Thesis of Ashok Kumar 17.12.2020

“Role of External Assistance in Assuring Sustainable Development: A Case Study in India”
TABLE OF CONTENTS
LIST OF TABLES III
LIST OF FIGURES III
LIST OF ABREVIATIONS V
ABSTRACT IX
CHAPTER 1: INTRODUCTION 1-9

1.1 Background
1.2 Problem statement
1.3 Objectives of the study
1.4 Research question
1.5 Scope of the study
1.6 Importance of the Study
1.7 Limitations of the study
1.8 Organization of the Study
CHAPTER 2: LITERATURE REVIEW 10-71

2.1. Introduction
2.2 The key issues
2.3 History of sustainable development
2.4 Relationships among the environment, economy and society
2.5 Pillars of sustainable development
2.6 The sustainable development goals
2.8 Principles of sustainable development
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2.8. Integration of Key Factors in Sustainable development

2.9 Sustainable development and Economic growth in India
CHAPTER 3: MATERIALS AND METHODS 72-77

3.1 Data Collection
3.2 Theoretical framework
3.3 Conceptual framework
3.4 Approach and Methodology
CHAPTER 4: RESULTS AND DISCUSSION 78-249

4.1 Role of Policy, Institution and Markets in Assuring Sustainable Development
4.2 Role of External Assistance in Assuring Sustainable Development
4.3 Policies and Procedures for Accessing External Assistance: Cross Country Context
4.4 Policies for Accessing External Assistance: Indian Government Context
4.5 Implementation and Achievements of Sustainable Development Goals in India
4.6 External Assistance and its Significance under Health Sector in India
CHAPTER 5: CONCLUSION AND RECOMMENDATIONS 250-263

5.1 Conclusion
5.2 Recommendations
5.3 Limitations and Suggestions for Further Research
REFFERENCES 264-276
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LIST OF TABLES
Tables Page
No.
Table 2.1: The determinants of sustainable development 37
Table 4.1: External Assistance 2020-2021 122
Table 4.2: External Debt - Outstanding and Variation 168
Table 4.3: Residual Maturity of Outstanding External Debt as at end-June 169
2020
Table 4.4: Government and Non-government External Debt 171
Table 4.5: Outstanding External Debt by Instruments 172
Table 4.6: India’s Key External Debt Indicators 173
Table 4.7: Assistance received from Multilateral and Bilateral sources under 246
Health Sector as Loan.
Table 4.8: Assistance received from Multilateral and Bilateral sources under 247
Health Sector as Grant.
LIST OF FIGURES
Figures Page
No.
Figure 2.1: Relationships among social, environmental and economic 20
sustainability
Figure 2.2: Road map for sustainable development in India 29
Figure 4.1: Poverty in India at the Tendulkar Line 208
Figure 4.2: Person-days of employment generated under MGNREGA 210
Figure 4.3: Cumulative Number of Self-Help Groups (millions) 210
Figure 4.4: Number of Houses Constructed in Rural Areas Under 212
Government Programs (millions)
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Figure 4.5: Households with Access to Sanitation Facilities (%) 213

Figure 4.6: Improvements in Nutrition Indicators of Children Under 5 Years 214
Figure 4.7: Sustainable and Adaptive Agriculture 215
Figure 4.8: Doubling Farmers' Income by 2022 216
Figure 4.9: Reduction in Infant & Child Mortality Rates (Per 1,000 Live 217
Births)
Figure 4.10: Improvements in the vaccination coverage of children between 218
12-23 months (%)
Figure 4.11: Total Fertility Rate (children per woman) 219
Figure 4.12: A Minimum of 4 Antenatal Care Visits (% of last births in the 219
past 5 years)
Figure 4.13: Increase in Institutional Deliveries Under Janani Suraksha 220
Yojana (%)
Figure 4.14: Progress With Respect to Gender-Related Indicators (%) 222
Figure 4.15: A Significantly Larger Percentage of Households Now Have 224
Access to Clean Fuel
Figure 4.16: Increase in Installed Electricity Generation Capacity (GW) 229
Figure 4.17: National Policy on Marine Fisheries, 2017 231
Figure 4.18: ODA/GNI Ratio of Major Donor Countries (2016) 236
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ABBREVIATIONS
AAY – Antyodaya Anna Yojana

AEEI – Autonomous Energy Efficiency Improvement
AMRUT– Atal Mission for Rejuvenation and Urban Transformation
AWC – Anganwadi Centre
AYUSH– Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homoeopathy
BAU – Business As Usual
BIG – Baseline, Inclusive Growth
BRICS – Brazil, Russia, India, China, and South Africa
CAGR– Compound Annual Growth Rate
CSP – Concentrated Solar Power
CSR – Corporate Social Responsibility
CTE – College of Teacher Education
DAC – Development Assistance Committee
DBT– Direct Benefit Transfer
DIET – District Institute of Education Training
DPT – Diphtheria Pertussis Tetanus
ECBC – Energy Conservation Building Code
ECD – Early Childhood Development
ESMAP – Energy Sector Management Assistance Program
EWS– Economically Weaker Section
FAO – The Food and Agriculture Organisation
FDI – Foreign Direct Investment
GDP – Gross Domestic Product
GDP – Gross Domestic Product
GNI – Gross National Income
GRBMP – Ganga River Basin Management Plan
GST – Goods and Services Tax
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HLPF– High Level Political Forum

HPEC – High Powered Expert Committee
ICAR – The Indian Council of Agricultural Research
ICDS – Integrated Child Development Services
ICT – Information and Communication Technology
ICT– Information Communication and Technology
IESS– India Energy Security Scenario
IIPS – International Institute of Population Sciences
IITC – Indian Institute of Technology Consortium
IMF– International Monetary Fund
IMR – Infant Mortality Rate
INDC – Intended Nationally Determined Contribution
INR – Indian Rupee
JNNURM – Jawaharlal Nehru National Urban Renewal Mission
JSY – Janani Suraksha Yojana
LCIG– Low Carbon, Inclusive Growth
LDC– Least Developed Country
LES– Linear Expenditure System
LIG – Low Income Group
MDGs – Millennium Development Goals
MGNREGA– Mahatma Gandhi National Rural Employment Guarantee Act
MIS– Management Information System
MoI – Means of Implementation
MoSPI – Ministry of Statistics & Programme Implementation
MSME – Micro Small and Medium Enterprise
MSP – Minimum Support Price
MUDRA – Micro Units Development and Refinance Agency
NAPCC– National Action Plan on Climate Change
NCMH – National Centre for Central Health
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NFSA – National Food Security Act

NIMZ – National Investment and Manufacturing Zones
NITI – National Institution for Transforming India
NMSA– National Mission on Sustainable Agriculture
NRDWP – National Rural Drinking Water Programme
NSDC – National Skill Development Corporation
NSS– National Sample Survey
NUEPA– National University of Educational Planning and Administration
ODA – Official Development Assistance
OECD – Organisation for Economic Co-operation and Development
PAT – Perform Achieve Trade
PDS – Public Distribution System
PHC – Primary Health Centre
PHD – Progress Harmony Development
PMJDY – Pradhan Mantri Jan Dhan Yojana
PPP – Public Private Partnership
PTR– Pupil Teacher Ratio
RAY– Rajiv Awaas Yojana
RBI– Reserve Bank of India
RRR – Repair, Renovation and Restoration
RTE– Right to Education Act
RUSA – Rashtriya Uchchatar Shiksha Abhiyan
SAPCC – State Action Plan on Climate Change
SCERT– State Council for Educational Research and Training
SCP – Sustainable Consumption and Production
SDGs – Sustainable Development Goals
SSA – Sarva Shiksha Abhiyan
TFM– Technology Facilitation Mechanism
TFP – Total Factor Productivity
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TSC – Total Sanitation Coverage

ULB – Urban Local Bodies
UMP– Unified Market Platform
UN – The United Nations
UNCTAD – The United Nations Conference on Trade and Development
UNDP– United Nations Development Programme
UNESCAP– United Nations Economic and Social Commission for Asia and the Pacific
UNICEF – The United Nations International Children’s Education Fund
WCD – Women and Child Development
WHO – World Health Organization
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ABSTRACT
The principle motivation behind this theory is to recognize the part of sustainable
development in India, in light of the coordination of three elements, economic growth,
social development, and the environmental dimension. Yearly time series data are
utilized for the period 1980-2010. With a specific end goal to create the most proper
relapse, significant hypothetical and exact examinations are surveyed. This proposal adds
to the on-going research issue about key determinants impacting sustainable development
in creating nations.
Initially, this investigation utilizes the principal distinctive of logarithm frame to

recognize the determinants of economic growth, the effects of growth on neediness and
environmental conditions in India. Be that as it may, utilizing the different relapses,
significant issues of multi co linearity were experienced and those outcomes turned out to
be less dependable. Principal components analysis (PCA) is a method to deal with the
issue of multi co linearity and create steady and important evaluations for relapse
coefficients.
This proposal presumes that there are a few factors, both inside and outside components,
which have affected the current economic growth of India. Especially the inward factors
(domestic investment, government consumption, and industry) demonstrate their solid
connection with economic growth, while the outside factor (interest in BRICS) likewise
assumes an essential part in economic growth. Then again, the other outside components
(FDI, AID and OPEN) demonstrate a weaker connect to domestic growth of India. Over
the long haul, to guarantee the viability of outside elements on domestic growth, this
research proposes misusing all the more adequately the open doors gave by foreign direct
investment, through the receptiveness of the framework to globalization and worldwide
exchange, together with better administration of help portion.
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The effects of economic growth on neediness and environmental conditions are then
viewed as, addressing whether economic growth prompts the lessening of destitution and
whether it creates a weight on environmental conditions. This investigation found that
those determinants have been prevailing in economic growth, as well as they do for sure
correspond with a lessening in the level of destitution. Then again, the expansion in
economic exercises prompts expanded environmental harm.
This research underpins proceeding with the modification of domestic movement

investment, government consumption, enhancing exchange receptiveness framework,
foreign direct investment, help designation, BRICS, etc. These variables can help the
nation to develop and neediness to lessen however we have additionally to focus on their
effects on the earth. Sustainable development would accomplish its objective just if these
interior and outer elements add to economic growth, where this growth is conveyed over
the whole populace, together with environmental security conditions.
So as to accomplish the objective of sustainable development, solid environmental and

normal asset assurance arrangements are proposed. To keep up a high rate of economic
growth, this investigation recommends considering the normal assets and the zones with
the best potential to be used for growth, for example, tourism maintainability, human
asset change and exchange approach change. To enhance social development, diminish
the development hole and annihilate outrageous neediness, it is recommended that group
interest development, gender orientation advancement, and investment in social
administrations be expanded particularly in provincial ranges.
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CHAPTER 1: INTRODUCTION
1.1 BACKGROUND
India has played a crucial role in shaping the Sustainable Development Goals (SDGs).
This has indicated that the national development priorities of the country are expressed in
the SDGs. As such, India was successfully committed to achieving the SDGs long before
they were completely crystallized. As one of the countries that volunteered to participate
in the Voluntary National Reviews (VNRs) of the High-Level Political Forum (HLPF)
2017, India appreciates the emphasis on 'Eradicating poverty and fostering growth in a
changing world.'
The memorable term Sabka Saath Sabka Vikas, translated as "Collective Effort, Inclusive
Growth" and enunciated by the Prime Minister, is the cornerstone of India's national
development agenda. To speed up this agenda, NITI Aayog, the Government of India's
leading think tank, recently published a draught three-year action agenda spanning the
years 2017-18 to 2019-20. At the same time, progress on a 15-year vision and 7-year plan
document is in advanced stages. Reflecting the long-standing federal tradition of the
country, these documents are being prepared with the active participation of sub-national
governments. Although concentrating on economic growth, infrastructure development
and industrialization, the country's poverty war has become more and more focused on
social inclusion and empowerment for the disadvantaged. Even as it fights poverty, India
remains committed to protecting the environment. Under its Nationally
Determined Contributions, India has committed to minimizing the emissions intensity of
GDP as well as creating an additional carbon sink.
Strengthening India’s contribution to the National Development Agenda and SDGs, the
country's Parliament has organized a number of forums to establish policy and action
perspectives on poverty eradication, fostering gender equality and addressing climate
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change. NITI Aayog, chaired by the Prime Minister, is committed to providing overall
coordination and leadership. The institution carried out a thorough mapping of the 17
goals and 169 Targets for the Nodal Central Ministries, the Centrally Funded Schemes
and major government initiatives. The majority of sub-national governments carried out a
similar mapping of the SDGs and goals for the departments and programmes in their
respective countries. The Ministry of Statistics & Program Implementation has drawn up
a list of draught national indicators in the light of the global SDG indicators. This plan
has been put in the public domain for broader consultation.
Several of the Government services will directly contribute to the implementation of the
SDG agenda. A prominent example of this is Pradhan Mantri Jan Dhan Yojana
(PMJDY), the largest financial inclusion initiative in the world. By leveraging PMJDY,
Aadhaar (biometric identification system) and mobile telephony, the Government has
paid a cumulative sum of INR 1,6 trillion (USD 25 billion) to 329 million recipients via
Direct Benefit Transfers.1 This has helped dramatically boost the efficiency of
Government programmes. While the central government has funded schemes to provide
jobs, link villages to cities through highways, create homes for the poor, and provide
education in the states, various sub-groups of chief ministers have come forward to
provide valuable advice to the central government on such important issues as digital
payments, skills development and Swach Bharat Abhiyaan (Clean India Campaig).
As part of its supervisory responsibility, NITI Aayog led the VNR preparation process. A
multidisciplinary task force was set up to organise the analysis and process
documentation. Governments of the State and Union Territories have registered progress
on the various programmes and initiatives at the sub-national level. Although reporting
on the different aspects of the SDGs, this VNR focuses on the progress achieving Goals
1, 2, 3, 5, 9, 14 and 17. These goals have been accepted in the HLPF as the priority areas
for this year. However, the essence of the SDGs is such that the advancement of one
global objective may lead to progress in other objectives as well.
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1.2 PROBLEM STATEMENT
The Government of India's strong commitment is to achieve the Millennium

Development Goals (MDGs) while leaving the status of the least developed countries
(LDCs) by 2020. With this specific goal in mind, a high rate of economic growth is seen
as a fundamental prerequisite for economic development, but it is not a panacea for
financial development. Similarly, attention must be given to the effects of economic
growth on various factors, such as the effects of growth on social development, in
particular poverty and income distribution, which remains a measure for India's economic
development. The other is the effect of economic growth on environmental factors, such
as deforestation and deforestation of the ecosystem, due to the way in which large parts
of India depend on natural resources, including forests and mineral resources, whereas
the hydro-control power has a real impact on the natural resources system of such a wide
variety of vegetation.
Economic growth is considered to be a crucial factor in achieving India's national

development objective; despite the fact that the administration's policies are based solely
on economic growth as a means of achieving a base income to transfer from the LDCs1,
without taking into account their impact on alternative perspectives, for example, social,
cultural and natural sustainability, this may mean that the imagined deviance is not the
same. Thus, in order to effectively achieve the goals of the numerous economic
development plans, the government needs to consider both the development potential of
expanding the abundance of individuals within the nation and the sustainability of
development that would ensure lasting benefits for the nations that are to come.
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1.3 OBJECTIVES OF THE STUDY
Taking account of the current economic environment and declining natural resources,
sustainable development objectives should focus on maximizing the satisfaction of the
population, but also a more efficient use of resources.
 Economic growth – building a strong, competitive economy, by ensuring that
sufficient land of the right type is available in the right places and at the right time to
support growth and innovation; and identifying then coordinating development
requirements.
 Environmental protection – contributing to protecting and enhancing our natural
and developed environment, while helping to improve biodiversity, use natural
resources wisely, minimizing waste and pollution, and adapting to and helping to
decrease climate change, including a global shift to low-carbon economy.
 Social inclusion – supporting strong, vibrant and healthy communities by providing
the supply of housing required to meet the needs of present and future generations;
and by creating a high-quality of development, with accessible local services that
reflect the community’s needs and support its health, social and cultural well-being.
Specifically, sustainable development ensures fuller knowledge of the function of the
natural environment or arranged in relation to man and society (ingluenta positive
direct and indirect effects on quality of life).
1.4 RESEARCH QUESTION
For some aspects, it is important that the nation's financial development policies ,
strategies and expenditure are sustainable through the achievement of sustainable and
equitable development. It is therefore important, by definition, to break down the
sustainability of development undertakings into the primary requirements for the
achievement of the national development objective. This position aims to assess the value
of sustainable development and means to implement a range of metrics and tools that can
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be used to promote progress towards sustainability. Sustainable development is supposed

to be an aspect of three elements: economic growth, social development and
environmental conditions.
Right from the bat, the main determinants of economic growth are to be remembered, in
particular as a result of being a member of the BRICS in 2001. It would then be opened
up to the issue of whether economic growth is beneficial to reduced needs or income
inequality and, furthermore, its effects on environmental conditions. In addition, this
paper distinguishes between the impact of economic growth on poverty and the
distribution of wealth, which is a necessary goal of economic development. In
conclusion, this paper dissects the impact of economic development on condition; per
capita carbon dioxide emissions are used as an intermediary for environmental
degradation. Results will then be coupled with the specific principles of sustainability to
create a Roadmap for Sustainable Development in India. The supported economic growth
is a promising prospect for the nation to land from rundown of LDCs as far as income per
capita; in any case, it might negatively affect the normal asset of the nation. The thesis
examines the accompanying inquiries:
1. Does exchange transparency cultivate economic growth in India? Or, on the other
hand there are other components, (for example, outside guide, remote direct
speculation, household venture, government consumption, and so on.) rule in
economic growth?
2. Does economic growth impact social development (neediness and income
inequality)?
3. Does the economic growth negatively affect environmental conditions? Is there any
correlation between the economic growth and environmental conditions?
The normal results of this thesis are to distinguish the key elements overwhelm in
economic growth, in view of the idea and theory of economic growth and its effect on
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social and environmental viewpoints. We expect that the work of numerous pertinent
indicators will offer an unmistakable clarification, and furthermore will distinguish a
decent strategy adding to a sustainable development of India; specifically:
1. To arrange the state of the financial development of India as to accomplish the most
extreme advantage from sustainable development;
2. The effects of every part on a sustainable development way, explaining criteria and
indicators that consider venture arrangement, execution and assessment,
3. To give a few suggestions to policy makers keeping in mind the end goal to
accomplish the national development and its long haul development objective.
4. This thesis adds to the on-going examination issue about key determinants affected in
sustainable development in creating nations.
1.5 SCOPE OF THE STUDY
The aim of sustainable development is to balance our economic, environmental and

social needs, allowing prosperity for now and future generations. Sustainable
development consists of a long-term, integrated approach to developing and achieving a
healthy community by jointly addressing economic, environmental, and social issues,
whilst avoiding the over consumption of key natural resources.
Sustainable development helps us to preserve and expand our resource base by gradually
improving the way we grow and use technology. Countries must be allowed to meet their
basic jobs, food, electricity, water and sanitation needs. If this is to be achieved in a
sustainable way, there is a strong need for a sustainable population level. Economic
growth should be encouraged, and developing nations should be able to expand equally
among developed nations. There are four objectives of sustainable development:
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These include social change and equality, preservation of the environment, conservation
of natural resources and steady economic development. Everyone has the right to a
healthy, clean and safe environment. Everyone has the right to a healthy, clean and safe
environment.
This can be done by the elimination of pollution, poverty, inadequate housing and
unemployment. No one, at this age or in the future, should be treated unfairly. Current
environmental risks, such as climate change and poor air quality, need to be minimized in
order to protect human and environmental health. The use of non-renewable resources,
such as fossil fuels, should not be halted immediately, but should be used effectively and
the production of alternatives should be promoted to help them phase out.
Everyone has the right to a decent standard of life, with better work prospects. Economic
growth is needed if our country is to succeed and our companies must therefore deliver a
high quality of goods that consumers around the world want at the prices they are willing
to pay. In order to achieve this, we need a workforce with sufficient skills and education
to help them.
This study is funded by the United Nations Development Program and the Government
of India, Ministry of Environment, Forestry and Climate Change. It was commissioned to
estimate the funding needs of India to fulfil the SDGs by 2030. Quantifying funding
needs for such a wide range of goals is difficult, since calculations are based on a number
of assumptions. However, these initial studies are intended to shed light on the magnitude
of the funding conditions involved and provide guidance on negotiations at the
international level.
1.6 IMPORTANCE OF THE STUDY
Sustainable development is a development that addresses the needs of today without

undermining the potential of future generations to fulfill their own needs. Sustainable
development has continued to evolve as a way of preserving the world's resources, while
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the real agenda is to exploit the world's resources. Environmentally sustainable economic
growth refers to economic development that meets the needs of everyone without leaving
future generations with fewer natural resources than we enjoy today.
The essence of this type of growth is a healthy relationship between human activities and
the natural environment, which does not diminish the opportunities for future generations
to experience a quality of life that is at least as good as ours.
The notion of environmentally sound economic development is not a fresh one.

Throughout human history, many cultures have recognized the need for peace between
the climate, community and the economy. 'Environmentally sustainable economic
growth' is synonymous with the prevalent idea of 'Sustainable Development.' The aim is
to create a balance / harmony between environmental sustainability, economic
sustainability and socio-political sustainability.
1.7 LIMITATIONS OF THE STUDY
One of the major criticisms that is often levied against recursive abstraction as an
analytical method is that, depending on how the summaries are carried out, the final
conclusions could be remote from the underlying results. The author, aware that there is
no doubt that weak initial summaries would produce an incorrect final report, took care to
record, through systematic notes, the rationale behind each summary phase concerning
the inclusion and exclusion criteria in the intermediate summaries. However, in view of
the steps taken to prevent the effect of this potential methodological error on the result of
this article, the author does not assign to himself the virtue of perfection in the
development of the article.
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1.8 ORGANIZATION OF THE STUDY
This research study begins by giving an overview of the Sustainable development in the
first chapter and the highlights the problem of over provisioning as a major challenge.
The second chapter details an overview of Literature related to Sustainable development.
It also looks at the various tools that can be used for machine learning. The third chapter
gives an overview of how the research was conducted in terms of the methodology, how
the data was prepared and how the study was done. The fourth chapter deals with the
analysis of the results from using role of External Assistance in Assuring Sustainable
Development. The fifth chapter is on the conclusions and recommendations that the
researcher came up with after conducting the research.
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CHAPTER 2: LITERATURE REVIEW
2.1. INTRODUCTION
Sustainable Development (SD) has become a ubiquitous model of development — the

catchword for international aid organizations, the language of development planners, the
theme of conferences and academic articles, and the slogan of development and
environmental activists (Ukaga, Maser, & Reichenbach, 2011). The idea seems to have
drawn wide-ranging attention to the absence of other development principles, and seems
to have remained the pervasive model of development for a long time (Scopelliti et al.,
2018; Shepherd et al., 2016). However, despite its prevalence and popularity, murmurs of
disenchantment about the term are prevalent as people continue to ask questions about its
meaning or description and what it means, as well as its implications for growth theory
and practise, without any definite answers (Montaldo, 2013; Shahzalal & Hassan, 2019;
Tolba, 1984). SD is therefore at risk of becoming a cliché like an apt technology — a
trendy and rhetorical phrase— which everyone pays tribute to, but nobody seems to
describe clearly and precisely (Mensah & Enu-Kwesi, 2018; Tolba, 1984). In an effort to
step beyond the jargon of sustainability and adopt a more concrete sustainable
development agenda, a consistent definition of this term and a clarification of its main
aspects are required (Gray, 2010; Mensah & Enu-Kwesi, 2018). This need, according to
Gray (2010), as cited in Giovannoni and Fabietti (2014), has been advocated by
academics and practitioners in order to encourage sustainable growth. Although it cannot
be denied that SD literature abounds, issues relating to the meaning of the term, origin,
pillars, concepts and their consequences for human development remain obscure to many.
Notwithstanding the profusion of literature, further clarification of unclear SD issues is
therefore necessary, because decision-makers need not only better data and knowledge on
the linkages between SD principles and pillars, but also a better understanding of those
linkages and their involvement in action in the interests of human development
(Abubakar, 2017; Hylton, 2019). Succinctly put, a succinct and coherent SD discourse is
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required to further illuminate the direction and trajectory of sustainable development in

order to promote citizenship rather than spectatorship. The goal of this study is therefore
to contribute to the intelligibility and articulation of the SD discourse by providing more
succinct information on its context, development, related main concepts, dimension, the
relationship between dimensions, principles and their implications for global, national
and individual SD behavior. This is important because it will provide scholars, policy
makers and academics, as well as development practitioners and students with more
knowledge on the model of policy-making, decision-making and more study.
2.2 THE KEY ISSUES
The study focuses on key issues related to the principles of growth, sustainability and
sustainable development. Issues include the past of SD, as well as the pillars and values
of the definition. The paper also presents the Sustainable Development Goals (SDGs) and
the related discussion on trade-offs, complementarities, costs and benefits, as well as
what can be done to achieve the much-talked-about SD.
2.2.1. The concept of development

Development, as a term, has been connected to the diverse definitions, interpretations and
theories of various scholars. Development is characterized as an evolutionary process in
which human capacity is increased in terms of initiating new systems, solving problems,
adapting to continuous change, and striving intentionally and creatively to achieve new
goals (Peet, 1999 cited in Du Pisani, 2006). According to Reyes (2001), growth is
understood as a social situation within a nation in which the needs of its people are met
by the fair and sustainable use of natural resources and systems. Todaro and Smith
(2006) also describe development as a multidimensional process involving significant
changes in social systems, perceptions and institutions, as well as economic growth, the
reduction of inequalities and the eradication of absolute poverty. Several hypotheses have
been put forward in order to understand the principle of creation. These include the
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theories of Modernisation, Dependency, World Structures and Globalisation.

