4 - Aid flows

Summary

Before turning our attention to the flows of technology, we will briefly outline the nature of financial flows to India from the USSR and from other major donors during the 1970s and the 1980s to determine whether any changes have occurred compared to the earlier two decades. Section 1 deals with the authorisation, utilisation and repayment of aid; section 2 with the terms of aid and section 3 with its sectoral composition.

Authorisation, utilisation and debt service ratio

We had suggested in chapter 1 that Soviet and east European aid in the first three Five-Year Plans had played a significant part in the implementation of India's chosen development strategy. In fact aid (from all donors) became increasingly important as planned development proceeded. Net aid as a percentage of plan expenditure rose from 9.1 per cent in the First Plan (1951/2 to 1955/6) to 33.9 per cent in the Annual Plan period and thereafter declined to 11.2 per cent in the Fourth Plan and around 9 per cent in the Fifth Plan. As the importance of aid in plan expenditure declined, so did the significance of Soviet aid. In fact, after a loan was authorised in 1966, the USSR did not authorise another credit for a decade, until 1977. However, in the eighties again there has been a sudden spate of Soviet loans to India.

In terms of total volume of aid authorised (see table 4.1) up to the end of the Annual Plans (1968/9), the USSR was the third largest donor to India after the USA and the IBRD/IDA.