economies, Sinha, who is in Washington in connection with the World Bank-International Monetary Fund annual meetings, was confident of India recording a growth rate of about six per cent this year, more than the previous year.

There were ''positive indications'' of the lifting of sanctions imposed on India after its May nuclear tests and, moreover, ''we don't believe that the sanctions are a long-term affair,'' said additional secretary in the finance ministry V Govindrajan.

''If we fail to invest adequately in infrastructure, the impetus to economic reforms and sound long-term development will be weakend,'' Sinha remarked.

Voicing concern at the east Asian crisis and its contagion effects, Sinha said: ''In this extremely difficult period, it is essential that world community takes sound and timely decisions on various problems besetting the world economy.''

He, however, did not approve of the Bank's action in providing assistance which was outside its mandate. ''While we appreciate the compelling circumstances under which emergency assistance was provided, we feel that such rescue packages, which are essentially in the nature of liquidity support, should not become a regular bank operation since such assistance tends to blur the bank's role with that of the fund,'' he added.

The minister welcomed the initiative taken by the Bank in assisting the post-conflict countries and the proposal to establish a trust fund for post conflict assistance. ''However, it is important that it should not be done at the cost of others, who are constructively engaged in nation-building and long-term development,'' he added.

At this critical juncture, when many member countries were facing financial crises, Sinha said, it was of utmost importance to establish a supervisory mechanism at the board level. Even a joint committee of board members of both the Bank and fund might be explored.

''There is a need also to establish a suitable incentive system or recognition of staff members who exhibit exemplary standards in co-operating with other institutions,'' he added.

He also raised the problem of rising charges on loans which, he felt, had arisen mainly because of heavy demands on the net income.

UNI