Modernization Theory of Growth distinguishes between the two major types of society in
the world, traditional and global societies. The theory, according to Tipps (1976), argues
that traditional societies are entangled by norms, beliefs and values that impede their
growth. Traditional societies must therefore, in order to make progress, imitate the
culture of modern societies characterized by the accumulation of capital and
industrialization which are consistent with growth. In essence, this theory aims to raise
the standard of living in traditional societies through economic development through the
adoption of new technology (Huntington, 1976). This theory is criticized for not taking
into account the view of Sen (1999) on the growth of freedoms and self-esteem. The
theory of dependency, based on Marxist philosophy, debunks the concepts of
modernization theory and claims that industrialization in developed countries is more
subject to underdevelopment of developing countries as a result of the economic surplus
of poor countries exploited by developed countries (Bodenheimer, 1970; Webster, 1984).
The theory, however, fails to explain the reliance of the least developed countries on the
metropolis in terms of how developed countries ensure access to the economic surplus of
the poor countries. The World Systems Theory argues that the specialization of foreign
trade and the movement of resources from the periphery (less developed countries) to the
centre (developed countries) hinders developments in the periphery by making them rely
on core countries (Petras, 1981).
The Global Systems Theory sees the world economy as an international hierarchy of
unequal relations (Reyes, 2001) and the unequal relationship between the Third World
and the First World is the root of the First World surplus. This contrasts with the classical
Marxist theory, which argues that surplus is the consequence of the capital-labour
relationship that occurs in "production" itself. (Bodenheimer, 1970; Reyes, 2001) The
World System Theory has been criticized for over emphasized the world economy while
neglecting the powers and ties of production. (Pétras, 1981)
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Similar to the World System Theory, the Theory of Globalization originates from the
global processes of deeper integration of economic transactions between countries
(Portes, 1992). However, apart from economic ties, cultural connexions between nations
(Kaplan, 1993; Moore, 1993) are also key elements for the understanding of growth as far
as globalization is concerned. One of the key factors in this cultural orientation is the
growing versatility of technology to bind people around the world (Reyes, 2001). Open
and simple contact between nations has therefore provided a foundation for cultural
homogenization, establishing a single global society (Waks, 2006). Political affairs no
longer have a local character, but a global character. Thus, according to Parjanadze
(2009), globalization is underpinned by political, economic, technological and socio-
cultural factors and orientations. Although these developments theories have their
weaknesses, they have paved the way for the current global development concepts and
paradigm, namely “sustainability” and “sustainable development” (SD).
2.2.2 Sustainability
Literally, longevity means the ability to preserve a certain individual, outcome or process
over time (Basiago, 1999). However, in development literature, most scholars,
researchers and practitioners (Gray & Milne, 2013: Tjarve, & Zemīte, 2016; Mensah &
Enu-Kwesi, 2018; Thomas, 2015) apply the idea of improving and maintaining a stable
economic, ecological and social environment for human development. Stoddart (2011)
describes sustainability as the effective and equal allocation of resources intra-
generationally and inter-generationally with the activity of socio-economic activities
within the bounds of a finite ecosystem. On the other hand, Ben-Eli (2015) sees
sustainability as a complex balance in the phase of interaction between the population
and the carrying capacity of its environment, such that the population grows to express its
full potential without having permanent adverse effects on the carrying capacity of the
environment on which it depends. From this point of view (Thomas, 2015), sustainability
adds to the attention of human activities and their ability to fulfill human needs and wants
without depleting or exhausting the productive resources at their disposal. This, therefore,
Ashok Kumar 13
gives rise to thoughts on how people can lead their economic and social lives by drawing
on the available ecological resources for human growth.
Hák, Janoušková, and Moldan (2016) argued that transforming global culture, the
climate, and the economy into a sustainable one is one of the most daunting tasks facing
man today as it is to be achieved within the framework of the planet's capacity building.
The World Bank (2017) continues to call for new approaches to reality management. In
support of this claim, DESA-UN (2018) argues that the overarching goal of the
philosophy of sustainability is, in essence, to ensure sufficient alignment and balance
between society, the economy and the environment in terms of the regenerative potential
of the life-sustaining ecosystems of the earth. Gossling-Goidsmiths (2018) argues that
this complex alignment and harmony must be the subject of a substantive concept of
sustainability. However, as Mensah and Enu-Kwesi (2018) have argued, the definition
must also emphasize the concept of cross-generational equity, which is obviously an
essential idea but presents difficulties, because the needs of future generations are neither
easy to define nor to recognize. Based on the above, contemporary sustainability theories
aim to priorities and incorporate social, environmental and economic models to resolve
human problems in a manner that will continue to be human-friendly (Hussain,
Chaudhry, & Batool, 2014; UNSD, 2018b). In this regard, economic models aim to
accumulate and use natural and financial resources sustainably; environmental models
ultimately concentrate on biodiversity and ecological integrity, while social models seek
to strengthen political, cultural, religious, health and education systems, among others, to
ensure human dignity and well-being on an ongoing basis (Acemoglu & Robinson, 2012;
Evers 2018) and for that matter, sustainable development.
2.2.3 Sustainable development

Sustainable development has become the buzzword in the discourse of development,
synonymous with various concepts, meanings and interpretations. Taken literally, SD
would simply mean "production that can be continued either indefinitely or over a given
Ashok Kumar 14
period of time" (Dernbach, 1998, 2003; Lele, 1991; Stoddart, 2011). Structurally, the
concept can be seen as a term consisting of two words, "sustainable" and "growth." Just
as each of the two words that combine to form the concept of SD, that is, "sustainable"
and "growth," has been defined from different perspectives, the concept of SD has also
been viewed from different angles, leading to a multitude of definitions of the concept.
Although SD definitions abound, the most frequently cited definition of the term is the
one suggested in the Brundtl and Commission Reports (Schaefer & Crane, 2005). The
Report defines SD as development that meets the needs of the current generation without
compromising the ability of future generations to meets their own needs.
Recognizing the widespread essence of WCED’s meaning, Cerin (2006) and Abubakar
(2017) argue that SD is a central principle of global development policy and agenda. It
offers a process by which society can communicate with the environment without risking
destroying the resource for the future. It is therefore a philosophy of growth as well as a
principle that calls for raising living conditions without endangering the habitats of the
planet or causing environmental threats such as deforestation and water and air pollution
that can lead to problems such as climate change and species extinction (Benaim &
Raftis, 2008; Browning & Rigolon, 2019). Looked at as an approach, SD is a creation
approach that uses resources in a way that enables them (resources) to continue to exist
for others (Mohieldin, 2017). Evers (2017) also refers to the idea of the guiding principle
for the achievement of human development goals while at the same time retaining the
capacity of natural systems to provide the natural resources and ecosystem services on
which the economy and society rely. From this viewpoint, SD seeks to achieve social
change, environmental balance and economic development (Gossling-Goidsmiths, 2018;
Zhai & Chang, 2019). Exploring the demands of SD, Ukaga et al. (2011) stressed the
need to step away from negative socio-economic practises and to participate in activities
with positive environmental, economic and social impacts. It is argued that the
importance of SD deepens with the dawn of each day since the population continues to
expand, but the natural resources available to meet human needs do not and do not want
Ashok Kumar 15
to. Hák et al. (2016) maintain that, aware of this phenomenon, global concerns have
already been expressed regarding the sound use of available resources, so that it will
always be possible to meet the needs of the present generation without compromising the
capacity of future generations to meet their needs. It means that SD is an attempt to
maintain a balance between economic development, environmental integrity and social
well-being. This supports the argument that intergenerational equity is implicit in the
definition of SD, which acknowledges both the short-term and long-term consequences of
sustainability and SD (Dernbach, 1998; Stoddart, 2011). According to Kolk (2016), this
can be accomplished through the incorporation of economic, environmental and social
issues into decision-making processes. However, it is common for people to regard
sustainability and SD as analogues and synonyms, but the two terms are distinguishable.
According to Diesendorf (2000) sustainability is the goal or endpoint of a process called
sustainable development. Gray (2010) reinforces the point by arguing that, while
“sustainability” refers to a state, SD refers to the process for achieving this state.
2.3 HISTORY OF SUSTAINABLE DEVELOPMENT
While the idea of SD has gained traction and prominence in theory, the history or
development of the idea appears to be overlooked and downplayed. While evolution may
seem unimportant to some people, it may nevertheless help to predict future patterns and
weaknesses and thus provide valuable guidance both now and in the future (Elkington,
1999). Historically, according to Pigou (1920), SD as a term stems from economics as a
discipline.
Discussion as to whether the ability of the Earth's finite natural resources could continue
to sustain the life of an growing human population gained popularity with the Malthusian
population theory in the early 1800s (Dixon and Fallon, 1989; Coomer, 1979). As far
back as 1789, Malthus argued that human population appeared to rise in geometrical
progression, while survival could only rise in arithmetic progression, and that population
Ashok Kumar 16
growth was likely to outstrip the capacity of natural resources to meet the needs of the
growing population (Rostow & Rostow, 1978). Thus, if steps were not taken to manage
rapid population growth, scarcity or degradation of natural resources would result in
human suffering (Eblen & Eblen, 1994). However, the import of this assumption
appeared to be overlooked in the belief that technology might be established to cancel
such an event. Over time, global concerns have heightened over the non-renewability of
some natural resources that threaten development and long-term economic growth as a
result of environmental degradation and pollution (Paxton 1993). This reawakened
knowledge of the probability of the occurrence of Malthus' postulation and raised
concerns as to whether the road to growth was sustainable (Kates et al., 2001). Similarly,
looking at whether the model of global economic development was "sustainable,"
Meadows researched the Limits to Growth in 1972, using data on population growth,
industrial production and emissions (Basiago, 1999; Rostow, 1978). Meadows concluded
that "because the universe is physically finite, the exponential growth of these three main
variables will inevitably reach its limit" (Meadows, 1972). However, some scholars,
researchers and development practitioners (Dernbach, 2003; Paxton, 1993) claim that the
idea of sustainable development gained its first major international recognition at the UN
Conference on the Human Environment in Stockholm in 1972. According to Daly (1992)
and Basiago (1996), although the concept was not expressly mentioned, the international
community accepted that both development and the environment should be handled in a
mutually beneficial manner, which is now central to sustainable development.
Following these trends, the World Commission on Environment and Development,

headed by Gro Harlem Brundtland of Norway, revived the SD call, resulting in the
development of the Brundtland Report entitled "Our Shared Future" in 1987 (Goodland
& Daly, 1996). As already stated, the report described SD as a development that meets
the needs of the current generation without sacrificing the ability of future generations to
meet their own needs. The Brundtland Commission's report focused on two main issues:
the definition of needs , in particular the basic needs of the world's poor (to which priority
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should be given); and the idea of the constraints imposed by the state of the art and social
organisation on the capacity of the environment to meet current and potential needs
(Kates et al., 2001). The recommendations of the report were the key topics of discussion
at UNCED. The UNCED had several primary outcomes for the SD set out in the outcome
document of the meeting, including Agenda 21 (Worster 1993). It claimed that SD should
become a priority item on the agenda of the international community "and continued to
suggest that national policies be planned and developed to address the economic, social
and environmental aspects of sustainable development (Allen, Metternicht, & Wiedmann,
2018). In 2002, the World Summit on Sustainable Development (WSSD), known as the
Rio+10 Summit, was held in Johannesburg to review progress in implementing the
results of the Rio Earth Summit. WSSD has established an implementation plan for the
measures set out in Agenda 21, known as the Johannesburg Plan, and has also initiated a
range of multi-stakeholder SD alliances (Mitcham, 1995).
In 2012, 20 years after the first Rio Earth Summit, the United Nations Conference on
Sustainable Development (UNCSD) or Rio+20 took place. The conference centred on
two topics for sustainable development: the green economy and the institutional structure
(Allen et al., 2018). A reaffirmed commitment to SD was central to the outcome
document of the meeting, 'The Future We Want,' to such an extent that the word
'Sustainable Development' appears 238 times in 49 pages (UNSD, 2018a). The Rio+20
Outcomes included a mechanism to create new SDGs, to take effect from 2015 and to
promote targeted SD action in all sectors of the global development agenda (Weitz,
Carlsen, Nilsson, & Skånberg, 2017). As a result, SD was listed as one of the five key
priorities of UN Secretary-General Ban Ki-Moon in 2012, emphasising the key role SD
should play in international and national development strategies, programmes and
agendas.
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2.4 RELATIONSHIPS AMONG THE ENVIRONMENT, ECONOMY AND

SOCIETY
The idea of sustainability continues to continue to affect future debate on creation

science. This, in the view of Porter and van der Linde (1995), means that the best options
are likely to be those that meet the needs of society and are environmentally and
economically viable, economically and socially equal, as well as socially and
environmentally sustainable. This leads to three interlinked sustainability spheres or
domains that define the relationship between the environmental, economic and social
aspects of SD as shown in Figure 2.1.
Essentially, it can be concluded from the figure that almost all man does or aims to do on
earth has consequences for the climate, the economy or culture, and for that matter the
continued life and well-being of the human race. Similarly, as Wanamaker (2018) argued,
the spheres are a collection of interrelated principles that should form the basis of human
decisions and actions in the quest for SD. Yang (2019) supports the statement that,
ultimately, the figure depicts that sound decisions on sustainable resource management
will bring sustainable development to a sustainable society. Examples include decisions
on land use, surface water management, Agricultural activities, building and renovation,
energy conservation, education, equal opportunity as well as regulations and regulation
(Montaldo, 2013; Porter & van der Linde, 1995). The point is that when the principles in
the three domains of sustainability are applied well to real world circumstances,
everybody benefits because natural resources are conserved, the environment is secured,
the economy is thriving and robust, social life is good because there is peace and respect
for human rights (DESA-UN, 2018; Kaivo-oja, Panula-Ontto, Vehmas, & Luukkanen,
2013). Kahn (1995) and Basiago (1999) offer a vivid example of the relationship between
economic, social and environmental sustainability, arguing that the three spheres must be
combined for the sake of sustainability. According to Khan (1995) as cited in Bassiago
(1999): "If a man lacks a job (economic) in a given geographical area, he is likely to be
Ashok Kumar 19
poor and disenfranchised (social); if he is poor and disenfranchised, he has an opportunity

to participate in practises that harm the environment, for example by cutting down
firewood trees to cook his meals and warm his home (environmental). As his activities
are coupled with those of those in his area who cut down trees, deforestation would lead
to the depletion of valuable minerals from the soil (environmental). If essential minerals
are missing from the soil, people will be deprived of the dietary nutrients required to
maintain the intellectual output needed to learn new technology, such as how to operate a
machine, which will decrease or stagnate (economic) productivity. If productivity
(economic) stagnates, poor people will remain poor or poorer (social) and the cycle will
continue.
Figure 2.1: Relationships among social, environmental and economic sustainability.
The above hypothetical case illustrates the linkages among the three interconnected
domains of sustainability and the need to integrate them for SD (Basiago, 1999).
Although this example may have been oversimplified, it contextualises how the
economic, social and environmental substrates of sustainability relate to one another and
can foster SD (Basiago, 1999; Khan, 1995).
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2.5 PILLARS OF SUSTAINABLE DEVELOPMENT
As a visionary and forward-looking development model, SD emphasises an optimistic

transformational pathway focused fundamentally on social, economic and environmental
factors. According to Taylor (2016), economic growth, environmental security and social
inclusion are the three main problems of sustainable development. On this basis, it can be
argued that the definition of SD is basically based on three conceptual pillars. These
foundations are 'economic sustainability,' 'social sustainability' and 'environmental
sustainability.'
2.5.1. Economic sustainability

Economic sustainability implies a supply mechanism that meets current demand levels
without compromising future needs (Lobo, Pietriga, & Appert, 2015). Traditionally,
economists, believing that the availability of natural resources is limitless, put excessive
importance on the market’s capacity to distribute resources efficiently (Du & Kang,
2016). They also assumed that economic development would be followed by technical
developments to replenish the natural resources lost in the process of production (Cooper
& Vargas, 2004). However, it has been recognized that natural resources are not infinite;
besides, not all of them can be replenished or are sustainable. The growing size of the
economic system has overstretched the natural resource base, leading to a rethink of
conventional economic postulations (Basiago, 1996, 1999; Du & Kang, 2016). This has
led many scholars to challenge the viability of unregulated development and
consumption. Economy consists of markets in which transactions take place. According
to Dernbach (1993), there are guiding mechanisms for evaluating transactions and taking
decisions on economic activities. Three key activities carried out in the economy are
production, distribution and consumption, but the accounting system used to direct and
assess the economy in relation to these activities massively distorts values and this does
not augur well for society and the environment (Cao, 2017). Allen and Clouth (2012)
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echo the fact that human life on earth is assisted and sustained by the use of the limited
natural resources available on earth. Dernbach (2003) argued earlier that, due to
population growth, human needs such as food, clothes, housing are growing, but the
means and resources available in the world cannot be increased to meet the requirements
forever. In addition, Retchless and Brewer (2016 ) argue that, as the key concern tends to
be economic development, essential cost components such as the influence of erosion and
emissions, for example, are neglected while growing demand for products and services
continues to drive markets and damage the disruptive effects of the environment (UNSD,
2018c). Economic sustainability therefore demands that decisions be taken in the most
fair and fiscally sound manner possible while taking into account other aspects of
sustainability (Zhai & Chang, 2019)
2.5.2. Social sustainability

Social sustainability incorporates the principles of equality, empowerment, accessibility,
engagement, cultural identity and institutional stability (Daly, 1992). The definition
implies that since creation, people matter to people (Benaim & Raftis, 2008). Social
sustainability is basically a method of social organization that decreases poverty (Littig &
Grießler, 2005). However, in a more fundamental sense, "social sustainability" relates to
the connection between social conditions such as poverty and environmental degradation
(Farazmand, 2016). In this regard, the philosophy of social sustainability claims that
poverty alleviation does not lead to unwarranted environmental degradation or economic
uncertainty. It should seek to minimize poverty within the current environmental and
economic resource base of society (Kumar, Raizada, & Biswas, 2014; Scopelliti et al.,
2018). In Saith's (2006) view, sustainability at the social level means promoting the
growth of individuals, societies and cultures to help achieve meaningful life, building on
sound health care, gender equality, peace and prosperity across the globe. It is argued
(Benaim & Raftis, 2008) that social sustainability is not easy to achieve because the
social dimension tends to be difficult and daunting. Unlike environmental and economic
processes where flows and cycles are readily measurable, the mechanisms inside the
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social structure are highly subjective and cannot be readily modeled (Benaim & Raftis,
2008; Saner, Yiu, & Nguyen, 2019). As Everest-Phillips (2014) put it, 'the concept of
success within the social system is that 'people are not subject to constraints that threaten
their capacity to meet their needs.' According to Kolk (2016), social sustainability is not
about ensuring that everyone's needs are met. Instead, it seeks to provide conditions for
all to have the capacity to meet their needs, if they so wish. Anything that hinders this
potential is considered an obstacle and needs to be resolved in order for individuals,
organizations or societies to make progress towards social sustainability (Brodhag &
Taliere, 2006; Pierobon, 2019). Understanding the essence of social processes and how
these mechanisms arise from a system perspective is of great importance to social
sustainability (Lv, 2018). Above all, in Gray (2010) and Guo's (2017), social
sustainability also includes many topics, such as human rights, gender equality, civic
engagement and the rule of law, all of which foster peace and social stability for
sustainable development.
2.5.3. Environmental sustainability

The idea of environmental sustainability concerns the natural environment and how it
stays viable and resilient to support human life. Environmental protection includes the
dignity of the ecosystem and the carrying power of the natural environment (Brodhag &
Taliere, 2006). It needs the productive use of natural resources as a source of economic
inputs and a waste sink (Goodland & Daly, 1996). The implication is that natural
resources must be harvested no faster than they can be regenerated, while waste must be
released no faster than it can be assimilated by the atmosphere (Diesendorf, 2000; Evers,
2018). This is because the earth's structures have limits or boundaries within which the
balance is preserved. The desire for unbridled growth, however, places ever-increasing
demands on the earth system and ever-increasing strain on these limits, as technological
innovation does not support exponential growth. Evidence to support environmental
sustainability issues is growing (Gilding: ICSU, 2017). The implications of climate
change, for example, are a compelling reason for the need for environmental
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sustainability. Climate change refers to major and long-lasting changes in the climate
system caused by natural climate fluctuations or human activity (Coomer, 1979). These
changes include warming of the atmosphere and oceans, declining ice levels, rising sea
levels, increasing ocean acidification and increasing concentrations of greenhouse gases
(Du & Kang, 2016). Climate change has already shown signs of biodiversity being
affected. In particular, Kumar et al. (2014) observed that higher temperatures appear to
influence the timing of reproduction in animal and plant species, animal migration
patterns, distribution of species and population sizes. Ukaga et al. (2011) argued that
while grim forecasts prevail, the full impacts of global warming are not understood. What
is obviously advisable, according to Campagnolo et al. (2018), is that, for the sake of
sustainability, all communities must adapt to new conditions with regard to ecosystem
management and natural growth limits. The current rate of loss of biodiversity exceeds
the normal rate of extinction (UNSD, 2018c). The borders of the world's biomes are
likely to change with climate change as species are likely to migrate to higher latitudes
and altitudes and global vegetation shifts (Peters & Lovejoy (1992) cited in Kappelle,
Van Vuuren & Baas (1999)). If species are not able to adjust to unfamiliar geographical
distributions, their chances of survival will be reduced. It is predicted that, by the year
2080, about 20% of coastal wetlands could be lost due to sea-level rise (UNSD, 2018c).
All of these are important issues of environmental sustainability because as already
pointed out; they have implications for how the natural environment remains
productively stable and resilient to support human life and development.
2.6 THE SUSTAINABLE DEVELOPMENT GOALS
Sustainable development is related to the concept of achieving human development goals

while at the same time preserving the capacity of natural systems to provide the natural
resources and ecosystem services on which the economy and community rely (Cerin,
2006). While the idea of sustainable development has been important since time
immemorial, it can be argued that importance deepens with the dawn of each day because
Ashok Kumar 24
the population continues to expand, but the natural resources available to humankind do
not. Aware of this phenomenon, global concerns for the sound use of available capital
have often been expressed. The most recent of these issues have been expressed in the
Millennium Development Goals (MDGs) and the Sustainable Development Goals
(SDGs). The MDGs is a follow-up to the SDGs. The MDGs have marked a historic
global movement to accomplish a collection of core social goals around the world
(Breuer, Janetschek & Malerba, 2019). However, in spite of the relative effectiveness of
the MDGs, not all the targets of the eight goals were achieved after being rolled out for
15 years (2000–2015), hence, the introduction of the SDGs to continue with the
development agenda. As part of this new development roadmap, the UN approved the
2030 Agenda (SDGs), which are a call to action to protect the planet, end poverty and
guarantee the well-being of people (Taylor, 2016). The 17 SDGs primarily seek to
achieve the following summarized objectives.
 Eradicate poverty and hunger, guaranteeing a healthy life
 Universalize access to basic services such as water, sanitation and sustainable energy
 Support the generation of development opportunities through inclusive education and
decent work
 Foster innovation and resilient infrastructure, creating communities and cities able to
produce and consume sustainably
 Reduce inequality in the world, especially that concerning gender
 Care for the environmental integrity through combatting climate change and
protecting the oceans and land ecosystems
 Promote collaboration between different social agents to create an environment of
peace and ensure responsible consumption and production (Hylton, 2019; Saner et al.,
2019; UN, p. 2017).
According to the United Nations Communications Group (UNCG) and the Civil Society
Organization (CSO)[2017] SDGs forum in Ghana, SDGs are a universal call for action to
end hunger, protect the world and ensure that all people experience stability and
Ashok Kumar 25
prosperity by 2030. The SDGs, adopted by 193 countries, came into force in January
2016 and seek to promote economic development, ensure social inclusion and protect the
environment. The UNCG-CSO (2017) argues that the SDGs promote a spirit of
cooperation between governments, the private sector, science, academia and civil society
organizations (CSOs)—with the help of the UN. The goal of this collaboration is to
ensure that the right decisions are made now to better life in a sustainable way for future
generations (Breuer et al., 2019). Agenda 2030 has five overarching themes, known as
the Five Ps: Citizens, Earth, Growth, Peace and Partnerships, spanning 17 SDGs (Hylton,
2019; Guo, 2017; Zhai & Chang, 2019). They seek to address the root causes of poverty,
including areas such as hunger, health, education, gender equality, water and sanitation,
electricity, economic development, manufacturing, innovation and infrastructure,
inequality, sustainable cities and societies, consumption and production, climate change,
natural resources and peace and justice. It can be argued from the SDGs that sustainable
development seeks to achieve social change, environmental balance and economic
growth.
2.7 PRINCIPLES OF SUSTAINABLE DEVELOPMENT
Achieving SD is based on a variety of values. However, the main message with regard to
the concepts of sustainable development (Ji, 2018; Mensah & EnuKwesi 2018) is geared
towards the economy, the climate and society. Specifically, they contribute, among
others, to the protection of habitats and biodiversity, development processes, population
control, human resource management, the protection of progressive culture and the
involvement of citizens (Ben-Eli, 2015; Molinoari et al., 2019).
The protection of the environment is a core concept of SD. There is a need to protect the
environment and biodiversity, because without it, the living organism would cease to
exist. The finite means and resources on earth cannot be adequate to satisfy the limitless
needs of the people. Over-exploitation of resources has detrimental effects on the
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ecosystem and, thus, for sustainable sustainability, the exploitation of natural resources
must be within the potential of the earth (Kanie & Biermann, 2017). This means that
construction activities must be carried out on the basis of the earth's power. That is why it
is important, for example, to have alternative energy sources such as solar energy instead
of being heavily dependent on petroleum products and hydroelectricity (Molinoari et al.,
2019). In addition, population management is required to achieve SD (Taylor, 2016).
People are looking to survive by using the limited resources on earth. However, due to
population growth, human needs such as food, clothing and housing are growing,
although the resources available in the world to meet these needs cannot always be
increased to meet the requirements. Population control and management are therefore
important for SD. Wang (2016) believes that the careful management of human capital is
another essential concept of SD. It is the people who need to ensure that the values are
accepted and adhered to. It is people who have a duty to use and preserve the
environment. It's people who need to make sure there's harmony. This makes the role of
human resources in the search for SD important. It implies that human expertise and
skills in environmental, economic and social care must be established (Collste et al.,
2017). This can be achieved primarily through education and training, as well as proper
health care, since a sound mind exists in a sound body. These elements may also help to
build a positive attitude towards nature. Training may also affect society in the protection
of the environment and in the understanding of human values as well as suitable methods
of production. It is also argued that the SD process must be participatory in order to be
efficient and sustainable (Guo, 2017). The statement that connotes the theory of systems
is based on the notion that SD cannot happen through the actions of a single individual or
organization.
It is a mutual obligation that needs the involvement of all individuals and organizations
concerned. SD is based on the concept of engagement, which involves constructive
behavior on the part of the people, so that real change can be made with responsibility
and accountability for stability.
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In addition, SD thrives on the promotion of progressive social values, customs and

political culture (Tjarve & Zemīte, 2016; Lele, 1991). Progressive traditional and political
culture must be developed, preserved or preserved, and built upon not only to sustain the
integrity of community and to preserve the SD environment. In short, the fundamental
summative concept of SD is the systemic convergence of environmental, social and
economic issues across generations in all areas of decision-making. The SDGs reflect a
balanced agenda of economic, social and environmental goals and targets. In achieving
the SDGs, countries will need to recognize and appreciate the existence of potential
trade-offs and devise ways to handle them. They should also identify complementarities
which can promote meaningful progress.
2.8. THE INTEGRATION OF KEY FACTORS IN SUSTAINABLE

DEVELOPMENT
Sustainable development is an idea which needs the making of a working definition for
particular discussions on its implementation. The integration of the economic drivers,
social development, and environmental components recommends the association of
essentially all the conventional areas of the economy and government movement. This
section introduces an anticipated road map of sustainable development of India, and it
additionally proposes the meaning of sustainable development and its determinants.
2.8.1. Road map of sustainable development

The development and implementation of sustainable development ideas need to consider
transient, administration and input mechanisms (Cheigh et al, 2004). Sustainable
development requires the development of interdisciplinary models for assessing and
evaluating the impacts of continuous economic arrangements on the sensitive exchange
between living populations, normal assets, environment, and economic development
(Nihoul, 1998). Therefore, it is vital to coordinate and accommodate the economic, social
Ashok Kumar 28
and environmental factors inside an all encompassing and adjusted sustainable

development structure.
This integration infers the inclusion of for all intents and purposes all the customary
segments of the economy and government action. To guarantee that these indicators have
been produced and maintained reliably, the pertinent foundations or organizations,
especially from government segments, should take up the mechanisms for national
procedures to accomplish sustainable development. The essential way to deal with
sustainable development ought to be remembered in creating, looking at and using
indicators. This thesis checks that sustainable development is the strategy to accomplish
high economic growth, under the condition that growth is dispersed to all the population,
through poverty reduction, limiting inequality in the public eye, and keeping up a decent
state of the environmental conditions and common assets. The road map for sustainable
development of India is proposed in figure 2.2 beneath:
Figure 2.2: Road map for sustainable development in India
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Effective implementation of sustainable development arranging requires accord and the

capacity to give a convincing contention to change customary development methods for
all the more sustainably engaged change (Beatley and Manning 1997; McDonough and
Braungart 1998). Graph 2 points of interest and indicates three key factors of sustainable
development in India: economic, social, and environmental factors. The integration of
these three factors is recognized as the way to achieve the sustainable development
perspectives. The fundamental meaning of these three factors can be explained beneath:
 The economic factor relates with two key elements including the capital proficiency and
growth improvement.
 Social factor incorporates diverse measurements, for instance: human rights, community
development, poverty eradication, inequality minimization, gender promotion, and so on.
 Environmental factor respects the environmental and characteristic asset insurance, for
example, clear air, clean water, reforestation, and emissions reduction. It is imperative to
investigate sustainable development in an imaginative way, since this suggests how
society ought to be sorted out, not just how environmental assurance ought to be adjusted
or how well it can be made strides.
2.8.2. The integration between economic growth and social development

