New DELHI, India, June 15, Reuter: India’s donor countries are meeting in Paris next week to put together their annual aid package but economists said the unpredictable monsoon and higher exports were more important to the country’s growth.

The World Bank has urged donor countries in the so called India consortium to provide 3.8 billion dollars in low interest, long term loans in 1988/89.

The consortium, with Japan the biggest donor followed by Britain, France and West Germany, will meet in Paris on June 20 and 21 to discuss India’s concessional aid requirements under the Chairmanship of the World Bank.

Economists Y.P. Srivastava said India could achieve six per cent growth in gross national product if Monsoon rains were good and exports increased by nine or ten per cent.

“Everything depends upon food production. Food production depends on the monsoon and the monsoon depends upon luck,” said Srivastava, from the Federation of Indian Chambers of Commerce.

Consortium members, including the European community and Asian Development Bank, put together a 5.4 billion dollar package in the financial year from July 1, 1987. This included 3.3 billion in concessional aid.

This year the bank was recommended a total of 5.8 billion.

J.L. Bajaj, a senior Indian Finance Ministry official, said: “We should be fairly satisfied if (concessional aid) comes to 3.8 billion dollars”.

He said the World Bank was happy with the way India managed last year’s drought, the worst in a century, and had acknowledged the Indian success was made possible by its domestic resources.

Bajaj said India’s development effort was based mainly on internal resources and foreign credits were of marginal help.

Economists Vasant Chitale said India could do with more soft loans with repayments spread over 30 to 35 years, but in real terms it appeared these would remain at about three billion dollars.

Bajaj predicted exports would grow in the current year by at least six per cent in real terms from a provisional estimate of 157 billion rupees (12 billion dollars) in 1987/88.

Bajaj said exports in 1987/88 rose by at least 10 per cent in real terms although nominally they increased by nearly 30 percent from 125 billion rupees (9.6 billion dollars) in 1986/87.

Experts have already predicted that India will have a good monsoon this summer. Rain has already reached parts of Southern and Eastern India.

But Chitale warned: “The spillover of last year’s drought will still be there and if the monsoon is not very good we are in for price increases”.

Article extracted from this publication >> June 24, 1988