NEW DELHI (PTI): India’s aid utilization which is slowest among borrowing countries, came under severe attack from the Asian Development Bank (ADB), currently having a whopping four billion dollars unutilized project aid commitment to India.

India’s disbursement of aid was “very poor,” particularly due to bureaucratic hurdles, ADB vice president Gunther G.Schulz, who concluded a three-day visit to the country told a news conference here Nov.5.

India’s experience on utilization of aid was perhaps the worst; he said and cited the examples of Korea and Indonesia, which had very high rate of aid disbursement. China and Pakistan were much better than India in this regarding, he said, China and Pakistan were much better in this regard.

He said the focus of his discussions with the prime minister, finance minister and senior officials was on how to improve project quality in India.

Total commitments for the ongoing ADB projects currently amounted to about four billion dollars for 20 projects, which were mainly concentrated in the infrastructure and energy sectors, he said.

Shultz, who is heading a special task force to improve projects quality, is on a. tour of several borrowing countries to streamline further and make more effective design. Preparation and implementation of projects and programs that the ADB finances in its developing member countries.

The task force which is to complete its final report by December end is visiting apart from India, countries like China, Indonesia, Pakistan and Philippines. Schulz said though India started its liberalization process two years ago, it had not yet percolated down to remove the hurdles in the implementation of the projects. ADB’s project aid was mostly to power plants and highways sector. The dealing with the public works department of India was perhaps the most difficult, leading to enormous delay in the implementation of the projects, he said.

He said dealing with dual ownership the central and state governments was another area of difficulty and suggested that the Indian government should consider allowing direct lending to projects.

The center has already allowed direct lending to public sector undertakings and ADB has already cleared two projects of ONGC and Gail. Similar facility should be extended to projects taken up by the stale governments as well, he said.

The ADB vice president also underlined the need for expediting the reform process and was happy to note that some headway was mad in the financial sector reforms lately. But he regretted that the reform process had slowed down in the industrial sector, particularly restructuring the public sector undertakings.

He was hopeful that the aid utilization would be better in the next financial year and ADB was envisaging expansion of its assistance in areas related to the development of renewable energy sources and energy conservation and environmental improvement as well as urban environmental infrastructure. Since the beginning of its operation in India, ADB has provided about 18 million U.S. dollars for technical assistance grants both for project preparatory work and advisory services.

During his discussions, Schulz was accompanied by Heinz Buehler, a former executive director for Germany in the ADB and an expert assisting the task force, Eustace Nonis, deputy director, infrastructure department and Richard Wada, ADB CIEF in India.

Article extracted from this publication >>  November 12, 1993