The integration of social development and economic growth is identified with many
factors of economic and social development. The primary issues are identified with the
accomplishment of social equity and welfare of population, including poverty
eradication, income distribution, gender promotion, ethnic minority, health, literacy, and
intergenerational opportunity (Hediger, 1999). This investigation features the integration
of economic growth and poverty reduction, and additionally the effect of growth on
income distribution.
Economic growth itself is ruled by a few determinants, for example, an open-entryway

arrangement prompting an expansion in the trade volume, accepting a few sorts of help
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from other nations in terms of foreign aid and help, an increment in the streams of foreign
direct investments and also domestic investments, while turning into a full individual
from BRICS is vital for India in regard of its economic progress in both regional and
worldwide strategies.
This analysis demonstrates that these factors deliver positive effects on economic growth.
The outcome likewise affirms that economic growth benefits poor people, suggesting that
a high rate of growth associates with a higher rate of poverty reduction. Then again,
economic growth expands inequality in beginning period and then it diminishes when a
specific normal income is come to. Our data affirm the altered U relationship of Kuznets'
hypothesis between these two variables. As present, economic growth expands income
inequality in India, meaning that even the growth decreases poverty, the rich individuals
who advantage from economic growth more than poor people. The last objective of
national development of India is to prevail in poverty eradication and to limit the level of
income inequality. The positive effect of economic growth on social factors happens just
when the growth is dispersed all through the population, by limiting the development
hole amongst urban and country territories and likewise amongst rich and poor. The
integration of economic growth and poverty is thought to be a positive correlation just
when the growth can decrease poverty and lessen inequality among the population.
One idea of social sustainable development is community participation. Dynamic

participation is a vital component to building an engaged community; it is a fundamental
factor of limit building, which is the development of self-assurance, pride, activity,
inventive, obligation, and cooperation (Burkey, 1993 and Wattam, 1998). Especially, for
poverty reduction and provincial development, the idea of participation in development
has turned into a viable method for the economic development. Any endeavours towards
sustainable development must start with neighbourhood individual’s knowledge,
understanding, and taking an interest in the making of sustainable development objectives
(Manteaw, 2012). Under the implementation of PRF (addendum 7), sustainable
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development is identified with the long haul adequacy of sub-venture operation. This to a
great extent relies upon the limit of the neighbourhood community to know about the
operation and the support of rustic infrastructures following the fulfilment of PRF. The
implementation appraisal of PRF affirms that community participation is directly
identified with limit working for nearby individuals as respects strengthening the
aptitudes, skills, capacities of individuals, and gender equality in focused territories so
they can conquer the reasons for their rejection and enduring (Phimphanthavong, 2012).
2.8.3. The integration between economic growth and environmental conditions

To energize a high rate of economic growth in India, the Government has supported more
prominent profitability and designated various assets by moving from an agricultural
economy to a mechanical and service economy, especially since the year 2000; therefore,
modern expansion is identified with the expansion in the extent of air pollution, which is
relied upon to end up noticeably a significant issue for the living state of the population.
To guarantee the long haul development perspective, the integration of growth and
environment must be arranged into its key components of development.
The integration amongst economic and environmental conditions is talked about in past,
which affirms that at the present beginning period, economic growth increments
environmental degradation, however perhaps environmental degradation will diminish in
the wake of achieving a specific level of normal income per capita: Grossman and
Krueger (1995) discover no proof that economic growth does unavoidable harm to the
regular conditions. This connection between economic growth and environmental quality,
which looks like a rearranged U, has been found for some other environmental records,
for example, water quality and waste transfer. In a word, the integration of these factors is
considered as a decent circumstance just when economic growth creates less effect on
environmental conditions, especially, assets are utilized to both amplify their beneficial
value and environmental assurance.
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2.8.4. The integration of social and environmental factors

Their integration of social and environmental measurements has turned into a vital issue
for national and additionally worldwide development, this integration concerns the
wellbeing and health of population which is connected with a decent state of
environment; therefore, it is important to grow clear environmental controls, together
with environmental equity, which are basic to counteract worldwide environmental
change, and to keep up the entrance to drinkable water and long haul normal assets.
India has kept up a high rate of economic growth subsequent to turning into an individual
from BRICS, including the advantages of trade openness, investment, foreign help,
investment, and so on. Those factors of economic activities are directly identified with
characteristic assets, especially the hydropower generation potential that is considered to
assume a urgent part in the socio‐economic development of the nation. Then again, India
is as yet thought to be one of the slightest created nations with a still abnormal state of
poverty. More than 70 per penny of the aggregate population live in country territories
and depend on common assets for their survival.
The development of numerous hydropower systems would deliver antagonistic effects

that could be significant, including displacement of individuals, flooding of characteristic
environments, harm to fisheries, changes in the amount, quality, and timing of water
streams, and changes in the amount and nature of sediment transported by the waterway.
The general population who depend on regular assets would directly get negative effects
on their living conditions (UNDP, 2006). Therefore, the poor may lose their opportunity
to get to those assets again and they would in the long run wind up plainly poorer,
prompting increment the development hole amongst rich and poor. It is essential to
consider the most suitable approach to circulate the growth that would profit the whole
population. The country or urban development idea must be founded on the qualities of
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every district, and underline development through community participation and building
limit of local people.
2.8.5. Determinants of sustainable development

Opschoor and Reijnders (1991) propose a basic structure for the development of physical
indicators of sustainable development. This model starts with the development of two
sorts of environmental indicators: one depicting the weight being set on the environment,
and one portraying the impacts of this weight. As a general rule, sustainable development
has a centre commence of fulfilling fundamental human needs and can be seen as a
proceeding with dynamic and advancing procedure amongst people and ecosystems that
can encourage versatile abilities and upgrade openings (Holden and Linnerud, 2007;
Newman, 2007).
David (1996) states that sustainable development idea comprises of two noteworthy
points: 1) the managed economic growth that even handedly address human issues
without separating resource inputs or removing squanders in abundance of the
environment's restore limit and 2) the supported human organizations that guarantee both
security and opportunity for social, cooperation and profound growth life.
This thesis proposes that SD guarantees social equity and economic progress while
securing natural resources and ecosystems. In short, it draws together with the limit
conveying of natural systems with the social difficulties looked by humanity. We expect
that sustainable development is the function of economic, social, and environmental
measurements.
The integration of these three factors is critical in light of the fact that every one of the
activities go for acquiring an adjustment of the economic growth process. In light of the
theoretical description of each factor, we feature their points of interest and
disadvantages, underlining the way that no pointer is perfect and nobody can give an
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extensive perspective of sustainable development; therefore, the analysis of different

indicators is important to assess sustainable development with exactness (Nourry, 2008).
Economic measurement (ECD) relates with the measurement of economic sustainability,

which happens if the economic system can keep up stability and bolster the economic
activities and requirements of present and future generations notwithstanding
withstanding the weights and stuns exuding from other determinants (Clarke et al., 2002).
Economic sustainability is utilized to recognize a few techniques which assign accessible
resources for the best favourable position. Additionally, this thought likewise advances
the utilization of those resources in a way that are both productive and dependable, and
prone to give long haul benefits. In many situations, the measurement of economic
sustainability is appeared in fiscal terms; nonetheless, it isn't generally simple to
recognize the measure of return created by the effective utilization of those resources.
Social measurement (SOD) relates with the measurement of social sustainability, which
is worried about keeping up social and human connections despite external weights; it is
alluded to socio-cultural sustainability as an idea which tries to keep up the stability of
social and cultural systems, including the reduction of dangerous clash (Munasinghe,
1993). Social sustainability is one of the parts of sustainable development. This factor is
utilized to decide the living conditions of people in the public arena, including human
rights, work rights, and equality. Social sustainability incorporates a few social resources
that the future generations ought to have, at the same or more noteworthy access as the
present generation. Social resources incorporate thoughts as broad as other societies and
fundamental human rights. One essential factor of social development is sustainable
human development; this would incorporate a poverty reduction program, gender adjusts
promotion, community participation in development including ethnic minority
association, and education availability for the entire population, while these factors are
fundamental elements of social development in India.
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Environmental measurement (END) relates with the measurement of environmental

sustainability, which is worried about keeping up an ecological system that can bolster
practical groups. Environmental sustainability is a standout amongst the most imperative
factors of sustainable development. The worldwide environmental issues on
environmental change and the more extensive extent of sustainability had a developing
effect in the course of the most recent couple of decades on the social demand and the
international political motivation (Kim and Brodhag, 2010). This factor contains the way
toward settling on choices and actualizing activities that ought to be required with the
method of ensuring natural resources by underlining the safeguarding of the limit of the
environment to help human life at the current economic growth rate for who and what is
to come.
Environmental sustainability is the idea of settling on solid choices on economic

activities that deliver a lower affect on the environment. This worries not just decreasing
the measure of waste or using less vitality, yet in addition creating processes to make
managed economic growth that advantages the population. A few economic activities
went for accomplishing an abnormal state of growth, can possibly make harm all zones of
the environment. On account of India, a portion of the normal environmental degradation
concerns for the most part include:
 Damaging rainforest and woodlands through logging and agricultural clearing
 Polluting the atmosphere through fossil fuels, manufactures running, and big
industrial construction; and
 Damaging agricultural and cultivated land through the use of unsustainable farming
practices
 Based on the above definition, to achieve the goal of sustainable development in
India, this thesis combines the results detailed in chapter 4, and then summaries the
correlation of those factors below:
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Table 2.1: The determinants of sustainable development
SD ECD SOD END

POV GNI
GDPP - + -
OPEN +/- -/+ -/+
AID +/- -/+ -/+
FDI +/- +/- -/+
DI + - +/-
GoEX + - +/-
ASEN + - +/- -/+
IND +/- -/+ -
POPD -/+ -/+ -
Notice: The symbol plus “+” or minus “-“represents the positive or negative correlation
of key determinants and three key factors, economic, social, and environmental factors.
Table 2.1 displays the mix of three development functions, ECD, SOD, and END in view
of the model specifications and the observational results. Economic growth is function of
trade openness, foreign aid, foreign direct investment, domestic investment, government
expenditure, and the advantage from holding full membership of the BRICS. To
demonstrate that those variables create positive effects on sustainable development, we
have to consider their effects on social viewpoints and environmental conditions.
Concerning change, in light of the poverty lightening progress and income distribution,
these determinants are utilized as an intermediary for social change. The last aim of
poverty reduction is to bring down the extent of the population living under the poverty
line, together with limiting the degree of income inequality in the public eye. In a
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nutshell, a more elevated amount of poverty and inequality is considered to negatively

affect sustainable development, which identifies with the national expenditure known as
social cost to kill or decline those issues.
This examination shows that the current economic growth of India decreases poverty;
then again, it expands the level of income inequality among people and gatherings inside
a general public. This suggests hole between the rich and the poor is more extensive
where the rich may accomplish more opportunity than poor people, especially the
chances to get education, and additionally to get to information, while numerous needy
people can't do as such. To some things up, the income inequality fluctuates between
social orders, recorded periods, economic structures and systems (for instance,
socialism), and between people's capacities to make riches (Kopczuk et al., 2010).
The environmental perspective considers both the air pollution condition and in addition
the natural condition (deforestation), to show that growth is deserving of sustainable
development just when it produces less effects on air pollution and natural resources.
Meanwhile, the economic development of India is exceedingly dependent on natural
resources. It is sketchy how those natural resources can be supported for the people to
come. Environmental degradation is explained by the expansion in the extent of air
pollution, in light of carbon dioxide emissions and in addition deforestation. This is
identified with the national expenditure known as the environmental cost to determine
these problems, which negatively affects sustainable development.
Prevailing with regards to accomplishing future economic growth and keeping up the
health of the sustainable condition would not happen unless there are particular and
consider arrangement mediations in every aspect of economic development strategies,
environmental approaches, macroeconomic arrangements, sectoral strategies,
administrative strategies, trade strategies, and international arrangements (Islam and
Jolley, 1996).
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This analysis underpins the assertion that high growth threatens the level of sustainability
concerning both social and environmental factors. An extra answer for lessen the contrary
effect of growth on the environmental state of India is to consider the potential resources
that would be assigned to the economic development of India, since each piece of this
nation (south, center, and north) contains an assortment of awesome natural attributes, for
example, waterfalls, islands, hollows, green ranger service, waterways, and ways of life
of people from various ethnic minorities; these factors would have the capacity to be
designated to social economic development and guarantee the viability of sustainable
development.
In light of the nation's geology and those potential natural resources, sustainable tourism
is one choice that could assume an essential part in sustainable development. This
tourism idea endeavors to deliver a low effect on the environment and local culture, while
helping with making openings for work for present and future local people. The last aim
of sustainable tourism is to guarantee that development conveys a positive experience for
local people (villagers or groups), tourism organizations, and vacationers themselves.
This would profit local people or organizations, as well as the whole population by
expanding the national income.
The principle reason for this thesis is to distinguish the part of sustainable development,
based on the integration of three factors, economic growth, social development, and
environmental dimension. As a general rule, we can't focus just a single of those; in this
manner, it is critical to integrate and reconcile the aspects of these factors inside an all-
encompassing and equity sustainable development idea. The analysis endeavours to
decide the significance of sustainable development and intends to show a few indicators
and devices that would be utilized to encourage a change towards maintainability. Both
the experimental and the hypothetical depiction of each factor featured its preferences
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and disadvantages, underlining the way that no marker is completely immaculate and
nobody can give an exhaustive perspective of sustainable development.
This thesis adds to the on-going research issue about key determinants impacting
sustainable development in creating nations. Initially, it utilizes the main diverse of
logarithm frame to distinguish the determinants of economic growth, the effects of
growth on poverty and environmental conditions in Laos. Be that as it may, utilizing the
various relapses, major issues of multicollinearity were experienced and those outcomes
turned out to be less solid. To handle the issue of multicollinearity and create steady and
significant evaluations for relapse coefficients, the Principal Components Analysis (PCA)
is utilized for this research. Four primary equations have been utilized for the analysis.
The initial two equations are for economic growth analysis, and last two equations
identify with the effect of economic growth (by utilizing the key determinants of
economic growth) on poverty and environmental degradation.
The outcomes demonstrate that the current economic growth for Laos has been supported
by interior (such as domestic investment, government expenditure and industry) and outer
(receptiveness of the economy, global guide, foreign direct investment, and BRICS
factors. Be that as it may, the conceivable commitment of outside factors appear not have
been completely misused in light of the fact that the coefficient estimations of the second
Principal Component are negative.
Exchange receptiveness is thought to be a key variable for economic growth in Laos. The
changing of the economic framework energized an abnormal state of advance of
economic execution as far as universal exchange and collaboration. In addition, turning
into an individual from the BRICS empowered huge execution of advance in both foreign
exchange and economic growth. Foreign guide is considered to assume an imperative
part in the economic execution of Laos, since this nation has confronted troubles with its
exchange shortfall; consequently, foreign guide is thought to be a basic factor for the
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achievement of the Government's investment program regarding infrastructure change

and country development.
FDI inflow has been generally thought to be a potential supporter of economic growth
and economic development. Nonetheless, it can be a to some degree disconnected from
the national growth if the foreign investment is for the most part identified with the
accessibility of natural resources, such as minerals, hydropower, and timber. These may
deliver a constructive effect by and large growth however just a couple of individuals
advantage from those investments contrasted and add up to populace.
The other inside factors, such as DI, GoEx and industry, demonstrate their positive
effects on economic execution and they are considered to enhance the advance of
economic activities and create job opportunities for Laos' populace and increase the
general national efficiency, prompting a high rate of managed growth.
Taking an interest in ASEAN has demonstrated to contribute decidedly to the economic

growth of Laos. This is a standout amongst the most imperative occasions that has
assumed a basic part in economic growth and it is a decent chance to advance the position
of Laos in the global group; in this case, there will be a long haul impact on the direction
of Laos' economic development
This thesis reasons that there are a few factors, both interior and outside factors, which
have affected current economic growth of Laos. Specifically, the interior ones (domestic
investment, government expenditure, and industry) demonstrate a solid correlation with
economic growth, while cooperation in BRICS likewise assumes an imperative part in
economic growth. The other outside factors (FDI, AID and OPEN) demonstrate a weaker
connect to domestic growth of Laos (based on relapse result). Over the long haul, to
guarantee the adequacy of outer factors on domestic growth, this research recommends
abusing all the more adequately the opportunities gave by foreign direct investment,
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through the receptiveness of the framework to the globalization and worldwide exchange,
together with better administration of help distribution.
To inspect the effects of economic growth on poverty reduction, this research utilizes the
key determinants of economic growth (GDPP Model 2) with an extra factor LnPOPD,
The outcome affirms that those determinants support economic growth, as well as lessen
poverty, on the grounds that the coefficients of both essential parts (F1 and F2) are
negative and measurably huge. The key determinants of economic growth incorporate
exchange transparency, foreign guide, foreign direct investment, domestic investment,
government expenditure, and interest in BRICS. These factors have been affecting
economic growth and that has profited poor people. Nonetheless, to demonstrate that
economic growth is useful for social development, it is important to consider income
conveyance. This is worried about the arrangement of job opportunities for all and giving
a framework to the populace to be engaged with financial development, including the
privilege to discuss these issues.
In a nutshell, we can state that social equity is thought to be one of the key esteems
fundamental sustainable development, with individuals and their personal satisfaction as
a focal issue, since equity includes the level of reasonableness and comprehensiveness
with which resources are dispersed, opportunities managed, and choices made. It
incorporates the arrangement of practically identical opportunities for business and social
administrations, including training, wellbeing, and equity. Besides, equity would be
fortified by upgrading pluralism and group support, as well as by engaging hindered
bunches characterized by income, gender, ethnicity, and religion.
Lastly, we analyzed the connection between economic growth and environmental

conditions. Maintained growth is thought to be a key factor in accomplishing Laos'
economic growth; be that as it may, it is vital to distinguish the effects of growth on
environmental conditions, which is one factor to accomplish the sustainable development
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objective. Utilizing an indistinguishable determinants of economic growth from well as

poverty reduction, this research found that the increase in economic activities prompts
increase environmental harm. Especially, industrialization may overwhelm economic
growth in prior phases of development and it might deliver a negative effect on
environmental conditions on the off chance that it disregards the solid environmental
assurance law strategy.
The increase in populace thickness relates with the utilization of natural resources and
waste creation and is associated with environmental burdens such as loss of biodiversity,
air and water contamination and increased weight on arable land. In any case, this
outcome isn't adequate to demonstrate that populace thickness growth adds to
environmental degradation or whether it increases poverty. Its belongings might be
dictated by different factors of economic growth and development activities.
With a specific end goal to achieve the sustainable development objective, solid
environmental and natural asset protection arrangements are proposed for the present and
future development of Laos. Thusly, the policy creators of Laos ought to consider
distinctive methodologies and strategies to discover the resources with the most potential
to be designated to economic development, rather than doing unsustainable examples of
utilization and generation, which are the significant reason for the proceeded with
consumption of natural resources and decay of the environmental conditions.
Moreover, we talked about environmental sustainability by considering the equity in the

environmental sense, which has gotten more consideration as of late. There has been an
increase in the extent of environmental harm endured by burdened gatherings, especially
in country areas, where a large portion of the populace depends on natural resources for
survival. In this manner, poverty destruction endeavours are being expanded to address
the debased environmental and social conditions confronting poor people. In this case,
the poor who depend on natural resources are regularly great environmental directors; so
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group support in development is identified with the limit of nearby individuals to oversee
and allot natural resources in managed designs.
Taking everything into account, based on the analysis of economic growth, poverty
reduction, and environmental degradation, this thesis affirms the negative correlation
between the determinants of economic growth and hostile to poverty factors and
condition dimensions. This research bolsters proceeding with the change of domestic
action investment, government expenditure, enhancing exchange transparency
framework, foreign direct investment, help allocation, BRICS, and so on. These factors
can help the nation to develop and poverty to decrease yet we have additionally to focus
on their effects on the earth. Sustainable development would accomplish its objective just
if these interior and outer factors add to economic growth, where this growth is
disseminated over the whole populace, together with environmental protection
conditions.
Then again, sustainable conditions would not be accomplished unless there are particular
and consider policy mediations in all areas of financial development arrangements as well
as the environmental protection strategies. It concerns the association of for all intents
and purposes every single traditional segment, including economic planning, training and
wellbeing change, sanitation framework augmentation, poverty reduction strategies,
social equality promotion (including gender and ethnic minority), and the environmental
and natural asset protection. Sustainable development is in truth based on the integration
of these factors in choice and policy making at all levels.
The momentum economic growth of Laos has been impacted by both inward and outer
factors, such as foreign guide, foreign direct investment, exchange receptiveness system,
domestic investment, government expenditure, mechanical expansion, partaking ASEAN
and so on. Be that as it may, the high rate of economic growth is identified with a high
rate of natural resources utilization and increased environmental degradation. In addition,
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it likewise increases the level of social inequality, while poverty stays high contrasted and
other neighbouring nations. Based on these issues, this research gives some reasonable
proposals to policy creators to ensure the viability of sustainable development.
One recommendation for the exchange transparency and exchange collaboration is to
enhance the universal exchange strategies with exchange accomplices. Exchange
execution can be enhanced by methods for an extensive development of the provincial
transportation system, particularly with China, Thailand and Vietnam and different
nations.
For FDI, it recommends the promotion of decent variety of investment in different sectors
that would give job opportunities to the entire populace in urban and rustic areas through
the overflow impacts and less on activities that are natural resources based, such as
assembling, handicraft, waving, rural creation, and so on. Besides, the Government still
keeps on creating and enhance strategies that pull in more steady inflows of FDI, together
with promotion of private domestic investment.
To evade dangerous guide appropriation and debasement in foreign guide assignment,

help benefactors ought to grow great strategies and standards for help distribution, which
include a decent observing and assessment system that could be utilized to assess the
viability of help designation. Albeit foreign guide assumes a vital part for social
development, in the long haul, rather than depending on foreign guide the Government
ought to consider the capability of natural resources (of the nation) and enhanced agrarian
methods that would take into account economic development under sustainable
condition.
The fast increase in the quantity of production lines/ventures and vehicles have prompted
a massive increase in the utilization of gasoline, which is causing an increase in air
contamination. These factors are thought to be a difficult issue for future development
and likewise sustainable development idea. It proposes building up a solid environmental
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protection policy for industrialization, together with issuing a strict policy for vehicle
utilize (individual autos and different vehicles), by urging individuals to utilize open
transportation and vehicles that don't depend on gasoline. In this case, this thesis proposes
creating and enhancing a decent system for open transportation in the enormous urban
communities with unique track for people on foot and cyclists. In the long haul, planning
for the utilization of light rail and electric trains ought to be embraced.
With respect to recommendation for natural asset protection, which is a fundamental

asset for the current economic development of Laos, it will be important to have a decent
policy for natural and environmental protection. Extensive projects for hydropower
construction and mineral projects ought to have adequate environmental effect considers
from environmental masters to affirm that those projects will profit the whole populace
and create few negative effects on the environmental and natural conditions in both
present and long terms.
Investment in BRICS has the potential for huge growth. BRICS has marked a statement
to integrate national economies and develop an economic and political union displayed
on that of the European Union, by 2015. This recommends the Government of Laos has
to focus on human capital promotion and investment. To keep away from the
development gap among part states, it is important to have qualified staff who can work
both at national and worldwide integration. In this manner, the nature of human capital is
a critical factor in deciding if Laos will accomplish present and long haul of sustainable
development objectives.
Natural asset shortage and environmental degradation are significant worries for the
entire BRICS locale; accordingly, the environmental and natural protection ought to be a
need for all individuals. This recommends building up a solid policy for condition
protection based on the genuine normal for every part.
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2.8.6 Extra recommendations for sustainable development

A standout amongst the most vital strategies is to consider the geography of the nation.
Laos is a little land-bolted nation that contains an assortment of characteristics, ethnic
minority gatherings and dialects, traditional convictions, societies, and natural resources
in each piece of the nation (southern, focal, and northern parts). There are many factors of
social characteristics and natural resources that could be distributed to economic
development. Laos is thought to be a land of disclosure, which contains numerous
verifiable locales (old sanctuaries, Buddhist history, old chronicled structures, and so
forth.), superb perspectives of natural resources (holes, waterfalls, islands, plain of jars
23, and so on.), traditional societies, and ways of life (garments, traditional celebrations
and convictions, individuals are delicate amiable nature with their enchanting
neighbourliness, and so forth.), and Laos still holds a few organic highlights that
incorporate the class and types of plant and creature life, their favoured developing or
reproducing propensities, and their association with each other in the earth. These
potential resources stay in great condition in many parts of Laos.
This would recommend that sustainable tourism development must be considered as an

amazingly suitable system for the current economic development of Laos. This idea
should endeavour to have as low an effect on the earth and neighbourhood culture as
conceivable (keeping up a decent traditional way of life, garments, and a decent state of
recorded aspects), while creating job opportunities for nearby individuals. This is
required to bring a constructive affair for neighbourhood individuals, tourism
organizations, and the visitors themselves.
To energize solid development in the tourism segment, this work proposes enhancing the
information system, through various media, including daily papers, magazines, and the
web, and making an interpretation of information into various dialects, such as Lao, Thai,
English, French, Chinese, Vietnamese, and Japanese. In addition, human asset
development for the tourism segment is imperative. Specifically, the information
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suppliers and tourism benefit area ought to acquire particular learning on the most
proficient method to give the best administration to voyagers and understand distinctive
dialects. The last recommendation for tourism promotion concerns the traveller
protection law. It is basic to secure and give an exceedingly agreeable support of all
voyagers, both domestic and foreign.
A critical issue respects the "slash and consume" moving development, which stays
across the board in remote areas of Laos. This has awful environmental results. The
proposal is to set up a policy to resettle inhabitants in areas where agribusiness is
sustainable with great conditions for the farming generation of those destitute individuals.
An extra recommendation for rustic development and poverty lightening strategies is to
advance community participation in the development procedure through readiness and
usage.
The last point of community participation is to give level with opportunities among the
populace (gender and ethnic minorities) to share their ideas and needs in social
development, prompting increased limit and consciousness of neighbourhood individuals
that can be used for the future development of their groups. Actually, Lao ladies have
constantly gotten less opportunity than men regarding working and accomplishing an
abnormal state of instruction. In this manner, the Government ought to build up a decent
procedure to urge ladies to take part in economic activities and social development, rather
than just working at home and dealing with their youngsters, especially in rustic areas.
2.9 SUSTAINABLE DEVELOPMENT AND ECONOMIC GROWTH IN INDIA
This section exhibits the examination of three factors for sustainable development in
India. Right off the bat, it recognizes the determinants of economic growth, followed by
analyzing the effects of economic growth on poverty and income distribution, and last
one, analyzing the effects of economic growth on environmental conditions.
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2.9.1 Economic growth in India

India sought after noteworthy economic change under the new economic systems
(NEMs) in 1986, which intends to enhance the economic development framework in
view of a market-situated economy, with the intention of transforming the country from a
shut and halfway arranged economy to a market-arranged one. India endeavored
awesome endeavors to change state-claimed undertaking and advance private
undertaking and foreign investment, in parallel with strengthening the banking
framework and implementing exchange liberalization. From the mid 1990s, this nation
has paid consideration regarding improving its business environment to make the nation
more investor-accommodating, together with exchange advancement and international
participation.
Economic growth is thought to be a key factor for present and future development,
especially to accomplish the development objectives for 2020, which is to rise up out of
the rundown of LDCs; what's more, the nation hopes to accomplish at any rate the center
income nation status. Business analysts have for quite some time been interested in the
factors that reason distinctive countries to develop at distinctive rates and one of such
factors is economic change. India had a high rate of economic growth from 1990 to 2010,
especially after the introduction of NEMs in 1986, which is essentially a policy that
opened economy to international exchange and integration. The point of view economic
growth of India under NEMs and holding a full participation of BRICS relies upon the
viewpoint of exchange with different countries. Following the open-entryway policies
and being an enrollment of BRICS, India acknowledged a few offers of help from
governments and international associations around the globe. These factors are accepted
to create a positive effect on its economic development.
Additionally, in the past foreign guide has been thought to be one vital factor for growth,
since this nation depends intensely on foreign guide for the advancement of higher
economic growth and poverty reduction. Foreign guide assumes a critical part in
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overcoming issues in poor countries. India got a lot of help from international
associations and offices in terms of foreign guide, amounting to 16 percent of the GDP,
on average, in the vicinity of 1989 and 2010. This guide was dispensed to social
economic development, especially country development and poverty mitigation.
Regarding different factors, for example, investment, both foreign and domestic
investments, they increased altogether, especially in the wake of gaining full participation
of BRICS in 1997. This proposal endeavors to examine the effects of these key
determinants, for example, exchange receptiveness, foreign guide, government
expenditure and investment, on economic growth in India. In request to give a superior
clarification of the determinants which influenced in economic growth, extra factors, for
example, industrial augmentation, and BRICS enrollment, may likewise be included. The
normal results will give great proposals to the future development of India.
2.9.2 Economic growth and poverty reduction

India ended up plainly independent in 1975, and chose to receive communist framework,
where the government chooses what to create, how to deliver, and who gets the final
item. This is inverse to a market economy, in which individuals claim most of property
rights on both utilization and capital merchandise are allowed to exchange and where
costs for products are chosen in a free market framework. In the mid-1980s, the
framework's economic execution was not able reach the normal objectives, the
population ended up noticeably poorer and the economic framework debilitated. These
issues affirmed that the halfway arranged framework alone was not the most fitting for
India, leading to economic change (Phimphanthavong, 2012). Most projects of economic
change now in progress in the developing world and in the post-communist world have as
their strategic point the integration of the national economy with the world economy
(Sachs and Warner, 1995). Considering the instance of India, the introduction of the
NEMs (1986) has delivered exceptional economic development, which has demonstrated
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that India has accomplished amazing economic growth, privatized previous state-
possessed undertakings, and generated macroeconomic solidness.
What's more, the NEMs and holding an enrollment of BRICS empowered a critical
growth out in the open and private investment, which added to average genuine GDP
growth rates of more than 5 percent for each annum from 1990 to 1999, more than 6
percent from 2000 to 2005, and past 7 percent from 2005 to 2010. According to the
Human Development Report of UNDP (2011), the nation is one of the 10 "top movers" in
the world regarding progress on human development (2010) in the course of recent years.
Given that one of the significant objectives of economic development is to rise up out of
the rundown of LCDs by 2020, one of the significant challenges for economic
development is poverty destruction. It is flawed whether the introduction of new
economic policy positively affected economic development in India regarding economic
growth and poverty easing. The advantages of economic growth are thought to be a key
plan of development of numerous countries including India. The development motivation
of the government is currently to mitigate poverty and maintain macroeconomic security.
From the point of perspective of social dimensions of development, comes about are
contrasting.
Regardless of its amazing economic growth, India is as yet considered by the

international community to be a minimum created nation, at rank 122 out of 169
countries. Further, its human development index is a negligible 0.497, which is lower
than the average for developing countries of 0.592 (UNDP, 2011); its economy is reliant
on natural resources. Regardless of this, India has encountered a high rate of growth since
1990s, which has lessened poverty from 45 percent in 1992/93 to 26 percent in
2009/2010. Be that as it may, despite everything it depends intensely on foreign guide
and underpins for economic development and poverty reduction. The population living
under the poverty line still continues to be far reaching all through the nation, especially
in rustic regions. There are presently an expansive number of investigations of the
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determinants of economic growth and its impacts on socioeconomic development.

Projects for poverty reduction that have been propelled by many developing countries try
to assess such factors, since it is vital to perceive their effects to distinguish the correct
connection between economic development and poverty. In the instance of India, few
examinations have investigated the effects of economic growth on social development. In
this manner, this investigation examines the connection between economic growth and
poverty reduction and how growth benefits are disseminated over the aggregate
population.
This investigation plans to demonstrate that macroeconomic policies and receptiveness to

the world economy are vital factors in reducing poverty. Since these new policies have
influenced economic growth and such growth is accepted to ease poverty, the normal
result of this investigation is essential for a few reasons. No one is denying the policy
importance of understanding the determinants of economic growth and its association
with poverty. Therefore, this area would be valuable to give suggestions to streamline
current socioeconomic development in the nation.
2.9.3. Economic growth and environmental conditions

To guarantee the advantage of growth in the long run, it is important to consider the
effects of growth on different dimensions of development; in this way, the effects
investigation of economic growth on environmental conditions is additionally included in
this proposition. The effect of economic growth on the environment has been broadly
talked about in the economic writing. A high rate of economic growth has been an
essential and changeless objective of government and society, especially in developing
countries. The increase in economic growth is identified with an increase in the
generation and utilization of merchandise and enterprises; thus, this may lead to an
increase in the amounts of products for individuals, income per capita and utilization. To
energize a high rate of economic growth, diverse economies' components have involved
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development in view of every individual nation's attributes and the potential natural
resources that are accessible.
Growth may create negative effects on the environment through numerous angles, for
example, environmental degradation (contamination), overexploitation of natural
resources, degradation and loss of untamed life territory, and climate change. These are
the key issues that numerous countries have been facing; specifically, the decline in
environmental quality is thought to be a difficult issue for the living condition of the
population from the present and in addition the long haul point of view. All in all,
mechanical development is considered as having the possibility to diminish or worsen the
impacts of economic growth on environment. As an outcome, development ought not be
measured by the GDP growth alone.
Instead, the sustainability of natural resources and environmental condition must be

considered to be one key factor that can be utilized to demonstrate that the advantages of
growth are sustainable for the population and subsequently development is occurring. On
the off chance that national development objective is cantered just around CO2 growth
and neglects to consider its effects on the natural resources and environmental condition,
this would affirm that the conceived development guidelines and procedures are
inadequate for the long haul development viewpoint of the nation. Therefore, to
accomplish effectively the objectives of the different economic development designs, a
nation's government needs to consider both the development potential to increase the
living condition of the population and the sustainability that would guarantee lasting
advantages for the nation's who and what is to come.
The key indicators used to catch the progressions in environmental conditions have been
created and utilized as a part of numerous countries. Considering the environmental
condition it appears that there are numerous viewpoints which must be included, for
example, water contamination, Carbone Dioxide emissions (CO2 emissions), soil
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disintegration, strong waste, and deforestation. Be that as it may, since we have restricted
information accessible of other viewpoints, this investigation considers just the emissions
to be an intermediary for environmental degradation.
When all is said in done, the increase of the emissions is mainly caused by burning oil,
coal, and natural gas for vitality utilize. Furthermore, emissions likewise enters the
climate from burning wood and waste material land from some industrial procedure, for
example, bond creation, article of clothing manufacturing, liquor production lines,
Tobacco organizations, and so forth. In India, the count of is mainly in view of the
utilization of fluid fuel, vaporous fuel, strong fuel, transportation, power and warmth
creation. The increase in number of economic exercises is expected to increase the extent
of environmental harm. This investigation would talk about a few hints about step by step
instructions to adjust growth and great conditions of environment. As of now specified in
connection to the environmental issue of India, which is just a minor supporter of climate
change at global and regional levels, the degradation in the environmental framework,
especially the quick decline of natural resources caused by factors such as deforestation,
may cause a negative effect on the living condition of the population from the current and
the long haul point of view. This is because of the economic growth in India is still
significantly reliant on natural resources.
The high rate of economic growth is a promising prospect for the nation to land from the
rundown of LDCs yet we need to address whether the high rate of economic growth
during the most recent two decades, particularly subsequent to joining BRICS in 2001,
has created negative effects on the natural resources and environmental conditions of the
nation. The normal result of this study may give a decent proposal to policy creators to
consider the most suitable technique to accomplish an abnormal state of growth and at the
same time to maintain the sustainability of the natural framework and a decent
environmental condition.
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2.9.4 The determinants of economic growth

Economic growth implies an increase in the average rate of yield delivered per
individual, generally measured on a for each annum premise. This segment reviews the
theoretical and exact thinks about identified with economic growth, especially the
connection between economic growth and its illustrative factors, for example, factor
blessing, investment and some other qualities like exchange receptiveness, help and
Government expenditure. Growth theory has mainly created from the neoclassical model,
for example, by Solow (1956), Cass (1965), and Koopmans (1965). The neoclassical
model has a total approach. Solow's model19 of economic growth allows the
determinants of economic growth to be separated out into increases in inputs (labor and
capital) and specialized advance.
The theory of Solow (1956) basically contends that when generation happens under
neoclassical conditions and steady comes back to scale, there will no restriction between
natural and baseless rates of growth. The framework is self-adjusting to any given rate of
growth in the labor drive and in the long run approaches a condition of unfaltering
relative extension. The main innovation introduced by Solow is the capacity to allow for
factor sustainability, so steady balance growth could be attained.
One normal for this model is the union property. Many examinations comment that a
nation that begins with a lower level of GDP per capita is required to accomplish a higher
growth rate in the long haul. This could suggest the supposition that if all economies were
fundamentally the same, aside from their initial capital intensities, poor economies would
become quicker than rich one However, this theory has not been totally demonstrated by
the exact investigation, since the economic frameworks of various countries contrast in
different highlights, including the government policy, access to work, international
collaboration, willingness to work, and access to innovation.
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The far reaching utilization of the neoclassical model concentrates on the parts played in
coordinating and integrating different factors in macroeconomics, open finance, and
international economics. Because of the reliance of growth on exogenous specialized
advance in the neoclassical growth show and the obvious inconsistency of the
"unconditional joining", the hypothesis prompted a restored scan for elective models that
can generate economic growth endogenously. According to the endogenous growth
theory, economic growth is essentially the after effect of endogenous and not outer
powers. This theory maintains that investment in human capital, innovation, and learning
is a noteworthy commitment to economic growth; therefore, the endogenous theory
accentuates education, at work training, and the development of new advances,
accounting for their increasing significance (Lucas 1988).
A few examinations have followed the endogenous theory, for example, the investigation
by Romer (1990), who recognizes four fundamental preconditions for growth: (1) capital-
measured in units of utilization products; (2) labor abilities accessible from a healthy
human body; (3) human capital-exercises such as formal education and at work training,
which is individual particular; and (4) an index of the level of innovation. In any case,
this model particular is less certain about the specialized advance and the factors
influencing growth are difficult to quantify. In an open economy, the economic growth
theory more often than not recommends more added substance determinants, for
example, level of exchange receptiveness, foreign guide and other factors, which are
accepted to influence growth.
2.9.5 Trade and growth

Receptiveness to exchange is one critical determinant of economic growth execution.
There are sound theoretical justification for arguing that there is a solid and positive link
between transparency and economic growth. Receptiveness empowers the misuse of
relative favorable position, innovation exchange and dispersion of learning, increasing
scale economies and introduction to rivalry (Arvanitidis et al, 2009). Financial analysts
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by and large concur that receptiveness to international exchange encourages

development.
A few investigations affirm that the receptiveness accomplished through exchange

collaboration and decreased exchange hindrance is identified with more noteworthy
growth. This is affirmed by the investigation of Harrison (1995), who examined the
connection amongst transparency and the rate of GDP growth, using the outcomes from
cross-sectional and board information gauges while controlling for nation impacts. This
examination appears that the transparency measures appear to have a positive correlation
with GDP growth, meaning that the more open the economy, the higher the growth rate,
while the more secured the nearby economy, the slower the growth in income.
Hassan (2011) comments that exchange transparency is accepted to prompt the enhanced
assignment of a wide range of resources on account of economies of scale, upgrades in
information creation methods, multilateral international game plans for the exchange of
innovation, gathering and development of capital, and raising the level of employment by
work creation and therefore economic growth and development. He points out that
exchange receptiveness is gotten from the traditional school of economics and from the
theory of Adam Smith and David Ricardo. It is trusted that economic gains of
specialization, noticeable in upgraded trades, involve higher levels of GDP, therefore
sends out contribute directly to growth of the national income. Then again, Jeffrey and
Romer (1999), examining the correlation amongst exchange and income, express that the
direction of causation. Between those two factors can't be distinguished. In expansion,
countries' geographic qualities; in any case, affect sly affect exchange, and are
conceivably uncorrelated with other determinants of income. Therefore, they utilize
geographic parts of countries' exchange to obtain instrumental factors evaluations of the
impacts of exchange on income. The outcomes give no confirmation that OLS gauges
exaggerate the impacts of exchange.
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They propose that exchange has a quantitatively substantial and strong, however just
moderately measurably noteworthy, beneficial outcome on income. The effect of
exchange on growth is affirmed by various observational investigations. Dollar and
Kraay (2001), using cross-country information on 100 countries, affirm that adjustments
in the growth rate are related with changes in exchange volumes. Especially, the
adjustment in exchange policy is one of the key factors that makes an increase in
exchange volume and leads quick growth. Furthermore, Dollar and Kraay (2002) express
that countries with better institutions are likewise countries with better exchange. The
change in decadal growth rates measured through instrumented changes in exchange and
changes in institutional quality gives proof of a huge impact of exchange on growth, with
littler part for development institutions. Fosu (1990) and Sachs and Warner (1997) led
ponders on a few African countries, and concurred that more exchange confinements
have a negative effect on growth. Notwithstanding, those examinations in view of cross-
country information may experience the ill effects of one-sided estimation, since the
distinctive attributes of every individual nation prompt contrasts in information
estimation and accumulation.
A significant number of the current examinations, using time arrangement investigation

to examine the effects of exchange on economic growth, affirm that there is a solid
correlation between send out execution and economic growth (Greenaway et al., 2002;
Shahbaz, 2012). Medina-Smith (2001) take a gander at the connection amongst exchange
and growth is conceived through a fare drove growth strategy, which follows the theory
that sustained exchange is the main engine of economic growth. This thought is affirmed
by Obadan et al. (2011), who examined the effects of exchange on economic growth and
development in Nigeria using time-arrangement information. The examination was
created from the investigations of Edwards (1998) and Obandan (2008) with a few
changes to the model: Gross domestic product growth is capacity of the level of
transparency, swapping scale, foreign direct investment, domestic investment, and
political stability. The investigation affirms that exchange receptiveness delivered a
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positive effect on Nigeria's economic growth. In addition, it expresses that political

instability has a solid negative effect on growth and development.
2.9.6 Foreign guide and growth

Be that as it may, the economic growth might be influenced by other determinants, which
rely upon the attributes of the individual countries, especially developing countries.
Foreign guide is an extra determinant expected to assume a basic part in economic
growth; therefore, other examines have investigated the effect of foreign guide on
economic development. For instance, Indonesia in the 1970s, and Bolivia in the late
1980s, moved from a slow way of economic growth to fast development through guide;
indeed, foreign guide assumes a noteworthy part in stimulating growth by transferring
cash, thoughts, and innovation from giver countries to developing countries (Burnside
and Dollar, 2000). Additionally, the positive effects of help on promoting economic
growth are affirmed by Mosley et al. (1987), Arvin and Barillas (2002), Hudson (2004),
and McGillivray et al. (2006).
As stated, taking into account the distinction in the qualities of the countries, foreign
guide may assume an imperative part (direct or indirect correlation) in the economic
growth of numerous countries, especially the countries on the rundown of LDCs, in light
of their absence of savings and capital stock. Then again, a few examinations are
reproachful of the effects of foreign guide on economic growth. For instance, Boone
(1996) can't help contradicting the positive guide growth relationship, stating that guide
has no impact on either investment or income growth in LDCs. Gupta (1975) and Gupta
and Islam (1983) found that the negative impact of foreign guide can be turned around if
indirect impacts are incorporated. Mosley (1980) additionally found a negative (yet not
noteworthy) correlation in help and economic growth utilized a concurrent condition
show; interestingly, he found a positive correlation for the situation of LDCs in his
specimen however in all out presumes that his examination is incomplete.
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As of late, the connection between foreign guide and economic growth has pulled in
incredible consideration and there is currently a lot of literature on the correlation
between foreign guide and economic growth. The investigation did by McGillivray
(2005) distinguished the effect of foreign help on growth in African countries, using time
arrangement from 1968 to 1999; the after effect of this investigation demonstrates that
guide positively affects growth, as well as lessens poverty in Africa.
The examination by Gomanee et al. (2005) directly tended to the instrument through
which help impacts on growth, in light of information on 25 sub-Saharan African
countries over the period from 1970 to 1997; this investigation indicates that there is a
positive correlation amongst help and growth. It demonstrates that foreign guide has a
noteworthy constructive outcome on economic growth. Additionally, this investigation
likewise finds that investment is additionally a standout amongst the most critical
transmission components for growth.
Karras (2006) investigated the connection between foreign guide and growth per capita
using yearly information on 71 help receiving developing countries, for the period 1960
to 1997. The aftereffect of this investigation demonstrates that the effect of foreign guide
on economic growth is certain, lasting, and measurably critical. A lasting increase in
foreign guide by US$20 per individual outcomes in a changeless increase in the growth
rate of genuine GDP per capita by 0.16 percent; in any case, this result is obtained
without considering the impacts of policies. Easterly (2001) says that the various factors
that influence growth cause the relationship amongst growth and investment to be free
and insecure. Growth changes around an average for every nation, while investment rates
float everywhere. About the guide, he states what income a nation would have
accomplished if the expectations of the financing gap approach were right and then
contrast the expectation with the real result. The financing gap show predicts that guide
goes into investment coordinated, or more. Investment to GDP will increase over the
initial year by the sum that guide to GDP increases over the initial year and then this
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investment will increase growth in the following period, yet the outcomes he finds are not
positive.
2.9.7 Foreign Direct investment and growth

Clift and Diehl (2007) express that capital should flow from wealthier to poorer
countries, from countries that have more physical capital per specialist and thus where the
profits to capital are lower to those that have moderately less capital and thus more
noteworthy unexploited investment openings. In principle, this movement of capital
should improve poorer countries off by giving them access to more financial resources
that they would then be able to invest in physical capital, such as gear, machinery, and
infrastructure. Such investment ought to enhance their levels of employment and income.
Capital flows to and from developing economies include official flows, for example,
inflows of foreign guide and outflows in the type of amassed international holds. These
flows might be driven by factors other than the fundamental rate-of-return
contemplations talked about before enhancing in the center income countries while there
is a 'two-administration' FDI impact for high income countries.
Chansomphou and Ichihashi (2011) examined the effect of foreign aid and foreign direct
investment on the long-run and short-run per capita income growth of India. Using time-
arrangement information for the period 1970-2008 and altered Solow's growth
demonstrate, they find that foreign aid has a solid positive effect and it is thought to be a
main contributor to income growth in India, while FDI negatively affects income per
capita. They presumed that the negative effect of FDI may be because of its focus in
couple of economic sectors and its outrageous ascents and falls in a few periods.
From the above review of the experimental literature, we accept that trade receptiveness
has a positive effect on economic growth; an increase in the transparency degree is
related with an increase in the level of income per capita, meaning that the trade
receptiveness is a driving force of economic growth. Next, we consider, as Karras (2006)
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and Chansomphou and Ichihashi (2011), that foreign aid and FDI positively affect
economic growth, since the effect of foreign aid and FDI on growth, especially in
developing countries, is affirmed by various investigations, for example, Hansen and
Tarp, (2000); Brautigan and Knack, (2004); and Dalgaard et al., (2004). The main part of
these factors in stimulating economic growth is to supplement domestic wellsprings of
finance, for example, savings, in this manner increasing the measure of investment and
capital stock.
2.9.8 The effects of economic growth on poverty reduction

The connection between economic growth and poverty reduction has been examined by
the development examine literature in numerous countries (Roemer and Gugerty, 1997;
Deaton and Dreze, 2001; Bhagwati, 2001; and Dollar and Kraay, 2002). According this
literature, a high rate of economic growth is thought to be an essential condition for
fighting poverty. In any case, it has likewise been guaranteed that to evaluate the link
between economic growth and poverty other outer factors related with the genuine
improvement in individuals' personal satisfaction ought to be taken into thought.
Analyzing the direct correlation between these two factors isn't sufficient; we additionally
need to consider other factors in the meantime, for example, foreign aid, international
collaboration, FDI, and population growth.
Easterly (2001) states that countries with positive income growth had a decline in the
proportion of individuals below the poverty line, and the quickest average growth was
related with the speediest poverty reductions. In Indonesia, for instance, which had
average income growth of 76 percent from 1984 to 1996, the proportion of Indonesians
underneath the poverty line in 1993 was one-fourth of what it was in 1984, (a terrible
inversion accompanied Indonesia's crisis more than 1997- 1999, with average income
falling by 12 percent and the poverty rate shooting up to 65 percent, again confirming
that income and poverty move together.
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Dollar and Kraay (2001) explored this inquiry by studying the encounters of a gathering
of developing countries that have altogether opened up to international trade during the
previous two decades. They give confirm that, as opposed to mainstream views increased
trade has unequivocally supported growth and poverty reduction and has added to
narrowing the gaps between rich and poor worldwide.
The tireless issue of poverty in the developing world has prompted visit questions about
the adequacy of economic growth in influencing poverty reduction. The diligence of
poverty may likewise prompt negativity about the effects of market-oriented policies and
outward looking development strategies. In any case, the projects propelled by many
developing countries for the reduction of poverty look to assess the factors that are
important to recognize the correct connection between economic growth and poverty.
Therefore, a vast assortment of logical literature on this theme has exactly examined the
important independent factors.
Kuznets (1955) investigated the connection between economic growth and income
inequality using the "inverted U" hypothesis. He proposed that in the beginning times of
economic growth, income distribution has a tendency to worsen, while in the following
stage it enhances as a more extensive section of the population take part in the rising
national income. This infers the constructive outcome of this linkage relies upon the level
of economic development.
Following Kuznets (1955), numerous exact investigations have underscored the part of
economic growth to manage poverty. As a rule, they have discovered that economic
growth plays a critical part in poverty reduction. This has been supported by the work of
the World Bank (1990), Lipton and Ravallion (1995), Goudie and Ladd (1999), Kakwani
(1993), and Osmani (2002). The increase in per capita GDP is directly identified with an
increase in average income of the poor, so and economic growth is decidedly connected
with reductions in poverty (Roemer and Gugerty, 1997). Indeed, 10 percent of GDP
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growth every year is related with income growth of 10 percent for the poor, which covers
40 percent of the aggregate population. These outcomes give solid support for the
recommendation that growth in GDPP is an effective force in reducing poverty. In the
course of recent years, the offer of to a great degree poor individuals in the world (those
living on less than two dollars every day) has fallen pointedly, from 38 percent in 1978 to
19 percent in 1998. This decline is totally inferable from growth itself, not to changes in
income distribution. The insignificance of changes in income distribution in explaining
changes in general poverty over the recent years isn't a coincidence. By and large, income
distribution is related to poverty reduction just when growth is adequately high, as said
by Kuznets. In this way, the primary impact on poverty is of growth, not of an adjustment
in income distribution.
Thirtle et al. (2003) misused the causal chain model to break down the connection
between economic growth and poverty reduction. In their paper, the poverty index was
explained by the Gini coefficient, GDPP, export or trade, government expenditure, net
settled investment, and provincial population. The outcome demonstrates that the Gini
coefficient and provincial population are poverty related and that GDPP, exports,
government expenditure and gross settled investment are poverty reducing. Net settled
investment has a vast effect since it includes land enhancements and street building,
which are labor intensive exercises that give employments at the base end of the labor
market, particularly in rustic ranges.
Islam (2004), using crosscountry information, demonstrated the connection between

economic growth, employment and poverty. The author focuses on that growth is
important; be that as it may, it isn't adequate condition for poverty reduction. Therefore,
the example and wellsprings of economic growth and in addition the way in which its
advantages are conveyed (an even grouth) are more important to accomplish the objective
of poverty reduction. The aftereffect of this examination contends that there is no
invariant connection between economic growth and poverty reduction. It has been
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demonstrated that comparable growth rates can be related with various results on poverty
reduction. Examples of growth, particularly as far as developments in employment and
labor markets that happen because of economic growth, assume an important part in
producing such varying outcomes regarding poverty reduction.
Adams (2004) utilized information gathered in 126 countries including 60 developing

countries to dissect the versatility of poverty. He found that economic growth diminishes
the proportion of poverty; be that as it may, the estimation of the connection amongst
growth and poverty in light of cross-country information is often questionable. Ravallion
(1995) expressed that the attributes of each nation could prompt one-sided estimations of
the effect of growth on poverty using cross-country information. This is because of the
distinctions in family unit studies, including contrasts in the living standards indicator
utilized and genuine estimations of poverty lines.
Late examinations have utilized time arrangement information to break down the
connection between economic growth and poverty reduction. A large number of those
have affirmed that economic growth is fundamental for poverty reduction, particularly
when it prompts an increase in employment and a change in opportunities for gainful
exercises among the poor. For instance the investigation of Tsai and Huang (2007), using
time arrangement information from 1964 to 2003, investigated the relationship amongst
growth and poverty in Taiwan. They affirmed that economic growth is a major driving
force for poverty reduction in Taiwan and that receptiveness to foreign trade helps the
poor through a direct distribution impact and in addition an indirect growth impact, in
both the long haul and the short term
Ijaiya et al. (2011) examined the effect of growth on poverty by employing time
arrangement information (1980-2008) in Nigeria. This examination indicated that a
positive change in economic growth is arranged to poverty reduction. Therefore, to
sustain high rate of economic growth in Nigeria from which poverty could be diminished,
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measured, for example, stable macroeconomic policies, gigantic investment in

horticulture, infrastructural development and great administration are proposed.
Mulok et al. (2012) determined the observational relationship and importance of growth
for poverty reduction in Malaysia. The outcomes demonstrated that growth explains
much, however not all, about the development of poverty. They expressed that economic
growth is important yet not adequate for poverty reduction, particularly if the goal is a
fast and sustained poverty reduction. In the event that a policy objective is centered
around poverty mitigation, it is important to consider extra factors for example, income
distribution.Economic strategies and policies through economic reform are required to
improve the impacts of growth on poverty. Poverty reduction is an issue of raising the
income levels of the poor on a sustainable nuts and bolts, and there are numerous
methods for obtaining this objective. Reducing poverty can happen through
redistributions among families at an existing level of average income, growth in average
incomes, or a combination of the two (McKay, 1997).
Following the investigations of Ijaiya et al. (2011) and Mulok et al. (2012), this
examination tries to survey if a relationship between economic growth and poverty
reduction exists and how much a change in economic growth influences an adjustment in
poverty reduction. To demonstrate that growth diminishes poverty, this examination
additionally examines the relationship amongst growth and income distribution based on
Kuznets' hypothesis. In addition, we will check if the introduction of new economic
policies, the participation of BRICS, and receptiveness to the world economy, decreases
poverty through its effects on growth (Thirtle et al., 2003).
2.9.9 The impacts of economic growth on environmental conditions

Sustainability can be distinguished as far as the maximization of prosperity of a
population after some time, while the economy is considered to be a major wellspring of
the change in the living condition of a nation and its population (Lawrence, 2011).
Therefore, the governments of numerous countries have underscored the accomplishment
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of economic growth. Starting here of view, the advance of growth happens through the
growing consumption of natural resources. Hence the estimation of the growth of
sustainable development has been considered as a major target of development
dimensions.
Grossman and Krueger (1991) express that the effect of economic growth on
environmental quality is categorized through three distinct channels: (1) the scale effect,
(2) the composition effect, and (3) the strategy effect. By definition, the scale effect
occurs as pollution increases with the extent of the economy, the explanation being that if
the structure of the economy and innovation does not transform, it is expected that an
increase in the scale of economic movement leads to an increase in pollution and
environmental degradation. The composition effect alludes to the change in production
structure of an economy from agribusiness based to industry and administration. In the
principal phase of the development procedure, pollution increases as the economic
structure changes from farming to resource-intensive overwhelming industries. The last
effect is the system effect, which catches upgrades in the strategy of production and
adaption of more clean advancements and henceforth a reduction in pollution. A few
examinations have considered the effect of growth on environmental conditions. One of
the best investigations is that of Smyth et al.(2008), who conducted an examination of the
relationship amongst growth and environmental issues in China, finding that together
with the high rate of economic growth, it additionally creates a high rate of pollution.
Numerous urban communities in China are presently suffering from an abnormal state of
pollution and natural catastrophes, and in addition a movement congestion issue. Those
issues are becoming a major challenge for the future development of China. A few
examinations have confirmed that the quest for higher growth dominates the
environmental perspectives. In this condition, the worsening of the environment in the
end prompts a decline in the welfare of the population (Day and Grafton, 2001).
Moreover, environmental and social mischief can confine long-run growth; therefore, the
key factors of social, economic and environmental frameworks are codetermined.
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Therefore, in order to obtain the goal of sustainable development, an expansion of the

extent of investigation is required to include more extensive framework progression
(Munasinghe, 2001).
The relationship between economic growth and environmental degradation has been
perceived and affirmed by various examinations (for instance Opschoor, 2001), who
examined the relationship between economic growth and environmental sustainability,
while proposing institutional and moral reforms to advance sustainable development. The
investigation by Norgaard (2001) indicates some essential limitations of fast sustained
growth, talks about a few legends concerning economic growth, and finally outlines a
plan in light of natural economics to move beyond growth and globalization. Other
investigations have demonstrated a negative relation between the plenteous enrichment of
natural resources and economic growth: countries that have rich natural resources tend to
have lower economic growth than others (Ascher, 1999; Birdsall et al., 2001; Gylfason,
2001; Sachs and Warner, 1995). In any case, these examinations utilized cross-sectional
information, and it is difficult to order the effect on economic growth of various
procedures of natural resources' shortage.
The growth of economic exercises, regarding production and consumption, requires

bigger inputs of vitality and material that generate a more prominent amount of waste
side-effects (Georgescu-Roegen, 1986). This is confirmed by Grossman and Krueger
(1995), who expresses that to accomplish an abnormal state of growth a nation needs
more inputs to develop its yields, leading to an increase in the waste and emissions
generated through the production of economic exercises. The increased utilization of
natural resources, accumulation of waste, and concentration of toxins directly impacts on
the degradation of environmental quality, leading to a decline in the human living quality,
in spite of the rising income (Daly, 1991). In addition, Daly contends that the reason for
resource degradation may in the long run put economic action itself in danger; therefore,
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to maintain the environment and even economic movement itself, the growth must stop
and the world must set up a transition to a relentless state economy.
Panayotou (1993) points out that when the production of an economy shifts from
agribusiness to industry, the pollution intensity increases, and then at larger amounts of
development, auxiliary change towards information-intensive industries and
administrations, coupled with increased environmental mindfulness, enforcement of
environmental regulations, better innovation and higher environmental expenditures
would at last prompt a leveling off and continuous decline in environmental degradation.
Beckerman (1992) stresses a strong relationship between income growth and the adoption
of environmental protection measures, which indicates in the long term that the change of
the environmental nature of a nation can only happen when it has turned out to be rich.
Since the beginning of the 1990s, a few observational investigations have examined the
relationship between economic growth and environmental degradation, by using the
environmental Kuznets curve (EKC). The investigations by Grossman and Krueger
(1995), Selden and Song (1994), and Shafik and Bandyopadhyay (1992) hypothesize that
the relationship between economic growth and environment quality, whether positive or
negative, isn't settled along a nation's development way; certainly, the correlation would
alter the course from positive to negative when a nation achieves a level of income at
which individuals require and can afford more proficient construction and devices for a
cleaner environment.
Stern (2004) states that the environmental Kuznets curve is a hypothesized relationship
among different indicators of environmental degradation20 and income per capita; during
the early phases of economic growth, degradation and pollution increase, yet beyond
some level of income per capita the pattern turns around, so a high income level of
economic growth prompts environmental change.
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The EKC hypothesis is on a very basic level a within-nation story; nonetheless, cross-
country think about expect that all cross-section countries respond indistinguishably,
paying little heed to their disparities in income, topographical condition, culture, and
history (Dijkgraaf and Vollebergh, 1998). As of late, a few examinations have begun to
dissect single nation to examine the EKC hypothesis: for instance, the investigations of
Cole (2003), Lekakis (2000), and Stern and Common (2001). Indeed, the environmental
degradation factor isn't only explained by the level of growth; it is additionally influenced
by other factors of economic development (Akpan et al., 2011).
Considering the instance of India, it appears that there are few investigations made with
the utilization of the Environmental Kuznets Curve (EKC). The past investigation
conducted by Kyophilavong (2011) utilized a Computable General Equilibrium (CGE)
technique to break down the effect of trade liberalization on emissions and a miniaturized
scale simulation to survey the impacts of trade liberalization. His examination
demonstrates that trade liberalization gives positive effect on growth, and it likewise
diminishes emissions however it increases the proportion of resource depletion on the
grounds that the demand for items increases.
Considering the instance of India, it appears that there are few examinations which
utilization of Environmental Kuznets Curve (EKC). The investigation conducted by
Kyophilavong (2011) utilized a Processable General Equilibrium (CGE) technique to
dissect the effect of trade liberalization on emissions and a smaller scale simulation to
evaluate the impacts of trade liberalization. His examination demonstrates that trade
liberalization gives positive effect on growth, and it likewise diminishes emissions
however it increases the proportion of resource depletion on the grounds that the demand
for items increases.
Another examination conducted by Dasgupta et al. (2005) examined the regional poverty
environment nexus in Cambodia, India, and Vietnam. This examination concentrates on
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spatial relations between poor populations and environmental issues at provincial and
region level. The consequences of this investigation demonstrate that the example of
regional settlement by poor family units is strongly related with five environmental
problems: deforestation, fragile soils, indoor air pollution, contaminated water, and
outdoor pollution.
This investigation is not the same as the past investigations of India, since it expects to
assemble a few components, utilizing time series data examination to test whether an
EKC exists. The paper methodicallly inspects the connection between economic growth
and environmental quality. The variables, for example, population density, trade
openness, and other independent variables, are considered in the estimation of the
connection amongst environment and growth.
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CHAPTER 3: MATERIALS AND METHODS
3.1 DATA COLLECTION
Data was gathered through a review of relevant materials, including papers, theses,
conference presentations and other documents accessible on the Internet. Documents
have been found by a mixture of queries, using keywords and SD-related terminology.
These included sustainability, creation, sustainable development, economic sustainability,
social sustainability, environmental sustainability and sustainable development
objectives. No date constraints were placed on the search, as priority was given to the
importance of the materials in terms of their substantive contribution to the current SD
debate, regardless of the age of the content. Attempts have, however, been made to
capture as much recent literature as possible to represent currency and to increase the
importance of the issue.
3.2 THEORETICAL FRAMEWORK
Sustainable development (SD) refers to the human development process by which

resource usage aims to solve human problems while maintaining the protection of natural
systems and environmental conditions (Smith et al., 1998). The concept of SD is
associated with the various issues of financial development which are intended to
establish the conditions for social orders to be administered. The term SD is commonly
used; the Brundtland Commission raised the possibility that the cutting edge will have
access to the same degree of wealth as the existing generation. In other words, sustainable
development is defined as a "non-declination" in the time of human welfare, which can
be measured, in the light of the form of study, by the level of human utility, benefit and
utilisation (United Nations, 1987).
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When all is said and done, SD is committed to achieving and sustaining economic growth
that identifies with other components of financial development. It aims to satisfy the
greatest demand for human needs and boost living conditions, in tandem with financial
tools that make environmental security conceivable (United Nations, 2000). The vision of
sustainable development has an expansive significance and a number of suspicions in
different countries. Business experts, specialists, governments and offices (including the
World Bank, the IMF and the WTO) have defined the sustainable development strategy
in recent decades, taking into account individual living conditions and environmental
perspectives (David, 1996).
The secret theme of SD, as indicated by Disano (2001), is the incorporation of economic,
social and environmental concerns into choice and policy making at all levels of growth.
This helps to consider the various aspects of sustainable development and their complex
collaboration and to support policy decisions aimed at achieving the goals of sustainable
development. Integration includes the incorporation of all conventional fields of
economic and government activity, such as economic planning, agriculture, well-being,
vitality, water, natural resources, manufacturing, education and the earth.
A few studies show that the rich advantage of development and the rest of the population
is affected by the costs of asset use, social anxiety, environmental degradation and other
issues (Bo Gao, 2001; Greiner, 2010; Limskul et al., 2013). Alluding to the World
Commission on Environment and Growth (2011), sustainable growth includes two main
ideas: (1) the concept of 'needs,' in particular the essential needs of the world's poor,
which need to be superseded; and (2) the possibility of restricting the potential of
creativity and social association on earth to meet the present and future needs;
Sustainable development entails more than economic growth; it needs an adjustment to
the substance of growth, to make it less material and to make it more severe and equal.
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These progresses are needed in all nations as part of a package of initiatives to maintain
the burden of ecological resources, increase income distribution and reduce the level of
powerlessness in the event of economic emergencies (United Nations, 2000). David
(1996 ) argues that SD is committed to achieving economic development that is intended
to solve human problems , improve living standards, and provide financial tools that
make environmental insurance conceivable. There are two noteworthy points of SD,
namely a sustainable economy that addresses human issues equally without depleting
knowledge sources on assets or eliminating waste in the overabundance of the earth's
restoration and sustainable human institutions that guarantee both security and an open
door to social cooperation and other worldly development.
The most fundamental challenge facing humanity today is to create a common vision of a
prosperous and attractive society; one of the most important issues is to contribute to the
unchanging flourishing of the world's biophysical limits in a way that is fair and equitable
to all of humanity, from this generation to future generations (Herman, 1992; Costanza,
2003). Environmental supportability is the conservation of components and activities that
contribute to the nature of the planet on a long-term basis. The estimation of this factor
underlines the general viability and power of living systems in their special and in-depth
dimensions (Costanza, 2000).
3.3 CONCEPTUAL FRAMEWORK
This analysis is based on the corresponding three key empirical variables, including
economic growth, social development and environmental protection. Adjusted and
organised research from the three fundamental points of view of economic growth, social
progress and environmental conditions is a core principle of sustainable development.
This conceptual framework is used to analyse the communication of those main

components that are supposed to provide a decent description of sustainability and its
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effects in India. In view of economic development, this aspect points to the improvement
of the population's living standards, from the provision of basic needs to the rise in the
use of goods and services.
The core concept of this study is to consider key determinants of economic growth,
followed by an analysis of the effects of economic growth on poverty and income
distribution and the effects of growth on environmental conditions. The incorporation of
these variables is a key concept for this analysis.
It is false if economic growth is generating differences in society. A study of the impact

of economic development on poverty and income distribution is also included in this
thesis. Economic growth is ideal for sustainable development just as it circulates to social
change by reducing poverty and minimising income inequality.
The impacts of economic growth on social perspectives are defined by job creation,
aptitude upgrades, near-economic impact, and social investment. A few studies have
shown that economic growth and social progress are deeply related. One clear example is
the Stinivasan investigation (1997), which shows that emotions are interwoven with
regard to both economic growth and the fundamental need for progress. It proposes that
the exceptional accentuation of fundamental needs will in any case, in the short term, be
adverse to economic development, and would therefore harm the potential improvement
of the basic needs programme.
Social growth, by definition, refers to a shift in the social demand within a society. It may
also refer to the concept of social progress. A change in economic execution leads to an
adjustment in social growth. Social equity, which is one of the main principles of
fundamental sustainable growth, is one of the most significant variables for the survey of
sustainable social development, with individuals and their personal satisfaction viewed as
a focal problem. In short, communication covers the degree of fairness and
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comprehensiveness with which resources are shared, the openings handled and the
decisions taken.
In addition, in order to discern the impact of economic growth on environmental

conditions, it has become a critical issue to gauge the degree of sustainable development
of a country. A high rate of economic growth is thought to be a key factor in economic
development for some countries, including India. Be that as it may, there are many
challenges involved in continuing economic development and improving the nation's
supply in the global economy, while at the same time reducing social disparities and
ensuring the environment.
In short, this philosophical structure ensures that the end outcome of this discovery can
be accomplished. In order to understand the last point of sustainable development in
India, it is important for the financial development of the nation to be composed of
economic growth, social development and environmental conservation, which are the
three key issues addressed in this study. In the same way, financial growth must circulate
congruously between industries, territorial development and urban and rural development
in order to allow maximum and efficient use of human capital and to preserve natural
resources.
In this study, three notable topics will be discussed. The first is to distinguish the
determinants of economic growth, the second is to analyse the effects of economic
growth on poverty and income distribution, and the third is to analyse the effects of
economic growth on environmental conditions. These three issues have been established
with a clear intention of seeking fair confirmations to make a few recommendations on
sustainable development for current and long-term development in India.
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3.4 APPROACH AND METHODOLOGY
This study has to be seen as a starting point in a process that is far more complex and
requires much more in-depth analysis. The study has taken the approach of looking at
trends in public expenditure to estimate availability of public finance in the future, and
building on existing sector-specific studies wherever possible to derive estimates of
finance requirements. These estimates are then used to calculate the potential financial
gap.
The study financially assesses the first category of targets. The second category of targets
is not financially assessed because these targets would be achieved with the achievement
of other targets in the first category. The third category of targets is not considered in this
study because these targets are either not related to Indian conditions, or may not have
financial implications, or do not have defined quantifiable indicators yet, or are beyond
the present scope.
These are dynamic categories as we expect that most targets in category 3 (and in the end
all) would move into categories 1 and 2 as greater understanding becomes available. The
costs of creating awareness, and research and development for enabling sustainable
development, have been estimated separately as a percentage of the future GDP. Some
costs are not fully calculated. For example, in the waste management sector, the cost of
only domestic solid waste management in urban areas has been calculated due to lack of
data on industrial and other forms of waste management. The complexity of assessment is
also enhanced by the fact that many indicators evident in the targets are not yet quantified
or quantifiable and for many financial assessment methodologies are not available.
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CHAPTER 4: RESULTS AND DISCUSSION
4.1 ROLE OF POLICY INSTITUTION AND MARKETS IN ASSURING

SUSTAINABLE DEVELOPMENT
Research staff in the Development Economics vice Presidency of the World Bank
arranged this paper for the United Nations International Conference on Financing for
Development hung. It has an eager reason: to examine in sensibly succinct frame the
changing roles and adequacy of development assistance amid the previous 50 years, with
specific attention to the previous two decades and to the experience of the World Bank.
Such a paper can't in any way, shape or form be comprehensive. Or maybe, the creators
endeavor to depict comprehensively how the goals and types of development assistance
have changed after some time. They conclude that as a result of these changes and,
maybe more imperative, of improvements in the policies, institutions, and governance of
developing countries, help is more compelling at lessening poverty today than at any
other time.
The previous 50 years have educated the international development group—developing

countries, donors, and the international financial institutions—an awesome arrangement
about development and poverty lessening. We now see better what the goals of
development ought to be and how to achieve them. We have gained from the two
successes and mistakes, specifically about markets, governments, and institutions, and
how they interact. This taking in—a typical and progressing exertion of the entire
development group—has prompted enhanced development execution in general and at
the World Bank specifically.
In the meantime, there is much that despite everything we don't have the foggiest idea.
Maybe most essential, we don't see completely how to help enhance institutions and
governance, particularly in the poorest countries where the requirements are most
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noteworthy. Also, we are as yet figuring out how best to manage squeezing cross-border
issues that threaten development, for example, disease, environmental issues, and
political instability.
In late decades, development has progressed at verifiably remarkable rates. For all the
political, economic, and social disruptions of the second 50% of the twentieth century, it
was likewise a period of phenomenal progress in expectations for everyday comforts
worldwide. Better technology, policies, and institutions not just impelled quick
development in the propelled economies; they moreover made conceivable substantial
improvements in the lives of needy people all through a significant part of the developing
world. Progress has been uneven, no doubt. However key pointers of prosperity affirm to
striking progress by and large.
Health: In the course of recent years, life expectancy during childbirth in developing
countries has expanded by a wonderful 20 years—or about as much as had been
accomplished in all of human history before the 1960s. The improvement resulted mostly
from higher incomes and better education, especially of women and girls, yet additionally
in vast measure from enhanced knowledge also, understanding about the counteractive
action and treatment of disease, and new programs to share this knowledge and set it in
motion.
Education: In the course of recent years, illiteracy in the developing world has been cut
about down the middle, from 47 percent to 25 percent of all grown-ups. Relentless
expansion of school enrollments worldwide and increments in education quality
influenced key contributions to this improvement, as did improvements in infrastructure
and nutrition.
Income poverty: Total income poverty—characterized as people subsisting on under $1
every day—ascended for a great part of the previous two centuries, yet finished the
previous 20 years it has started to fall. On account of better economic policies through a
significant part of the developing world—yet most imperatively in China and India—the
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quantity of needy people worldwide seems to have fallen (maybe by up to 200 million),
even as the world's population ascended by 1.6 billion.3 Similarly, a two-century
decrease in the assessed offer of destitute people in the worldwide population has
quickened since 1950. In the 1990s alone, the offer tumbled from an expected 29 percent
to 23 percent.
It is difficult to relate to exactness the contributions of development assistance to this

progress. There is no single concurred way to deal with doing as such, and such
assessments confront challenges natural to the way toward helping a nation to create.
There are different reasons why surveying the contributions of development assistance is
naturally troublesome. To begin with, responsibility for development progress will
dependably lie essentially with the developing nation itself. No outside giver is capable,
or without a doubt has the right, to urge a nation to take after policies prone to advance
development. Nor would it have the neighborhood knowledge important to do as such
regardless of the possibility that it had the impact. Nation ownership of the reform
program and development strategy is fundamental. That is, as the confirmation in
following sections will appear, the nation must be focused on and associated with
molding development strategies and projects.
This nation ownership is one of a few factors making it difficult to evaluate with any
accuracy the impacts of development assistance. On the off chance that the nation leads
the pack in reform and institution-building, at that point by definition the external
performing artist—regardless of whether a bilateral contributor or a multilateral like the
World Bank—assumes just a supporting part and ought not to guarantee excessively of
the credit. As talked, different factors likewise make attribution troublesome: the
requirement for association across donors, and in addition the inclination for the best
projects to have benefits that stretch out a long ways past the restricted limits of the
project itself.
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In addition, levels of development assistance are little with respect to other financial
flows and to the scale of the current challenge. Development help totaled about $54
billion of every 2000; this was as it were 33% as much as foreign direct investment in
developing countries ($167 billion), which itself was just a little fraction of aggregate
investment (almost $1.5 trillion). Likewise, in spite of the fact that the World Bank is the
world's biggest external supplier of assistance in the education division, it ordinarily
gives under $2 billion in direct assistance for education each year. By examination,
yearly open spending on education in the developing world aggregates more than $250
billion. Given this inconsistency in scale, regardless of the possibility that the World
Bank were to significantly build its loaning in the part, its viability would need to come
basically through catalyzing institutional development and approach change in education,
as opposed to through resource transfer alone.
This implies the direct impacts of assistance (for instance, as far as income increments or
diminishments in mortality) will regularly be overwhelmed by different factors. Fruitful
development assistance essentially will have impacts that resonate a long ways past the
bounds of the project itself—either in light of the fact that the thoughts are reproduced
somewhere else, or on the grounds that the intercession served to institutionalize new
methodologies. However when the beneficial outcomes of help do spill past the limits of
the particular project or strategy mediation, the impacts turn out to be substantially harder
to measure.
In any case, while no single sort of confirmation is conclusive, and keeping in mind that
there have been issues and disillusionments, the confirmation recommends that on adjust
development assistance has contributed unequivocally to development progress.
Regardless of these analytic restrictions, there is solid proof that outside assistance is
frequently an intense power for development and poverty lessening, gave that the
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beneficiary nation is focused on utilizing outside resources well. This paper amasses a
few sorts of proof supporting this conclusion. Each of these methodologies has
methodological issues, and none of them is above challenge. In any case, every one of the
four give prove that assistance has made a contrast, and together they give a premise to
optimism:
 Cross-nation measurable examination of the impacts of help, which demonstrates that
guide, has quickened development when designated effectively, and moreover, that
the allotment of help by the World Bank and different donors is enhancing.
 Project-and area level examination of particular intercessions, drawing basically on
World Bank experience, which demonstrates significant yields to development
assistance—both as far as income-centered money saving advantage examination and
regarding different pointers of human development.
 Country contextual investigations, which demonstrate that external assistance has
assumed a critical part in supporting, solidifying, and regularly forming reform
endeavours that have conveyed enormous poverty decrease as of late, in countries as
assorted as Vietnam, Uganda, China, India, Poland, Mozambique, and Bangladesh
(encloses different sections).
 Evidence on worldwide programs, which demonstrates worldwide endeavours, for
example, investment in farming research and programs to stop communicable
diseases—regularly have been an essential supplement to nation particular
endeavours.
These positive results have depended vigorously on learning. The World Bank and
other development offices have adjusted their methodologies after some time,
accordingly not exclusively to changed conditions yet in addition to lessons learned
through experience, research, and evaluation. Some of these are lessons from
successes, for example, those recorded previously. Be that as it may, the Bank has
additionally gained from disappointments. For instance, it has discovered that project
loaning in poor arrangement environments commonly has much lower returns than in
countries with great policies, and that advance conditionality does not modify the
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policies of beneficiary countries that are not officially dedicated to change for their
own reasons.
This study concentrates on lessons learned and the results that development assistance
has just accomplished. This isn't to propose there is nothing left to learn. Despite what
might be expected, there is much that the global development group and the Bank still
don't have a clue. For example, we know too minimal about how to enable countries to
enhance governance and how to help the production of viable institutions. We likewise
know too minimal about how to start reform and development in the poorest-performing,
low-income countries—those that have been buried in a cycle of poor institutions and
policies, economic stagnation, and frequently conflict. The development group perceives
that current methods of help and development participation have not functioned
admirably in these environments. The World Bank, as other development organizations,
is presently examining crisp approaches to helping the urgently destitute people in these
countries.
Kept learning and knowledge are basic to scaling up the battle against poverty. Despite
the progress made in the previous 50 years, a tremendous poverty challenge remains.
About 1.2 billion people still live on under $1 every day, and the challenge will develop
as the population of the developing world increments by another 2 billion in the
following 30 years. To address a challenge of these measurements, help should have
impacts a long ways past the estimation of the cash alone. This implies help must form
the systems for private economic activity and social improvements—guaranteeing that its
belongings go a long ways past any individual project—and it must add to more
noteworthy limit and more prominent knowledge. Kept learning is fundamental to these
points.
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4.1.1 The Meaning of Development and the Role of Policy, Institutions, and Markets
Notions regarding policies and institutions, and in addition the policies and institutions
themselves, drive development. So seeing how those thoughts have advanced, and how
they can be changed, is critical to seeing how we can contribute all the more adequately
to development.
Development thinking has advanced constantly finished the previous 50 years. Because
of the lessons of experience and examination, development practitioners have adjusted
their approaches to advancing development, and even the goals of development work. We
have discovered that strategies that appeared glaringly evident to numerous sooner or
later—for example, both the intensely statist and insignificant government free-showcase
approaches—have must be reevaluated and changed as part of a constant learning
process. This is one motivation behind why a cautious and measured take a gander at
experience is so important.
4.1.2 Objectives for development and development assistance

Early postwar guide was centered on reconstruction of the war-torn economies of Europe
and Japan—an errand that it added to with impressive success.7 For example, five of the
World Bank's initial six advances went to countries of Western Europe, and the initial
four were unequivocally for reconstruction. The poor countries of the world were not the
principal need, and the attention was on raising generation and income, instead of on
more extensive notions of development.
With quick progress in post-war reconstruction, development assistance started to center

on bringing incomes up in what came to be known as the developing world. At in the first
place, the objective was to a great extent restricted to raising total national incomes. With
the acknowledgment that population growth rates differ forcefully, with the goal that total
income did not really give an unmistakable picture of changes in living standards,
attention swung to per capita incomes. Before long, be that as it may, with expanded
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comprehension of issues identified with income appropriation, essentially raising normal

per capita incomes additionally was perceived as excessively constrained an objective.
By the 1970s, attention concentrated on the twin issues of development and income
dissemination and progressively, on the fundamental needs of poor people. Decrease of
income poverty turned into a more noteworthy need inside the international financial
institutions, and for governments.
As of late, the goals of development have come to grasp the elimination of poverty on the
whole its measurements—income poverty, illiteracy, poor health, insecurity of income,
and powerlessness. A consensus is rising around the view that development implies
expanding the control that poor people have over their lives, through education, health,
and more noteworthy interest, and in addition income gains. This view comes not just
from the declaration of poor people themselves, yet in addition from propels in
theoretical pondering development. It is certain that the different measurements of
poverty are connected, and income development by and large prompts solid progress
against the non-income measurements of poverty also. It is additionally evident that
direct activity to enhance these other measurements can quicken the decrease of both
income and non-income poverty. In summary, the objectives of development have
advanced because of changing conditions what's more, a deeper comprehension of
poverty. This evolution has made development assistance more mind boggling and
testing. In the meantime, it has centered the development group's attention on our basic
mission: making it feasible for poor people to enhance their lives.
4.1.3 Approaches to development: The roles of states, markets, and institutions

The development group's comprehension of the best approach to accomplish
development objectives has likewise advanced after some time with the amassing of
evidence and experience. Approaches that showed up at an opportunity to be both right
and evident have been undermined by experience and nearer investigation; similarly, our
present thoughts will no uncertainty offer approach to others as experience collects and
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thinking develops. This definitely helps us to be careful to remember shortsighted

arrangements or "silver bullets." Perhaps the most important question on which our
understanding has developed over the previous decades is this: what are the particular
roles of governments and markets in impelling development, and how do institutions fit
into the picture? At the danger of oversimplification, we can distinguish no less than
three noteworthy stages in the evolution of our responses to these questions.
In practice, we perceive that there is a continuum of approaches; both in created and

developing countries, and that the stages portrayed here don't coordinate definitely the
evolution of thinking in a specific region. Rather, they are planned to catch the wide
moves in the thinking about the development group and development practitioners. It is
additionally the case that fruitful countries all through this period have seen both state
and market assume positive roles. With those provisos, this representation can by the by
give a valuable setting to a dialog of development assistance by proposing where that
assistance is well on the way to be successful.
Statist and import-substitution period

The 1960s were a period of extraordinary trust in government. Development practitioners
and masterminds trusted government both for its intentions and for its capacity to make
economic progress happen, regardless of whether in the wealthier or poorer countries.
Development considering concentrated on advertise failures, which were particularly
predominant in developing countries and appeared to give a solid rationale to state
intervention. The private sector was believed to be as well uncoordinated, too poorly
created, and excessively centered on private interests, making it impossible to enable it to
fill in as the locomotive for development. What's more, in Africa, recently autonomous
countries hunt down a postcolonial model of development and a fortified position of
authority for the national state. In numerous countries around the globe, the trust in
government was reflected in the overwhelming role of focal arranging and in the
moderately shut (import substitution) trade arrangement.
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This state-drove approach had some underlying development successes. Driving

economies of Latin America, where state economic management did not totally swarm
out the private sector, developed quickly for quite a long time under the import-
substitution model. What's more, even in some "tiger economies" of East Asia, industry
figured out how to develop and turn out to be more gainful behind high trade barriers,
because of generally great economic management. In any case, the expenses of state
economic control progressed toward becoming clearer after some time. State planners
were not omniscient: they couldn't in any way, shape or form secure all the data expected
to settle on choices that reflected both productivity contemplations and people's varying
preferences.
More awful, governments uncovered themselves to be accumulations of interests instead

of impartial also, kind "social planners." Even had they been powerful in their role as
social planners, government authorities would not have possessed the capacity to make
the entrepreneurial dynamism basic for managed development and change. Behind
defensive barriers, firms in numerous countries (India furthermore, Mexico, to name only
two) turned out to be less productive as they concentrated on getting government
supports as opposed to enhancing productivity. At long last, fiscal and macro instability
ascended with the oil value stuns of the 1970s and mid 1980s, adding to the debt crisis
and uncovering the shortcomings in the statist model.
Free- market response

As a result of the mistake with the state-drove approach, the 1980s and mid 1990s saw a
solid response that focused on the primacy of markets in development. This response was
a fundamental restorative from multiple points of view: it refocused attention on
generation proficiency and market signals, and it enlivened the move to bring down trade
barriers as methods for prodding productivity. Macro stability and balanced fiscal
accounts were viewed as fundamental building blocks for development and turned out to
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be early needs for reform. This period saw substantial improvements in both macro
stability and receptiveness through a great part of the developing world.
In the meantime, this school of development thinking additionally neglected to address

key focuses. Once countries started to accomplish macro stability and more prominent
transparency, it turned out to be evident that these were essential however not adequate
for development. Specifically, the free-showcase see tended to disregard the institutional
establishments of successful private markets. The importance of institutions was
underscored by significant movements: the economic decrease in the countries of the
previous Soviet Union; the proceeded with development in China, a nation that pushed
ahead with advertise arranged reforms without unreasonable disruption of institutional
establishments; and, later in the 1990s, the financial crisis in East Asia, to which
institutional shortcomings contributed vigorously. Moreover, even as it performed a
valuable service by spotlighting government failure, the free-advertise response had
limited genuine issues of market failure that are common in the developing world. As a
result, development performance missed the mark regarding desires in many parts of the
developing world.
Deeper comprehension of complementarities and role of institutions

Recent years have seen a more prominent acknowledgment in the approach verbal
confrontation of the complementarities amongst markets and governments. Obviously,
experience demonstrates that the private market economy must be the motor of
development; however it demonstrates additionally that a vibrant private sector relies
upon well functioning state institutions to fabricate a decent investment climate and
convey fundamental services skillfully. This perspective of complementarities draws
vigorously on what we have realized in the previous a few decades in the more effective
instances of income growth, for example, East Asia and Chile. It too draws on learning
from the transition process in the previous Soviet Union, where an absence of
institutional development joined with too many optimistic expectations prompted to a
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great degree frustrating development results and showed obviously the importance of a
sound state in giving the environment to growth. The role of institutions has come
through more firmly than it did in before perspectives of development, and especially
than it did in the approach banter in the 1980s and mid 1990s. Countries that have
consolidated institutional improvements with advertise situated approach reforms and
more noteworthy engagement with the world economy saw their per capita incomes
develop in the 1990s at the exceptionally quick pace of 5 percent per year.
Kept learning
This comprehension of states, markets, and institutions has solid calculated foundations,
and it is based additionally in experience with what works in development. There is a
solid and developing consensus about the estimation of such an approach. By and by,
there is much that the development community presently can't seem to learn. The World
Bank is focused on kept learning and to consistent improvements in our general way to
deal with development. For example, while institutions have now played a central role in
the World Bank's strategic way to deal with development, we are acutely mindful that we
know excessively minimal about exactly how to construct them.
Execution of Central and State Externally Aided Projects (EAPs) and Fund Flow of
External Assistance with a focus on less developed states.
As per the provision of Indian constitution (Art. 246) the power for negotiating and
entering into External Loans/ Grants is with the Union Government. This subject is
enumerated in the central list of subjects at entry no. 35. Owing to these provisions all the
projects undertaken with External Assistance are scrutinized by the Union Government.
The projects which are undertaken as Central Projects finds there entry/mention in the
Budget Provisions of the Central Line Ministries. However, in case of state projects the
entry in the Budget provisions is ensured by the concerned sub-national governments. At
any point of time approximately around 400 active projects have been under execution
with an external assistance (Loans and Grants ranging from Rs. 20767.01 crore to Rs.
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48899.92 crore). One of the major issues in financing the state projects is the viability of
the concerned states to repay the Debt. During last one decade there has been no. of
changes in the externally funded state projects mechanism. The changes undertaken are
in the succeeding paras.
Position upto 2005

The liability of the state for Externally Funded Project was limited to the 70% of the
borrowed funds in INR. The exchange rate fluctuations and commitment charges if any,
were also to central government account. This policy was not appreciated by a number of
states and it was pointed out that Union Government being in a dominating position is
taking undue advantage at the cost of the states. Union Government used to prescribe
generally a higher rate of Interest as compared to the International Interest Rates (LIBOR,
EURIBOR) which was a cause for fiscal burden on the states. This particular aspect was
taken care by the Finance Commission. Resultantly, from April 2005 onwards the
External Assistance was being passed on to the state on back to back basis. In partial
modification of externally aided projects financing in special category states (11 states- 8
North eastern States, Uttrakhand, HP and J&K) was reviewed as the back to back
financing was causing a hardship to these specific states. In a number of projects the
initiation from the state side but the importance in terms of Geographical location and
strategic importance is much more for the country as a whole. Accordingly, the pattern of
funding for the special category state was revised to the pre-2004 position wherein the
entire Loan proceed are transfer to the state 90:10 ratio.
Evaluation of the projects undertaken by the Special Category States

In special category states the cost of external finance is borne by the Union Government
to majority extent. Hence, projects undertaken by states leaving aside the national and
strategically need to be evaluated in terms of viability. Under the tag of special category
state sometime the projects are approved but the cost is borne by the Union Government
without fulfilment of the desired objectives. Hence the project initiated by the states need
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to be evaluated as if the project is from a normal category state. This evaluation is

required primarily to ensure the viability of the projects and not the financing cost. In
case of slippage in the execution the impact is restricted to the concerned state but it spill
over to the whole country and economy.
4.1.4 Summary
We have taken in an awesome arrangement about what development means and how,
comprehensively, to accomplish it. Our comprehension of what development implies has
advanced. Poverty reduction endeavors ought to address poverty in every one of its
dimensions—absence of income, yet additionally the absence of health and education, the
vulnerability to shocks, and the absence of control over their lives that poor people
endure. This multidimensionality of poverty reduction is epitomized in the Millennium
Development Goals. We have likewise adapted more about the best wide model for
development:
 Evidence from past successes and failures proposes firmly that neither the more statist
approach of the 1960s nor the more minimal-government free-showcase approach
that overwhelmed strategy discuss in the 1980s and mid 1990s will accomplish these
goals.
 Effective approaches will be driven by the private sector, yet with powerful
government to give the governance framework and to guarantee the provision of
physical infrastructure and human capital investments fundamental for growth and
poverty reduction. Indeed, to set state and advertise against each other is to miss the
central question: how might they best supplement each other to advance growth and
diminish poverty?
 A public-private development organization is fundamental, particularly in the zone of
health and education. Institutional development has over and over again been
disregarded in the development arrangement talk about, however is presently
perceived to be basic to sustained poverty reduction.
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4.2 ROLE OF EXTERNAL ASSISTANCE IN ASSURING SUSTAINABLE

DEVELOPMENT
4.2.1 Introduction
Today, the Indian economy is no longer dependent on external assistance for the
financing of its plan outlays or for the formation of gross capital. The change in the trend
of external assistance is clear. Dependence on food aid has been eliminated and the
economy has evolved enough to step away from the need to accept linked aid. External
assistance today plays a more constructive role in the funding of large development
projects, social sector projects and institutional capacity building. The policy on external
assistance has therefore been recast to confirm this evolving position of external
assistance and to emphasize the reform focus of India's economic policy. The updated
guidelines released in January 2006 underline the country's reduced dependency on
external assistance.
As per the current policy, the Government of India does not allow assistance in areas
where it has considerable influence. Although bilateral aid is only recognized by the G8
nations, the Russian Federation and the EC, tied aid is not recognized at all. The
channeling of external assistance from smaller partners (other than those listed above) is
aimed only at facilitating greater harmonization of aid across multilateral organizations.
Furthermore, both countries can provide bilateral development assistance directly to
autonomous organizations, universities, NGOs, etc. through a streamlined process.
Directing smaller foreign support to the non-governmental sector enables the sector to
remain an important conduit for implementing development projects and enhances civil
society.
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4.2. Major Findings

Tied aid
India is well aware of the drawbacks of the recipient country's lending by donor
countries. Tied assistance means that loans from a single country must be used for
imports from that country alone. While aid to India was mostly related in the initial years
of planning, India’s reliance on aid has decreased over time and has reiterated its stance
on not accepting tied aid. As of 4 February 2003, India has not obtained any related
external assistance.
Debt servicing
One of the major problems facing policymakers has been the growing burden of debt
Charges for service. This was largely due to the comparatively difficult conditions of
external assistance, both in terms of interest rates and maturity periods.
Efforts to counter this a) progressive reduction of reliance on external assistance and
(b) Changing the emphasis on the acquisition of loans and loans with longer maturities
and with Lower interest charges, please.
Low utilization of aid

The problem of low utilization of external assistance was felt from time to time. This was
addressed through measures like
i) Waiver of DGTD clearance for import of capital goods under all externally aided
projects,
ii) formation of standard bid documents and simplification of other procedures, and
iii) the decision taken in the 1990s to pass on to the states the entire external assistance as
additional central assistance in respect of all sectors and to release advance central
assistance to meet the initial liquidity requirements of state Governments.
It is reassuring that the policies on external assistance followed by India have borne fruit
resulting in better aid utilization and harmonization. Aid utilization has improved from
about 50% in the 1980s to over 90% today.
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Shift in sectoral focus

There has also been a change in the focus of the business. While the emphasis during the
early planning years was on areas such as agriculture, food aid and industrial projects, the
emphasis has now changed, in addition to infrastructure, to social sectors such as health
and education. This move is essentially in line with the promises to achieve the
Millennium Development Goals.
Skewed distribution of external assistance

The system of external assistance in India tends to be biased in favor of a few
governments. Central business / multi-state sector ventures and seven or eight stable
countries account for almost 90% of disbursements. On the other hand, disbursements to
states such as Bihar and the North Eastern and Special Category States are marginal.
States such as Andhra Pradesh, West Bengal and Gujarat continue to be the primary
absorbers of external assistance. These problems need to be discussed.
Composition of external assistance

External aid consists of loans and grants. However, much of the assistance during the
initial planning phase was in the form of interest-bearing loans, but only in the form of
direct grants. Loans accounted for 90 per cent of the assistance receipts in the first 10
Five Year Programs, while the remaining 10 per cent were grants. As a result, external
debt servicing accounted for a substantial proportion of the foreign exchange earnings of
the country. The loan / subsidy mix became more favorable in the 1980s and the grant
portion, which amounted to about 11 per cent during the Second Plan period, increased to
13.39 per cent during the Tenth Plan. The dependency on bilateral sources of funding was
another characteristic aspect of external assistance during the initial years of planning. In
fact, up to the third plan period (31.3.66), loans from multilateral sources - The
International Bank for Reconstruction and Development (IBRD) and the International
Development Agency (IDA) accounted for only 19% of the authorizations, while bilateral
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aid accounted for the remaining 81%. Multilateral sources of funding began to gain
predominance after the 1970s.
Technical co-operation vs. budget support

Another area of discussion in the international forum is the shift of ODA towards
particular grants such as technical cooperation (TC). While TC is welcome, it should be
complementary in that it should transfer valuable expertise and skills and establish
supporting conditions that improve the efficacy of the programme and the effectiveness
of the project, with a focus on cash / budget support. Untying TC and offering it as
budget support could result in savings through competitive recruitment of experts.
Short term Debt Management

Policymakers have exercised due care in keeping short-term debt under management. An
unduly high proportion of short-term debt in total debt poses a potential risk to balance-of
- payment management which, in the event of a sudden shift in international market
conditions or international investor trust in the country, may lead to a severe reduction of
foreign-exchange reserves in the country. The Government of India has always kept a
watchful eye on the build-up of short-term external debt and, as a result, short-term debt
today accounts for just 7.7% of the overall debt, compared to 10.2% in 1991. Prudent
debt management requires not only that short-term external debt be retained at
sustainable levels by its original maturity, but also that long-term maturation
commitments be avoided, in order to hold the overall short-term debt within the residual
maturity at a comfortable pace. This needs to be kept in mind at the time of approval.
Pre-payments
Over the last three-four years, the Government of India has prematurely repaid a large
portion of both multilateral and bilateral sovereign loans under external assistance
programmes. However, it has been noted that some low interest-bearing loans have been
repaid while high-cost loans have remained in our portfolio. Although prepaying low
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interest loans on one hand, we continue to contract high-cost loans like those from IBRD
and ADB. This questions the economic logic and needs to be kept in mind when
formulating future pre-payment proposals.
Cost effectiveness of ADB/IBRD loans

Multilateral assistance today accounts for almost 70% of India's overall assistance. Of
these, 64 per cent consists of non-concessional IBRD and ADB loans at market rate the
grant portion in each of these portfolios is negligible. This sparked a discussion on the
cost-effectiveness of these loans and the justification for keeping these loans in our
portfolio in view of their effects on external debt management. While IBRD and ADB
loans are market dependent and thus expensive, the cost of these foreign loans is still
below that of domestic borrowing. This is for the simple explanation that domestic
interest rates are higher than foreign interest rates. Too much dependency on any single
source of bilateral funding can also be risky. For instance, Japanese loans account for
25% of our sovereign debt portfolio. Indiscriminate borrowing in yen will scale up our
exposure to yen, thereby increasing the currency risk. Therefore, so long as the current
external aid policy of supplementing the Government borrowing with borrowing from
abroad under external assistance continues, the IBRD and ADB loans cannot be
eliminated from our sovereign debt portfolio.
Improving aid effectiveness

At the international forum, the push to harmonize, coordinate and manage development
assistance in order to achieve greater development outcomes has been gaining traction.
At the Paris High Level Forum on Aid Effectiveness held in 2005, donors and partner
countries committed themselves to improving aid delivery by actively leveraging donor
capital to help achieve tangible country-level development outcomes. The Paris
Declaration set the benchmarks for 'scaling up' assistance, both in terms of quality and
quantity. India has endorsed the Paris Declaration as a beneficiary of assistance and is
well placed to face the challenges ahead.
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4.3 POLICIES AND PROCEDURES FOR ACCESSING EXTERNAL

ASSISTANCE: CROSS COUNTRY CONTEXT
4.3.1 Introduction
External assistance has played a major role in India's development process. Although the
share of foreign assistance was less than 10% of the overall public sector expenditure, its
importance lies in the fact that some of the major projects in the different sectors have
been financed by external assistance. In the wake of the liberalisation process, the role of
external assistance has become much more important in view of the broad gap in funding
requirements for the social and infrastructure sectors in order to achieve competitive
strength within the globalised economic system. A large part of foreign assistance also
needs to be channelled to projects for the growth of poorer sections in order to ensure the
active involvement of all communities in the stabilisation of the economy and access to
the necessary benefits. For the project proposals of the Central Ministries / State
Governments, all agreements with multilateral / bilateral agencies shall be signed by the
Central Government, as this is the focus of the Union list. The Ministry of Finance of the
Department of Economic Affairs (DEA) is the nodal department for the procurement and
arrangement of international assistance from multilateral / bilateral agencies and is
responsible for all policy issues related to external assistance obtained by the Government
of India (GOI). It has a role to play in setting limits, if any, for external borrowing sector-
wise or lender-wise, establishing a project pipeline, negotiating external assistance and
controlling implementation. To promote the smooth and rapid flow of external assistance
to the Country some reform steps have been taken from time to time. The GOI’s policy
and procedures for accessing external assistance are described below:
(i) Intermediation/Disintermediation of external assistance: Since April 1993, all

borrowings by the Central Public Sector Enterprises (CPSUs) from multilateral / bilateral
agencies have been direct (without GOI intermediation) on terms negotiated between the
borrower and the lender and authorised by GOI. The borrower also bears the exchange
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risk. Disintermediation was also expanded to grants from multilateral / bilateral agencies
to CPSUs with effect from 14 October 1993 and from bilateral agencies to autonomous
bodies with effect from 30 August 1996. All other loans and grants are covered by the
Union budget.
External aid made available to GOI in the form of loans, loans and grants is part of the
resources generated for the implementation of the schemes and projects included in the
Five-Year Plans. In the Five Year Plan documents, the Planning Commission allocates
funding, including the external aid portion, on an annual basis for each programme.
These allocations include programmes in the Central Sector, the State Sector and
centrally funded schemes introduced by the Member States. Project Management Unit
(PMU) of DEA, communicates with the Planning Commission on the provisioning of
proposals for projects in the central and state sectors. External funding would not bear the
full cost of the programmes. A proportion of the budget is funded. Expenditure not
covered by foreign assistance must be given as parallel support in the budget.
(ii) Terms and Conditions of External Assistance: External assistance obtained from
various multilateral and bilateral agencies shall be offered by the GOI to the Member
States as additional central assistance (ACA) on the same terms and conditions as central
assistance for State plans. These are different from the circumstances by which external
assistance is received from various multilateral / bilateral agencies. In the case of States
not falling under the special category status, assistance shall be granted in the 30:70
combinations of grants and loans. With effect from 1 April 2001 the loan with a maturity
of 20 years shall have an interest rate of 12 per cent and half of it shall have a grace
period of 5 years. For special categories States such as the 7 North Eastern States
(Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland and Tripura),
Sikkim, Himachal Pradesh and J&K, the funds are granted as 10% loans and 90% grants.
The central government bears the exchange risk. In this transformation of external
assistance into ACA, the initial terms and conditions of the assistance are updated. Any
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exception to the general policy shall be expressly informed. The current system for
central assistance for externally assisted projects (EAPs) has developed since 1971. Prior
to that, there was no additionality in central assistance for the EAPs. At that time, it was
felt that, in order to make certain projects more appropriate to the Member States, 25 per
cent of the credit approved should be provided as additionality to the project authorities
over and above usual central assistance. Subsequently, it was thought that this was
insufficient and, as a result, the proportion of central assistance rose to 70% in 1979. In
1990, programmes in the social and agricultural sector were increased to 100%. Since
1992, all sectors have been eligible for an additional 100 per cent.
(iii) Disbursement and release of External Aid: All external assistance paid to GOI by
the external agencies is first obtained by the central government. At the Ministry of
Finance, Department of Economic Affairs, O / o Accounting and Audit Controller. In the
case of direct payment by the External Entity to the supplier / consultant, the roupee
equivalent shall be balanced by the Department of Expenditure against the additionality
owed to the Government of the State. It's on such disbursement.
(iv) Release of Advance ACA: The expenditure on EAPs is initially borne by the
Member States and is subsequently stated to be reimbursed by GOI. A scheme of
advance release of ACA has been in effect since 1993-94 in order to avoid adverse
impacts on the implementation of the project by the Member States due to the limitation
of funds and for the expeditious use of external assistance. Up to 25% of the ACA budget
allocation for EAPs throughout the year shall be made available to the Department of
Expenditure on advice from DEA, usually in the first month of the financial year as
advance ACA. Subsequently, this is adjusted against the State Government’s claims for
reimbursement. For the remaining 3-4 months of the financial year.
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4.3.2 Policy on external assistance since independence
Initial phases of growth in India were characterized by difficulties in the balance of

payments and a scarcity of foreign exchange capital. Planners had to rely on external
assistance to make available sufficient foreign exchange supplies to complement existing
investment capital in the region. External assistance was received from different countries
and foreign organizations in the form of equipment and commodities, technical assistance
in the form of specialist services and training facilities. Assistance was offered as loans,
grants and deferred payment facilities. Some of the key areas of assistance in the early
planning years included community development, irrigation and electricity, industry and
mining, transport and communications, social services, assistance for various projects,
food aid and aid for the import of agricultural commodities.
During the First Plan period (1951-56), India obtained loans and grants from abroad for
Rs.191.75 crores to augment its domestic capital. The goal of the Second Plan (1956-61)
was to establish an industrial base for the economy. The bulk of the foreign assistance
obtained (Rs. 1,430 crores) was therefore geared towards industrial projects. As a result,
the agricultural sector has suffered a setback. Food shortages have started to arise and
demand for food imports has risen sharply. In order to meet this challenge, India has
entered into an agreement with the U.S. Government to assist in the import of food grains
under the P.L. 480 software.
During the second phase of the Programme, India's foreign-exchange reserves were
rapidly depleting and the balance of payments issue arose. In this sense, the Aid India
Consortium was formed in 1958 with 13 countries, the IBRD and IDA as members.
India's Third Plan (1961-66) pursued a more balanced approach to agriculture and
industry. However, this era was marked by droughts and the cessation of assistance for
some time during the war, which exacerbated the problems of the balance of payments.
The Third Strategy stressed self-reliance and concentrated on gradually reducing
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dependency on special types of external assistance. The industrialization policy emulated

an import substitution regime for trade. The total assistance obtained by India during the
Third Plan (including government loans and grants and non-government loans) amounted
to Rs.2,879.75 crores. The use of assistance during this time remained high at around
72%. During the Fourth Plan (1969-1974) the import substitution scheme was further
extended in order to maintain maintenance imports within the limits of the foreign
exchange available. Debt service has been a huge burden and, in the case of some donors,
repayments have also exceeded the aid receipts. While the assistance was received as tied
funds, repayments of principals and interest charges were paid out of free foreign
exchange, with the consequence that a substantial part of the export earnings had to be
used for debt servicing. Help India Consortium offered non-project help as debt relief.
The policy goal of the Fourth Plan was therefore to reduce foreign aid net debt servicing
(including interest payments) to half the current amount by the end of the Fourth Plan and
to eliminate it as soon as possible thereafter. The long-term development scheme aimed
to reduce reliance on foreign assistance by 1980-81. Total assistance receipts for the
Fourth Programme amounted to Rs.4,183.70 crores. Up to the Fourth Programme, the
United States remained India's largest single contributor to external assistance. As the
Green Movement gained traction, the PL 480 was reduced by just over 20% to around 9
percent of the overall assistance from the previous stage. In 1970, the current account
deficit level reached a low of 1.2%, referring to the availability of foreign financing,
much of which was contracted by official creditors and at concessional interest rates. The
first oil shock occurred in 1973, and India reacted well with cautious macroeconomic
management. Imports were practically confined to the amount of exports, and thus all
inflows of workers' remittances and net aid inflows (after changing the gross debt-service
flows) were recovered to build up the reserves. Following the rise in oil prices and the
rapid increase in import prices of some other essential commodities, such as fertilizers
and food grains, India's balance of payments experienced heavy pressure at the beginning
of the Fifth Plan (1974-1979), needing greater external assistance of Rs.5,725.03 crores.
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The reserve status improved towards the end of the Plan period and, encouraged by this
status, imports were liberalized a little in 1976-77 and 1977-78 through the
implementation of the Open General License (OGL), but security policies for the Indian
industrial sector prevented any major loss of imports. The second oil shock happened in
1979. This time, it had a big effect on India's balance of payments, with POL prices more
than doubled over the course of the year. In order to ease foreign exchange strains
following the second oil shock, India obtained a large amount of loans from the
International Monetary Fund. In 1979-80 alone, foreign loans on the Government account
amounted to Rs.973.06.
The Sixth Plan (1980-85) envisaged the prospect of increased assistance from global
agencies and envisaged changes in the disbursement of assistance, inter alia through the
accelerated implementation of the programme. Help receipts amounted to Rs.10,902.69
crores during the Sixth Plan, an improvement of almost 90% over the Fifth Plan period.
During the seventh cycle of the Plan (1985-90), the balance of payments issue emerged.
Controlled depreciation of the therupe was the main mode of payment balance changes
made. However, the results of the devaluation did not succeed and there was a marked
deterioration in India's balance of payments status by 1990. Current account deficits,
maintained mainly by borrowing from commercial sources and NRI deposits, with short
maturities and variable interest rates, resulted in a balancing of the repayment burden and
the size of the external debt reached $83 billion in March 1991. Another notable change
in the 1980s was the relative increase in the IBRD-IDA blend ratio of the World Bank,
which rose from 25:75 in the 1981 financial year to 70:30 in 1989. There was some
change in the ratio of IBRD-IDA loans to 57:43 in 1990. The terms of the IDA assistance
also became more rigid after 1987 and loans became available with a lower maturity of
35 years (from the previous 50 years). In the light of India’s criteria for concessional
investment assistance, these developments have been a matter of concern. From time to
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time, policymakers have stressed the need for debt relief and a softening of the terms of
assistance.
The aid receipts amounted to Rs. 22,695.11 crores during the Seventh Plan and the debt
service payments (main plus interest) made during that time alone consumed 56% of
those aid receipts.
The foreign exchange crisis of the early 1990s was aggravated by the Gulf War that
began in August 1990, leading to a shortfall in exports to West Asia, a loss of remittances
from Kuwait and Iraq, major foreign exchange costs of emergency repatriation from the
region, and, most notably, additional costs for oil imports due to an rise in oil prices. The
Gulf crisis coincided with the recessionary trends in the West that depressed demand for
Indian exports. The volatile political climate at home and the precarious balance of
payments situation have contributed to the deterioration of India’s international credit
scores. Net resource flows on account of official and private credit were not even
sufficient to fulfill the obligations on account of amortization and interest payments. The
amount of foreign exchange reserves fell to just $1 billion in 1990-91. The Reserve Bank
of India had to sell 20 tonnes of gold in May 1991 and pledge another 46.91 tonnes in
July 1991, for meeting the urgent foreign exchange needs and for financing current
account deficits. An imminent foreign exchange crisis loomed large before the Indian
economy, with an unsustainable external debt burden.
India’s response to the 1990-91 crises was to undertake macro-economic reforms and
stay current on debt servicing through borrowing from multilateral sources. As part of the
overall macroeconomic reforms, sweeping adjustments in trade and exchange rate
policies have been implemented and the IMF's medium-term structural adjustment
programme has been approved by the Government. This marked the beginning of a new
age of change for India culminating in the opening up of the Indian economy (Eighth
Plan period 1992-97). During the Eighth Programme, foreign aid receipts increased
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dramatically to Rs. 56,703.45 crores. The proportion of repayments, which amounted to

about 45 per cent of gross external borrowings in the first year of the Eighth Plan,
increased to about 73 per cent by the end year of the Plan. Most of the receipts came from
multilateral sources such as the IBRD, IDA and ADB. As the economy went forward
with its reform plan, the East Asian crisis occurred in 1997. This also coincided with the
start of the Ninth Plan era (1997-2002). Total assistance receipts for the length of the
programme amounted to Rs.71,680.55 crores. Following India's nuclear test in May 1998
and the subsequent imposition of economic sanctions, most bilateral donors have frozen
new assistance to India and have also indicated their reluctance to support new loans
from multilateral agencies for non-humanitarian purposes. This has had an influence on
both World Bank and ADB loans to India. Together with the freeze on bilateral
assistance, the sharp fall in multilateral lending to India drastically reduced foreign aid to
India in 1998-99. The external lending environment remained stable during the tenth plan
period (2002-2007) and the aid receipts amounted to Rs.69,251.98. As of February 4,
2003, India is not availing of any tied external assistance.
Total foreign assistance receipts for the 10 Five Year Plans were Rs.269,723.55 crores.
Loans accounted for 90% of these revenues, while the remaining 10% were grants. As a
result, external debt servicing accounted for a substantial proportion of the foreign
exchange earnings of the country. A change occurred in the 1980s, and the terms of
assistance provided by individual donor countries were gradually relaxed. Assistance
from the United Kingdom, Sweden and the EEC countries came in the form of grants.
The grant portion, which amounted to about 11 per cent during the Second Plan period,
increased to 13.39 per cent during the Tenth Plan. In absolute terms, the rise was
substantial. The sum of the grants recorded a remarkable increase from the Eighth Plan
onwards.
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Summary of observations
 The key issues in the evolution of policy on external assistance are summarized in
succeeding paragraphs.
 One of the major challenges before the policymakers was the rising burden of debt
service charges. This was largely attributable to the comparatively harder terms of
external aid, both in terms of interest rates and maturity periods. Though the
importance of aid could not be undermined, the problem of rising debt service
charges was addressed through gradual reduction on dependence on external
assistance, shifting the focus towards obtaining loans and credits of longer maturities
and lower interest charges.
 The disadvantages to the recipient country of credit tying by donor countries have
generally been recognized by India. (Box 3). For instance, it was realized that though
aid in the form of credits contained a genuine element of assistance in so far as it was
generally made available on softer terms than similar credits obtainable from the
international capital market, and the terms were comparatively favourable as regards
both interest rates and maturity periods, however, most of it was country-tied. Loans
from a particular country had to be utilized for imports from that country alone.
Though in the initial years of planning, aid to India was mostly tied, India’s
dependence on
aid has reduced with time, and it has affirmed its stand on not accepting tied aid. As
of February 4, 2003, India is not availing of any tied external assistance.
 External assistance is composed of loans and grants. However, most of the assistance
in the initial periods of planning was in the form of interest-bearing loans, while only
a fraction was in the form of outright grants. Loans accounted for 90% of the aid
receipts during the first ten Five Year Plans, while only the remaining 10% were
grants. Consequently, the servicing of the external debt claimed a sizeable proportion
of the country’s foreign exchange earnings. Up to the third plan period, loans and
PL480 imports accounted for a major portion of the total authorizations. The loan
grant mix became more favorable from the 1980s and the grant component, which
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was about 11% during the Second Plan period, increased to 13.39% during the Tenth
Plan. This is a positive development.
 Another characteristic feature of external aid in the initial years of planning was the
reliance on bilateral sources of funding. In fact, up to the third plan period (ending on
31.3.66), loans from multilateral sources (IBRD and IDA) accounted for only 19% of
the authorizations, while bilateral aid accounted for the remaining 81%. . It was only
after the 1970s that that the multilateral sources of funding began to gain
predominance.
 The problem of low utilization of external assistance was felt from time to time.
 The Indian economy today is no longer reliant on external assistance for the financing
of its plan outlays or for gross capital formation etc. The change is evident from the
changing pattern of external assistance. The reliance on food aid has been done away
with; the economy has matured sufficiently to move away from the compulsions of
accepting tied aid. External assistance today plays a supportive role in financing
major infrastructure projects, social sector projects, building up the institutional
capacity and in the managing the balance of payments.
4.3.3 Policy on Development Co-operation
Policy announcements on bilateral co-operation

Following the 2003-04 budget announcement, the Government of India reviewed its
bilateral development cooperation strategy in September 2004 to confirm the
liberalization and reform direction of India's economic strategy. Revised guidelines were
released in January 2005 which has superseded all previous guidelines in this regard. The
highlights of the new strategy are summarized below.
Under the existing rules, bilateral development assistance (including grants) is not
applicable to the Government and its subordinate and related agencies (societies, trusts,
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commissions, businesses, organizations, etc.) where the Government has considerable

power.
Bilateral development assistance is recognized from all G8 nations, including the United
States, the United Kingdom, Japan, Germany, France, Italy, Canada and the Russian
Federation, as well as from the European Commission. Non-G8 countries of the
European Union may provide bilateral development assistance to India given that they
provide a minimum annual development assistance of USD 25 million to India. The
Government of India does not recognize related assistance. In spite of the shift in policy,
the financing of all existing programmes and initiatives continued as provided for in the
previous regulations until their completion.
Bilateral assistance shall be accepted if it is in the form of programmes of technical

assistance aimed at improving the awareness and skills of Indian nationals. A part for the
provision of equipment / hardware is permitted if the expenditure on it is negligible
compared to the overall cost of the project. The main focus, however, is on improving the
knowledge and skills of Indians.
Bilateral development assistance can also be obtained by the government if the assistance
is channeled through or co-financed by a multilateral agency and the planned programme/
project is to be introduced by the multilateral agency in compliance with its own rules
and procedures. Such agreements should be established between the participating
multilateral and bilateral agencies as part of their policies. Such co-funded schemes or
initiatives will be controlled by the protocols applicable to the multilateral organisation
spearheading the programme/ project.
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Policy on grant assistance to non-governmental organizations (NGOs), autonomous

institutions and other such bodies
All countries may directly provide bilateral development assistance to autonomous
organizations, universities, NGOs, etc. External development partners may consider
directing such bilateral assistance to projects of economic and social significance only.
A streamlined strategy to promote the flow of bilateral development assistance to non-

governmental organizations and autonomous institutions has also been placed in place.
Bilateral development assistance to these organizations is controlled by the International
Contribution (Regulation) Act, 1976 and bilateral assistance can be given only to those
organizations registered under that Act. Organizations not licensed under the
International Contribution (Regulation) Act should obtain prior authorization from the
relevant authority under that Act. The recipient NGOs, autonomous organizations, etc.
are expected to fill out the specified pro forma and send it to the appropriate external
development partner along with their proposals. DEA does not make any direct
recommendations from NGOs, autonomous organizations, etc. Department of Economic
Affairs collects project proposals for the financing of NGOs, etc. during the year so that
the process is not prolonged. The bilateral development partner forwards the project
proposals to the credit division concerned in DEA when the project concept paper is
ready, accompanied by a pro forma check-list. DEA expeditiously processes project
proposals in a time-bound manner. In April and October of each year, the bilateral
development partner country provides DEA with pro forma II information on the extent
of funding to different organizations and the status of the programme. The bilateral
partner can transfer funds directly to the accounts of the recipient organizations after the
proposals have been approved by the DEA. They will also make their own plans to track
the physical and financial progress of these ventures.
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Procedure for Disbursement and release of external aid

All external aid disbursed by the external agencies to GOI is first received by the central
government in the Ministry of Finance, Department of Economic Affairs, O/o Controller
of Aid Accounts and Audit (CAA&A). The funds flow process in case of Central sector
projects is as follows:
The funds flow process in case of state sector projects is as follows:
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Additional Central Assistance (ACA)

The system for central assistance for externally assisted projects (EAPs) has developed
since 1971. Prior to that, there was no additionality in central assistance for the EAPs. In
1971, it was thought that, in order to make such projects more appropriate to the Member
States, 25 per cent of the credit awarded should be awarded as additionality to the project
authorities over and above usual central assistance. Subsequently, it was thought that this
was insufficient and, as a result, the proportion of central assistance rose to 70% in 1979.
In 1990, programmes in the social and agricultural sector were increased to 100%. After
1992, both sectors have been liable for an extra 100 per cent.
Until recently, external assistance obtained from various multilateral and bilateral
agencies has been handed over to the Government of India as additional central
assistance (ACA) under the same terms and conditions as central assistance for State
plans. These differed from the circumstances under which external assistance was
obtained from different multilateral / bilateral agencies. In the case of countries which do
not come under the special category status, assistance was provided in the 30:70
combinations of grants and loans. For special category states such as the seven north-
eastern states (Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland and
Tripura), Sikkim, Himachal Pradesh and J&K, the funds were transferred as a 10% loan
and 90% grant. The central government was responsible for the exchange risk. In this
transformation of external assistance into ACA, the initial terms and conditions of the
assistance have been updated.
The Government of India approved the recommendation of the 12th Finance Commission
to provide external assistance on the same terms and conditions on which it was received.
Consequently, in the case of new projects signed on or after 1 April 2005, foreign
assistance is moved back-to - back. However, in this system, operating prices and
currency fluctuations are now passed on to the Member States. The countries of the
special category represented and demanded the restoration of the old system for the
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transition of external assistance as ACA on a grant and loan basis of 90:10. Their appeal
was approved and the old arrangement was restored in 2006.
Summary of observations
The key policy objectives being pursued presently are as follows:
 Reliance on external assistance has reduced. Government of India now does not
accept aid in areas where it has substantial control. Bilateral aid is accepted only from
the G-8 countries, the Russian Federation and the EC. 2) Tied aid is also not accepted.
 Bilateral development assistance from other sources is being welcomed only if it is
routed through or co-financed with a multilateral agency. Channelization of external
assistance from smaller partners through multilateral organisations would promote
greater aid harmonisation.
 All Countries can continue to provide bilateral development assistance directly to
autonomous institutions, universities, NGOs, etc through a simplified procedure. It is
appropriate for small size external assistance to be directed towards the NGO sector
as this sector would remain an effective channel for implementation of development
programmes and would strengthen the civil society.
 Priority is given to aid with longer maturity periods and bearing lower interest rates
so as to keep the burden of debt servicing within manageable levels.
 External assistance is passed on to the states on the same terms and conditions on
which it is received (i.e. back to back). The service cost and exchange fluctuations are
passed on to the states. For the special category states, transfer of external assistance
as ACA is done on a 90:10 grant and loan basis.
 State Governments cannot access external aid directly either through bilateral or
multilateral sources. This remains the mandate of the central government.
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4.3.4 Policy on External Assistance 2020-2021
This study provides a brief overview of the essence of external assistance obtained from
multilateral and bilateral sources. Estimates of receipts of external assistance and
principal repayments and interest payments for the years 2019-2020 and 2020-2021 are
summarized in Table 4.1 below:-
Table 4.1: External Assistance 2020-2021

(In crores)
Actuals B.E R.E B.E.
2018-2019 2018-2019 2019-2020 2020-2021
1. Loans 50,609.45 44,673.00 57,016.00 57,557.00
2. Less-External loans for State 14,351.41 12,262.05 17,972.88 15,547.35
Projects
A. Net External Loans (1-2) 36,258.04 32,410.95 39,043.12 42,009.65
B. Cash Grants 833.20 650.00 361.00 400.00
C. Commodity Grant Assistance 229.99 356.00 613.00 412.00
D. Total(A+B+C) 37,321.23 33,416.95 40,017.12 42,821.65
E. Repayment of loans 30,738.77 35,363.00 34,110.00 37,338.00
F. External Assistance (Net of 6,582.46 -1,946.05 5,907.12 5,483.65
Repayments) (D-E)
G. Interest Payment on loans 8,149.62 9,765.00 10,537.00 10,178.00
H. External Assistance (Net of -1,567.16 -11,711.05 -4,629.88 -4,694.35
Repayments & Interest
Payments) (F-G)
In accordance with the new policy guidelines released by the Ministry of Finance on 8
December 2015 on Official Development Assistance (ODA) for Development
Cooperation with Bilateral Partners, it has been agreed that ODA may also be approved
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from other countries. It was also agreed to consider offers for bilateral assistance, in
addition to assistance on the usual path, in the form of special loans (i.e. loans which
have requirements for the procurement of the executing agency from the financing
country).
Bilateral development assistance can also be obtained by the Government if the

assistance is channeled through or co-financed by the Multilateral Agency and the
planned programme/project is to be introduced by the Multilateral Agency in compliance
with its own rules and procedures. Such agreements should be established between the
participating multilateral and bilateral agencies as part of their policies. Such co-funded
programs or projects will be regulated by the procedures applicable to the Multilateral
Organization spearheading the programme/project. A brief overview of the assistance
being extended to various countries and organizations is given below:
External assistance rendered available to India by various multilateral and bilateral

agencies consists of loans and grants. The World Bank provides assistance through its
concessional lending window, the IDA, and market-based lending through the IBRD. The
funding from the Asian Development Bank (ADB) is also market-based. These are the
primary sources of multilateral external assistance to India. Important bilateral sources of
external assistance include Japan, Russia, Germany and the United Kingdom.
(A.) Major Bilateral Donors
CANADA
Nature and details of assistance:

Technical assistance and grants for government to government bilateral projects, and
direct funding to NGOs through small Funds Mechanism.
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Sectors in which assistance is offered:

- Social and Economic Reforms.
- Environment
- Private Sector
Aid policy, including objectives:

The foundation of the development assistance programme of the Canadian International
Development Agency (CIDA) is to promote development in order to alleviate poverty,
ensure long-term sustainability and contribute to a more stable, inclusive and prosperous
environment. The goal of CIDA is to collaborate with developing countries and countries
in transition to build resources that will ultimately meet their own needs. To this end,
CIDA is concentrating its efforts on six priority areas:
- Basic human needs: covering primary health care
- basic education
- family planning
- nutrition
- water and sanitation, shelter
- emergency humanitarian assistance (but not sustained incomes).
Terms and conditions of assistance:

CIDA presently extends assistance in grant form only.
The proposals need to adhere to Country Programme Framework of the CIDA India
Program whose goals and objectives are:
Goals:
* To promote sustainable development in India.
* To contribute to the transition to a mature economic and political relationship between
India and Canada.
Objectives:
* To promote economic and social policy reforms in India.
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* To contribute to India’s capacity to promote environmentally sound development.

* To assist in building a stronger economic relationship between India’s and Canada’s
private sectors.
Major projects assisted: Following are the major projects assisted by CIDA and along
with is the objective in each case:
Oilseeds project Phase II: establishment of an integrated oilseed production, processing
and marketing system with a cooperative structure in the states of Maharashtra, Andhra
Pradesh, Gujarat, Rajasthan, Orissa, Karnataka and Uttar Pradesh.
Fertilizer Project: Enhancing agricultural productivity in the districts of Meerut,
Barabanki and Sultanpur, Uttar Pradesh, by increasing the stock of Potash available for
agricultural use and by promoting agricultural expansion.
Chamera Hydro-electric Project-Stage I: to upgrade NHPC capability in the
construction and management of hydro projects. More precisely, the project consisted of
the design and construction of a 540MW hydroelectric dam complex in Himachal
Pradesh, including an underground power plant with three 180MW turbine generators
and a related 500 km of 400KV transmission lines.
Institutional Cooperation Project: Strengthening the institutional capability of
polytechnic education and training system in the southern region of India and foster
linkages among Indian and Canadian educational institutions and associations.
How to pose projects:

For Bilateral Projects, the project proposals are required to be forwarded to Department
of Economic Affairs (AC Division) through the administrative ministry. The projects of
NGOs outside the bilateral programme, funded through Small Funds Mechanism, are to
be sent to the Development Cooperation Section, Canadian High Commission. The
NGOs should have necessary clearances under FCRA.
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Other information:
Project proposals which include, but are not limited to, a brief overview,
purpose/objectives, scope of work and work structure and programme components,
length of the project, approximate total cost and resources needed by CIDA with year-to-
year specifics, overall plan implementation (if part of the plan), the role and contribution
of GOI and the various agencies involved in the project. The expected outcomes, and in
particular the effects of projects on poverty reduction, gender equality, the environment ,
human rights and child labour, can also be highlighted. The goals of the GOI serviced by
the project may also be indicated.
DENMARK

At present Danish assistance is entirely in grant for local cost projects that also includes
Technical assistance in the form of Services, Consultancy & Training etc.

Assistance is offered in Agriculture, Health & Family Welfare, Rural Drinking Water &
Sanitation, Environment & Forest, Non-Conventional Energy Sources etc. sectors.
Aid policy, including objectives: Assistance is provided for poverty alleviation & Social
development. No loan assistance/Credit line is under operation at the moment.

At present no loan is provided. Grant is provided to the Government of India & the aid is
passed on to States on Standard Terms for state sector projects. For Central PSUs,
decision is taken on case to case basis.
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General requirement/pre-conditions of eligibility for aid:

Grant assistance is concentrated in Tamil Nadu, Orissa, Madhya Pradesh and Karnataka.
As per Danida’s new strategy, assistance will be available only in Karnataka and Madhya
Pradesh for Social Sector projects.
Major projects assisted so far:

(i) National Programme for Control of Blindness
(ii) Leprosy Eradication Programme
(iii) Wind Farm Projects
(iv) Tool-room & Training Centres
(v) Optic Fibre Project

Proposal is posed to the Royal Danish Embassy once in-principle approval of the
concerned Central Administrative Ministry and the State Government (if it is State sector
project) is received.
Other information:
(a) The Government Agreement shall be signed only after the technical and financial
clearance of the project by the appropriate Central Administrative Ministry / State
Government and the provision of the necessary budget in the Central / State Plan and the
approval of GDP / EFC for the Central Sector Project.
(b) No new plans for financing by Denmark are being considered on the basis of the
sanctions imposed on them following the nuclear tests carried out by India in May 1998.
However, Denmark has agreed, in the light of its New Strategy for Development
Cooperation, to grant assistance in the health sector and 're-open' existing programmes in
the light of the Private Sector Development Program and the Mixed Credit Schemes.
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EUROPEAN COMMISSION (EC)

EC assistance is entirely in the form of grants that include technical assistance in the form
of Monitoring and Evaluation, Consultants, Training, etc.

EC assistance is offered in Agriculture, Horticulture, Watershed Management, Irrigation,
Environment, Primary Education and Basic Health sectors (no order of preference). As
per recent changes, EC assistance will be in three sectors – Education, Health and
Environment.
Aid policy, including objectives: EC assistance is being provided for Poverty

Alleviation and Social Sectors. Due to change in their strategy, at present, EC is funding
Sector Development Programmes instead of individual projects.
Terms and conditions of assistance: EC assistance is entirely in the form of grant.

However, grant provided to Government of India is passed on to States on Standard
Terms for State Sector projects.

Tank Irrigation Systems in Tamil Nadu Phase II.

The approval of the Central Administrative Ministry concerned shall be obtained for
State sector projects. Governments involved in EC assistance must aim to be included in
the Business Investment Plans of the three sectors visz. Education, health and the
environment, jointly prepared by the EC and the Ministry of Administration concerned.
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Other information:
Government agreement is signed only after Technical and Financial clearances of the
project by the concerned Central Administrative Ministry/State Government and
provision of requisite budget in the Central/State Plan and PIB/EFC approval in case of
Central Sector projects.
FRANCE

French assistance is primarily in the form of a loan for products and services of French
origin. No local expenses are financed under the French package. The French
Government has been extending development assistance to India since 1968. French
assistance shall be given as treasury loans for which the signing of an agreement is
necessary. The signing of the FP between the two Governments indicates the dedication
for certain duration as well as for prospective projects to be financed under the Protocol.
French assistance is linked to the supply of goods and services from France. As of 04-02-
2003, India has not been given tied external assistance.
Sectors in which assistance is offered: The assistance is offered in sectors like

Environment, Urban Water and Sanitation, Agro-food industries, Fisheries etc. Other
areas in which French have so far assisted is in procurement of equipment for hospitals
and Railways.

French aid is tied to imports of French goods and services. French commitments are
made for specific projects where contracts are awarded to French companies. Local costs
are not financed under French aid.
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French assistance is usually given in the form of a 50:50 combination of soft treasury
loans and export credits. The treasury loan shall have an interest rate of 0.47 per cent
repaid over 30 years, including a grace period of 10 years. Export credit is available at the
OECD Consensus rate. However, the governor. India transfers assistance to States under
the Standard Terms for the State Sector programme. After the project authority (PA)
concerned has properly approved the invoices for the equipment / study completion, the
French Government shall pay the supplier directly. However, PAs are required to deposit
the required counterpart rupees equivalents (for foreign exchange issued / paid by the
French Government) in the account of O / o CAA&A. In the case of State Sector
programmes, this amount is recovered by O / o CAA&A through the notional release of
Additional Central Assistance (ACA). In other situations, PAs are expected to deposit
this amount with O / o CAA&A.

Aid is tied to imports of French goods & services. Local cost funding is not available.
There is no regional priority in case of French aid.

(i) Rourkela Steel Plant modernization
(ii) Dulhasti Power Project
(iii) Assistance to NALCO
(iv) Supply of equipment to Sanjay Gandhi P.G. Institute of Medical Science
(v) Namchi Hospital, Sikkim

The projects are posed by the Department of Economic Affairs after the concerned State
Govt. (in case of State Sector projects) and the line Ministry recommends/approves the
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project and all necessary internal clearances and necessary budgetary provision are
confirmed.
GERMANY

Assistance shall be both in the form of a loan and a grant. Since 1958, the Federal
Republic of Germany has been providing financial and technical assistance to India.

With the overall objective of poverty alleviation, Indo-FRG bilateral cooperation focuses
on rural development and agriculture, human capital development, in particular health
and education, including vocational training, cooperation in the fields of research, the
environment, infrastructure, in particular power and transport, finance and private
industry (especially small and medium-sized enterprises)

German assistance is limited to seven countries in India, namely Maharashtra, Madhya
Pradesh, Karnataka, Rajasthan, Himachal Pradesh, Orissa and West Bengal. Germans
insist on more involvement of NGOs, levying and increasing tariffs, consumer
engagement, appropriate staffing, ample budget allocations and reforms in the power
sector.

Financial assistance shall be given as a soft loan, grant and commercial loan. The soft
loan is available at an interest rate of 0.75% p.a. For a payment period of 40 years, with a
grace period of 10 years. The loan also bears a commitment fee of 0.25 per cent of the
outstanding sum. Commercial credit shall be issued at the prevailing market rate with a
repayment period of 10 years, with a grace period of 5 years. Technical assistance is
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given in the form of direct grants. However, the Government of India grants loans and
mixed loans to states on regular terms for state sector projects and grants (post 1994) are
handed over to states as pure grants.

The projects have to undergo appraisal procedures by KfW in the case of Financial
Cooperation Projects and by GTZ in case of Technical Cooperation projects.

(i) Nevyeli Lignite Corporation (NLC)-II & III
(ii) NLC Mine-I & Thermal Power Station-I Expansion
(iii) Korba Thermal Power Station
(iv) Dadri Thermal Power Station
(v) Credit line for Import of Capital Goods
(vi) Uran Combined Cycle Power
(vii) Credit Lines to HUDCO, HDFC, NABARD, NSIC, ICICI & IFCI
(viii) Ramagundam Thermal Power Station
(ix) Ramagundam Open Cast Mine
(x) Rajasthan Rural Water Supply
(xi) Import of Fertilizer
(xii) Pulse Polio Immunization
How to pose projects to the donor:

The project proposals satisfying the policy and conditions mentioned above should be
routed through the Administrative Ministry to the Ministry of Finance, Department of
Economic Affairs with necessary approvals/clearances from the concerned authorities.
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Other information:
After Pokhran-II in 1998, Germany has not made any fresh commitments for financial
cooperation assistance. However, for technical cooperation fresh commitments are being
made. Recently, German Govt. has lifted the sanction, and the annual aid talks is
expected shortly for fresh Commitments.
ITALY

There's a $100 billion pledge. Lira, out of which there are 50 billion. Lira has been
allocated to NSIC to create an open credit line for financing the supply of capital goods
and related technical assistance for the growth of Indian Small and Medium Enterprises.
Out of this, the 10 billion credit line. Since then, Lira has been operational since
17.7.2000. The balance is 50 billion. Lira would be used for the "Water Supply and Solid
Waste Management" project in West Bengal. There is an offer of 15,4 billion Italian Lire
as a technical grant to be used for projects in the fields of education, health , the
environment and security and development of children and women. The Italians have
also provided 20 billion Italian Lira grants to help introduce poverty alleviation
programmes in India.
Sectors in which assistance is offered: There is no order of preference. However,

assistance is being offered in the sectors of Water treatment, environmental protection
and infrastructure with a positive environmental impact, development of small and
medium enterprises.
Terms and conditions of assistance: The loan of 50 billion It. Lira for the West Bengal
project will carry an annual interest rate of 0.5% to be repaid in 35 years including a
grace period of 24 years. (The interest rate for the NSIC loan of 10 billion It. Lira will be
0.5% to be charged half yearly for 35 years including a grace period of 14-15 years.)
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However, GOI passes on the assistance to States on standard terms for State Sector
Projects.

There is no regional priority for Italian assistance.

(i) Namrup Fertilizer Plant
(ii) Thal Fertilizer Plant
(iii) HBJ Pipeline
(iv) Farakka STPS-II
(v) Telephone manufacturing Projects at Naini and Bangalore
(vi) ONGC Gas Lift at Bombay High
(vii) Gas Development Project of ONGC.

Proposal is posed to the Italian Embassy by the DEA only after receipt of in principle
approval of the concerned Central Administrative Ministry and the State Govt. (if it is a
State sector project).
JAPAN

Japanese aid is primarily in the form of loans. Japan has been providing financial
assistance to India's development programme since 1958. Initially, Japanese assistance to
India was channeled through the government-owned Export-Import Bank of Japan (J-
EXIM). During 1975-76, assistance was channeled through the Japan Overseas Economic
Cooperation Fund (OECF). From 1976 to 77, both project and product assistance was
channeled via the OECF. With the combined impact and the resulting new organisation,
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Japan Bank for International Cooperation (JBIC) has become a conduit for both ODA
operations and the Government of Japan's international economic operations. Japanese
ODA loan assistance to India is received through JBIC and grant assistance and technical
cooperation (TC) is received through the Japan Foreign Cooperation Agency (JICA).
Japan is India's biggest bilateral donor. Since 2003-04, India has been the largest
recipient of Japanese ODA loans. In the 2006-07 fiscal year, the Government of Japan
allocated Yen 184,893 billion (approx. Rs. 7,025,93 crores) to 11 projects in India. This
is the largest ever contribution made to India by the Government of Japan in a single
financial year. Currently, 55 projects are underway with Japanese loan assistance. The
loan amount committed for these projects is Yen 858.859 billion (i.e. Rs. 28.342.35
crores at current exchange rate). The accumulated Japanese ODA loan to India reached
Yen 2437.43 billion (Rs. 85.456.3 crores approx. at the current exchange rate) on a
commitment basis until 2006-07.
Priority Sectors for ODA loan:

Infrastructure sectors like power, roads and bridges, water supply and sanitation, urban
transport, and environment and forests are the priority sectors for Japanese ODA loans.
Procedure for consideration of proposals:

The plans of the state governments must be routed through the central ministries. These
are prioritized by inter-ministerial meetings and are proposed to the Government of
Japan. JBIC is responsible for a fact-finding mission followed by an evaluation mission.
Projects for the year are chosen for the annual meetings between the Governments of
India and Japan. Following the evaluation, the Government of Japan has made
commitments to yen loans for projects.
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Rolling Plan:
The concept of a Rolling Plan has been introduced from the year 2006-07 in the system
of ODA loans from Japan. This provides a medium term plan of action of a central
ministry, according to its sectoral and regional priorities, to produce a roadmap for 3 to 4
years for the critical utilization of ODA. In the long run this helps to optimally and
systematically channel ODA funds towards the achievement of national priorities.
Double Track Mechanism:

The Government of Japan has recently initiated a double-track mechanism for ODA loans
to India. This allows DEA to make proposals to the Government of Japan twice a year
instead of the earlier practise of bringing forward proposals in April / May and securing
the loan agreements signed by the end of March next year. Fast track would allow mature
proposals to be evaluated by JBIC by May / June and for loan agreements to be signed by
the end of August of the same financial year.
Grant Assistance from Japan:

Government of Japan through JICA provides grant aid for construction of facilities and
procurement of products and services required for development projects. By way of
Technical Cooperation, JICA provides approximately Rs. 35-40 crores to India in a
financial year. The main components of TC are:
i) Technical cooperation projects,
ii) Development studies,
iii) Dispatch of experts,
iv) Training of Indian government personnel.
The Government of Japan also provides small assistance to Indian NGOs under its
Grassroots Funding Program through the FCRA path. The Japanese Embassy coordinates
this operation and the DEA grants permission for the financing of NGOs in compliance
with the current guidelines. The Government of Japan's Grant in Aid Scheme was
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suspended following Pokharan-II in May 1998. Since then, this has been revived in 2003.
Since August 2003, four projects with JICA grant assistance have been implemented. No
programmes under grant assistance are currently underway.

Power, Fertilizers, Telecommunication, Railways, Industry, Irrigation, Ports,
Environment and Health etc.

To support efforts of the developing countries towards establishing a more integrated and
equal world society.

Soft loans, which are mostly project tied, carry an interest rate of 1.8%. For general
environmental projects, the interest rate is 1.3% while for special environment projects it
is 0.75%. The tenure of loans is 30 years including the grace period of 10 years for the
first two categories and 40 years for the special environment category.
Present Terms and Conditions of ODA loans:

Japanese ODA loans to India are "unbound loans." They're routed by JBIC. ODA loans
are often expected at an interest rate of 1.3 per cent per year for general ventures with a
30-year term, including a 10-year grace period. For environmental initiatives, the interest
rate is 0.75 per cent per year with a term of 40 years, including a grace period of 10 years.
Apart from these regular terms and conditions, Japan's ODA to India provides a variety
of options for different types of projects, with interest rates varying from 1.3 per cent per
year to 0.5 per cent per year and repayment periods ranging from 30 to 15 years.
Ashok Kumar 127

General requirements/pre-conditions of eligibility for aid:

Japanese loan assistance is available for financing upto 85% of the project cost either in
foreign exchange or local cost.

1. Nagarjuna Sagar Hydro Electric Project
2. Telecom Project
3. Thal Vaishet Fertilizer Project
4. Bombay Sub Railway Modernization Project
5. Calcutta Metro Railway Project
6. Ammonium Sulphate Fertilizer Project
7. Anpara ‘B’ Thermal Power Project
8. Anola Fertilizer Project
9. HBJ Gas Pipeline Project
10. Assam Gas Turbine Project
11. Srisailam Left Bank Power Project
12. Raichur Thermal Power Project
13. Tourism Development Project
14. Mysore Paper Mills Project
15. Gandhar Gas Based Power Project
16. Indira Gandhi Nahar Project
17. Anpara Power Transmission System Project
18. Power System Improvement & Small Hydro Project
19. National Highway Projects
20. Ajanda-Ellora Conservation & Tourism Development Project

Each year, the State Governments and the Central Ministries are invited to send proposals
for projects to the Government of Japan. Following receipt of the project proposals
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properly recommended by the administrative ministries, the same shall be reviewed in

consultation with the Ministries and the project authorities. A list of projects is then
prepared and sent to the Government of Japan / JBIC for assistance.
Other information:
Since 1993-94 for the OECF loan package, all procurement is on general untied basis. No
price preference to indigenous bidder under ICB is permitted.
KUWAIT

The assistance from Kuwait Fund has been both in the form of loan and grant

Kuwait Fund is interested in Power & Infrastructure Sectors.

The purpose of the Kuwait Fund is to provide assistance to developing countries in their
efforts towards economic growth, in particular by providing them with the loans needed
to promote the implementation of their development programmes. Funding is limited to
50 % of the cost of the project.

The loans under Kuwait Fund carry interest at the rate of 3.5% to 4.5% and a service
charge of 0.5% per annum.

1. Kalinadi Hydro Electric Project Stage-I, Karnataka
2. Anpara ‘A’ Thermal Power Project, U.P
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3. Thal Vaishet Fertilizer Project

4. South Basin Gas Development

The proposals would be posed to Funding Agencies after their receipt from the concerned
Administrative Ministry along with all necessary clearances and with adequate provision
for counter funding.
NETHERLANDS

Netherlands assistance is in grant form for local cost projects, which also includes
Technical assistance in the form of Service, Consultancy, training etc.

Assistance is offered in Environment, Drinking Water Supply, Irrigation and Water
Transport sectors. In addition, assistance is being provided under Education and
Agriculture sectors.

Netherlands Assistance for poverty alleviation and social sectors is given. As a result of
recent changes in the policy of the Netherlands Government, the Dutch assistance will
henceforth be concentrated in a few countries of India. In addition , the Project Approach
would replace the Sectoral Approach to Development Cooperation. The selected sectors
will be consulted by the Governments of the State.

Loan from the Netherlands has an interest rate of 2,5% and is to be repaid in 40 years,
with a grace period of 10 years. All loans and grants given to the Government of India
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shall be transferred to States under Standard Terms for State Sector Projects. Decisions
are made on a case-by - case basis for central PSUs. The chancellor. The agreement shall
be signed only after the technical and financial approval of the project by the Central
Administrative Ministry / State Government concerned. and the provision of the
appropriate budget in the Central / State Programme. Money is expended by the Member
States only on receipt of audit certificates and the State Government shall be reimbursed
for this expenditure.

Grants assistance is concentrated in Kerala, UP, Andhra Pradesh, Karnataka & Gujarat.
Due to recent changes in the policy of the Netherlands Govt., the States prioritised for
assistance are Gujarat, Kerala and Andhra Pradesh.

(i) APWELL
(ii) Kerala Rural Water Supply Scheme (Pavaratty)
(iii) Karnataka Rural Water Supply Scheme (RWSS)
(iv) UP RWSS Sub Project VI & VIII
(v) Gogha RWSS
(vi) Gujarat Health Care Project
(vii) Mahila Samakhya Phase II
(viii) Ganga Action Plan Support Project Phase II.

Project Proposals are posed to the RNE by the DEA only after receipt of in principle
approval of the concerned Central Administrative Ministry and the State Govt. (in case of
State projects).
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NORWAY

Normally Norwegian assistance is in the form of grant.

Earlier Norwegian assistance was concentrated in the social sector. In 1990, the
Norwegian Government took a decision to gradually reduce aid to India and to shift their
focus on the industrial sector. They, however continue to give priority to issues relating to
the development of women and environment.

The policy of the Norwegian Government on assistance to India has undergone drastic
change since 1991-1992. Previously, about 60 per cent of the assistance allocated to India
was geared towards the social sectors and the eradication of poverty. However, they have
now taken a decision to withdraw from these sectors and to focus instead on institutional
cooperation and the promotion of their assistance in the environmental sector and the
empowerment of women. The amount of Norwegian assistance to India has decreased to
almost one third of what it used to be in 1990. As compared to N.Kr. 140 million in 1990,
it was N.Kr. 45 million in 1995. The new guidelines for development cooperation with
India adopted by the Norwegian Parliament would concentrate on education, child labour
and the environment. Allocations to India will be funded by the Regional Fund for Asia
of NORAD. Efficient Sector Programs will be phased out progressively. The global funds
for Industrial Development Cooperation will be open for India comprising financing of
mixed credit schemes and Investment support.
Major projects assisted:

(i) Fisheries Grants
(ii) Orissa Environment Programme
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(iii) Children’s Project ICDS

(iv) Women’s Project
(v) All India Hospital Post Portum Programme.
(vi) National Leprosy Eradication Programme

After getting all the necessary clearances from the administrative Union
Ministry/department concerned and the State Government, Planning Commission, MEA,
MHA and provision of budget, DEA poses the project to the donor.
Other information:
As an immediate reaction to Pokhran-II, Norway decided to freeze all aid to India except
those directed towards Poverty Alleviation Programmes. Norway has lifted the sanctions
since 18.10.2000.
SAUDI

All Saudi fund assistance, till date, has been in the form of loan.

The Fund provides loan for projects in Energy, Industry, Agriculture, Transport and
Communication Sectors. It has no geographical or sectoral limitations.

The basic purpose of the Saudi Fund is to engage in the funding of development projects
in developing countries through the granting of loans. Focus is focused on development
programmes that facilitate the social and economic well-being of citizens in low-income
countries. SFD assistance has a high grant feature and is not related to procurement. The
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Fund considers the following points before granting loans: (a) that the project contributes
to the economic and social well-being of the borrowing country; (b) that the amount of
the loan does not exceed 5 per cent of the total capital of the Fund and 50 per cent of the
cost of the project; (c) that the total amount of the loan to any country shall not exceed 10
per cent of the capital of the Fund at any time.

The Saudi Fund loans carry an interest rate of 3 to 4 percent per annum. These loans are
repayable over a period of 20 years including an initial grace period of 5 years.

1. Srisailam & Nagarjunasagar Hydro Electric Power Project (AP)
2. Ramagundam Thermal Power Project Stage-II (AP)
3. Nhava Sheva Port Project.

Administrative Ministry alongwith all necessary clearances and with adequate provision
SWEDEN

After 1976, Swedish Assistance is in the form of a 100% grant and is mainly focussed on
the social and energy sectors. In addition to grant assistance, Swedish Government has
extended soft loans for large power sector projects.
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The broad areas of Swedish assistance are poverty alleviation, primary education, health,
environment, energy saving, consultancy, and other activities aimed at encouraging
sharing of experiences and expertise between India and Sweden.

The strategy for the period 1997-99 focused on poverty alleviation and infrastructure.
Sweden primarily concentrated its assistance in Rajasthan, Tamil Nadu, Orissa and
Himachal Pradesh. However, it has been decided that a certain geographical spread
would be considered by the Embassy while initiating and identifying new projects.

Assistance is provided both in the form of loan and grant. Govt. of India passes on the
assistance to states on Standard Terms for state Sector projects.

(i) Social Forestry Project Tamil Nadu
(ii) Social Forestry Project Orissa
(iii) Social Forestry Project Bihar
(iv) Uri Project
(v) Chandrapur Pedghe HVDC
(vi) Lok Jumbish (Education Rajasthan)
(vii) ICDS.

After getting all the necessary clearances from the administrative Union
Ministry/Department concerned and the State Government, Planning Commission, MEA
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Other information:
As an immediate reaction to Pokhran-II, Sweden concluded its three-year Development
Cooperation Agreement with India (1997-99) for Sw. Kroner 900 million (Rs. 450 crore),
with the assumption that funding from SIDA to India will only be available for ongoing
projects. The Swedish Government has now agreed to draw up new guidelines for
Sweden’s development cooperation with India. A cumulative assistance of SEK 75-100
million per year is envisaged. This assistance would exclude construction credits for
environmental initiatives.
SWITZERLAND

At present Swiss assistance is available in the form local cost grants and technical
assistance.

Improved land use, dairy farming and livestock production, rural cottage industry, human
resource development & research, environment and renewable energy sources.

Assistance for poverty alleviation, human rights, decentralisation and promotion of civil
society.

At present loan is not available. Grant is available to the Government of India and the
same is passed on to States on standard terms for State Sector projects.
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Although there is no regional priority as such, Swiss assistance is confined to the
Southern parts of India for dairy development and improved land use.

(i) National Sericulture
(ii) Tassar Silk
(iii) NABARD

Proposal is posed to the Swiss Embassy only after receipt of in principle approval of the
concerned Central Administrative Ministry and the State Govt. (if it is a State Sector
project).
UNITED KINGDOM (UK)

The Government of the United Kingdom (UK) has given bilateral assistance to India
since 1958. The UK is currently the main external bilateral development partner in terms
of grants. UK aid is channelled into the Department for International Development
(DFID), the Government of the United Kingdom. Bilateral assistance from the United
Kingdom is offered in the form of grants by FC (routed via the GOI budget) and TC,
which includes direct payment by DFID for consulting services, experts, training, etc.
DFID also offers assistance in the social sector through various multilateral organisations
through Trust Funds with the World Bank, ADB, UNICEF, UNDP, etc. 33. 45 per cent of
DFID’s portfolio focuses on major national programmes such as Sarva Shiksha Abhiyan
(SSA), the National AIDS Prevention Program, Polio Eradication, Reproductive & Child
Health (RCH-II). The DFID has increased its grants to India to GBP 300 million by 2008.
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Priority Areas:
The priority areas of UK assistance are mainly in the social sectors viz. health and family
welfare, rural development, environment, slum development, education and programmes
relating to achieving the Millennium Development Goals (MDGs).
Priority States:
DFID has chosen Andhra Pradesh, Madhya Pradesh, Orissa and West Bengal as its
priority states. DFID also supports local NGOs/Civil Society Organisations (CSOs)
projects through Poorest Areas Civil Society (PACS) and Orissa Civil Society Poverty
Programme (OCSPP). The funds for NGO projects are disbursed by DFID to the
concerned NGOs.

The Government of United Kingdom grants the aid in various sectors such as Education,
Slum Improvement, Health & Family Welfare, Coal, Power, Forestry & Renewable
Natural Resource.

British assistance is provided in the priority states viz. West Bengal, Orissa, Karnataka &
Andhra Pradesh and their objective is to make progress towards elimination of poverty in
India.

Assistance granted by the Government of United Kingdom is in the form of grant only.

The Department for International Development (DFID) offers assistance in the fields of
forestry, slum improvement, energy conservation, education, sustainable natural
resources, health and family welfare only. DFID also has priority states where assistance
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is mainly provided. These states are West Bengal, Orissa, Karnataka, Andhra Pradesh.
DFID is likely to take Madhya Pradesh as their priority state in the immediate future.

(i) Andhra Pradesh Energy Efficiency
(ii) Eastern India Rainfed
(iii) Polio Eradication Programme
(iv) Andhra Pradesh District Primary Education
(v) Western India Rainfed Farming.
(vi) Cuttack Urban Services
(vii) Andhra Pradesh Urban Services for the Poor
(viii) A.P. Rural Livelihoods
(ix) Partnership for Sexual Health in A.P., Gujarat, Kerala & Orissa
(x) Polio Eradication Programme, 2000
(xi) Shiksha Karmi Project Phase III
(xii) W.B. District Primary Education (Expansion Phase)
(xiii) Lok Jumbish Project Phase III
(xiv) Revised National TB Control Project, AP

The proposal received from State Government/Central Administrative Ministry, is posed
to British High Commission for obtaining the grant assistance from the Govt. of United
Kingdom.
UNITED STATES OF AMERICA (USA)

The aid consists primarily of Development Assistance (DA), Technical Assistance (TA)
and Food Aid. India has been one of the largest recipients of US assistance to Israel and
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Egypt. US assistance is channelled primarily through the US Agency for International

Development (USAID). Currently, US assistance comes in the form of grants and is
available for the implementation of projects. Approximately 30 to 40 per cent of the
assistance is given by the Government's receipt of the budget. India and the rest are
extended as technical assistance. Food aid under PL 480 is provided directly to some US
voluntary organisations, such as CARE, CRS and CWS, for the implementation of
various programmes.
US bilateral development assistance to India began in 1951 and until March 2006 total
assistance to India amounted to approximately US$ 14.7 billion. The assistance consists
primarily of development assistance, agricultural goods and technical assistance. US
assistance is predominantly administered by the US Agency for International
Development (USAID). The assistance currently being extended by USAID is entirely in
the form of grants, both in the form of grants via the budget and technical assistance.
Initially, the main thrust of US bilateral development assistance to India was on projects
designed to reinforce key institutions and shift money for infrastructure programmes in
agriculture and social forestry. Since mid-1980, however, the emphasis has been
diversified to include science and technology, with a strong focus on the
commercialization of technology. Health and family services and emergency recovery
were also included in the top priority regions.
The main priority areas for development assistance from the US are:
1) Economic Growth - Financial market reforms, state fiscal reforms, urban financial
management;
2) Health: Fertility reduction, reproductive health, family health, prevention of
HIV/AIDS and infectious diseases, child nutrition;
3) Environment & Energy - Better access to clean energy and water, power distribution;
4) Disaster Management - To increase capacity in the Indian public and private sectors in
Ashok Kumar 140

all phases of the disaster cycle and thereby support the initiatives and efforts of the
Ministry of Home Affairs to usher in a new culture of disaster prevention.

At present the priority areas of US assistance are:
(a) improvement of financial and regulatory environment;
(b) increase productivity of Indian enterprises;
(c) promotion of smaller & healthier families, and
(d) containment and prevention of AIDS/HIV.

Initially the main thrust of US assistance to India was focused on projects that were
designed to strengthen institutions and transfer of resources for infrastructure programs
and social forestry. Since Mid 1980, the priority has been diversified to include science
and technology dimension focusing specifically on commercialization of technology.

The US assistance comes only in the form of grant.

The general requirement for qualifying a project for USAID assistance is that the project
should conform to the priority areas of USAID. Generally there are no specific pre-
conditions for consideration of assistance for any project under USAID.

1. Innovation in Family Planning Service in UP M/o H&FW
2. Green House Gas Pollution Prevention IDBI/NTPC
3. Prog. for Advancement of Commercial Tech. ICICI
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4. AVERT-AIDS/HIV Prog., Maharashtra M/o H&FW

There is no clear procedure for the submission of USAID ventures. Usually USAID
introduces new priority projects in coordination with the administrative ministries /
implementing authorities. The proposals would then be forwarded to the Department of
Economic Affairs by USAID for consideration and approval. The Department of
Economic Affairs shall consult in depth with various departments, such as administrative
ministries / implementing authorities, the Ministry of External Affairs, CAA&A and the
Department of Revenue, where applicable. The project agreement and project documents
are signed with USAID, depending on the policy of the Government of India.
(B.) Major Multilateral Donors
ASIAN DEVELOPMENT BANK (ADB)

Assistance shall be given in the form of a loan and technical assistance. ADB is a major
regional financial institution and India's capital stock subscription is the fourth highest
among all member countries after Japan, the United States and the People's Republic of
China. While qualified to borrow on the basis of the requirements laid down by the ADB,
India voluntarily refrained from borrowing initially. However, with a view to broadening
its capital, it was agreed to start borrowing from ADB in 1986.

The assistance is offered in Energy, Transport and Communications, Financial, Social
Infrastructure, Housing and Industry etc. The major areas of lending by the Bank include
the following sectors:
 Transport & Communications
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 Energy
 Financial
 Multi-sector projects
 Industry and non fuel minerals
 Social Infrastructure, and
 Irrigation.
Social and economic development activities aimed at improving the welfare of the people
of the region – to foster economic growth - reduce poverty - support human
development– improve the status of women, and protect the environment.

Ordinary Capital Resources comprising of subscribed capital reserves and funds raised
through borrowings Normally repayable in 20 years including grace period of 5 years;
carry a variable lending rate of interest which varies from six to seven per cent. In
addition, commitment fee of 0.75% on undisbursed loan on graded scale and front end
fee of 1%.
General requirements/pre-conditions of eligibility for aid:

It should be within the framework of Strategy of ADB.

Public Sector
1. Railways
2. Unchahar Thermal Power Ext.
3. Second North Madras Thermal Power
4. Coal Ports
5. National Highways
6. Karnataka Urban Infrastructure Dev
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7. Rajasthan Urban Infrastructure Development Project

8. Karnataka Urban and Coastal Environmental Management Project
9. MP Public Resource Management Program
10. Gujarat Public Sector Resource Management Program
Private Sector
11. Industrial Energy Efficiency
12. Karnataka Urban Infrastructure Development (HDFC loan)
13. Power Transmission Sector Project
14. Renewable Energy Development
15. ICICI
16. IFCI
17. Housing Finance (NHB)
18. Housing Finance (HUDCO)
19. Housing Finance (HDFC)
20. Mumbai Port Trust
21. Chennai Port Trust
22. LPG Terminal
23. HUDCO
24. ICICI
25. IDFC
ADB assistance is generally available for projects being implemented by Central

Ministries, State Governments and of Central Public Sector Undertakings and reputed
financial institutions. The Bank extends assistance to those projects which meet the
Bank’s requirements on ‘economic’, ‘financial’ and ‘technical’ aspects and within the
policy and objectives framework defined by the Bank.
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The project pipeline is being discussed with the ADB Country Program Mission – usually
for a period of three years. It is subsequently verified each year by the Country
Programming Mission, sometime in November or December for the following year. Both
plans for projects shall be considered in coordination with the Administrative Ministries
to ensure other internal clearances, such as EFC, GDP and CCEA, MoEF, etc. in the case
of projects in the Central Sector. In the case of State ventures, the Governments of the
State shall confirm the availability of counterpart rupee funds. The assistance to the
Central Public Sector Companies is dis-intermediated, i.e. directly against the
Government of India Guarantee. Government of India charges guarantee fee for early
repayment of principal and interest. In such loans, GoI is not allowed to make payment
for commitment and interest payments and foreign exchange risk is not to be borne by
PSUs.
Other information:
The project cycle of ADB project is described below:
Identification – Projects are identified and reviewed with the representatives of
Government of India and other concerned executing agencies in which definition of
project goals, objectives, principal issues, general scope and time frame are broadly
discussed.
Project Preparation – After identification, ADB extends a Technical assistance for
project preparation to establish a project after examining the economic, financial,
technical and institutional aspects of the project.
Appraisal – The Bank in consultation with Government of India and the project
authorities, mounts a mission to review the project comprehensively. At this stage, the
various conditions and covenants, project activities, amount of loan and other
procurement issues are discussed and finalized.
Loan Negotiation – Once the project has been appraised, loan negotiation takes place,
generally in ADB’s Headquarters in Manila. Indian negotiating team consists of
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representatives of Department of Economic Affairs, administrative Ministry and

executing agencies. All conditions are thoroughly discussed and agreed to. At the end of
negotiations, minutes of the Loan negotiations are signed and draft loan agreements
approved.
Loan signing and effectiveness – All projects are discussed and approved by the ADB
Board with simple majority. India is represented by an Executive Director who represents
India, Bangladesh, Lao PDR, Bhutan and Tajakistan. India has a voting power of 5.516%
of the total voting power of members of ADB. After the loan is approved, the loan
agreement is signed, normally in Manila. The Agreement is signed by the Indian
Ambassador in Manila on behalf of Government of India, State Government and Central
PSUs/Financial Institutions. After obtaining legal opinion from the Department of Legal
Affairs and the State Governments/PSUs/Financial Institutions on Loan, Guarantee
Agreement and the Project Agreement, the loan is declared effective within 90 days after
signing of the Agreement.
Project execution/Evaluation – ADB and the Department of Economic Affairs monitor
the project execution closely. Tripartite portfolio review meetings are held from time to
time amongst the executing agencies, ADB and DEA in which representatives of
administrative ministries are invited. The Bank also sends its mission to the project for
review of project. Mid-term review is also carried out by the Bank. Once the project is
closed, the Bank brings out the project completion report and project performance audit
report.
Organization of Petroleum Exporting Countries (OPEC)

The OPEC (Organization of Petroleum Exporting Countries) Fund assistance, till date,
has been only in the form of loan.
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The OPEC Fund provides assistance for projects in health, education, water supply &
sewerage, energy, transportation, balance of payments, agriculture sectors. The fund has
preference for the social sector projects.

The purpose of the OPEC Fund is to improve financial cooperation between OPEC
Member States and other developing countries by providing financial support to assist
these countries in their economic and social growth. The Fund was conceived as a
collective financial facility to coordinate the assistance extended by its member countries.
The Fund usually provides 50 per cent of the cost of the project as assistance, but has
funded up to 100 per cent of the cost of some parts.

The interest, repayment period and grace period for OPEC credits varies from case to
case. Interest per annum varies from 0% (in such cases there is only a service charge of
0.75%) to 3%.

1. Korba Thermal Power Project (NTPC)
2. Ramagundam Thermal Power Project (NTPC)
3. Bombay High Development Project (ONGC)
4. Ramagundam Thermal Power Project-II (NTPC)
5. Railway Modernisation & Maintenance Project

Administrative Ministry along with all necessary clearances and with adequate provision
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UNITED NATIONS
Nature and details of Assistance:

The assistance is in the form of grant.

Sustainable Human Development (SHD) is the main goal of UNDP Assistance. The
country co-operation framework (CCF-I) focuses on SHD by way of growth with equity,
poverty alleviation and human development.
Aid Policy, including objectives:

The objective of UNDP Assistance is sustainable Human Development (SHD) which
encompasses a variety of dimensions including poverty elimination, employment
generation, capacity building, empowerment of women and environmental regeneration.
General requirement/pre conditions of eligibility for aid:

UNDP provides technical cooperation support for capacity building and upgradation of
technology including through pilot initiatives. This may include, but would not be limited
to, technology upgradation, training, expertise and consulting services. Purchase of
equipment is allowed only when it is considered necessary to complement these elements
of a programme.

CP-I (1972-79) – (1) Project for Development of Computer System, TIFR, Bombay, (2)
Setting up of a Computer Centre at National Aeronautical Lab, Bangalore, (3) Expansion
of Research Facilities at the Cancer Research Institute.
CP-II (1979-85) – (1) Advanced Industrial Training Centre for Indian Leather, (2)
Sedimentation of Reservoirs – Min. of Irrigation, (3) Performable optimization of
Petrochemicals complex IPCL Vadodara.
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CP-III (1985-90) – (1) Development of Amorphous Silicon Cells, D/O Non-Conventional

Energy Sources, (2) Satellite Data Analysis for oceanographic Institutes – CSIR, (3)
Treatment and Prevention of Leprosy – DST.
CP-IV (1990-97) – (1) Aluminium Research Centre, Nagpur, (2) Hydrology Study
Capabilities, Roorkee, (3) Hybrid Rice Technology, Hyderabad, (4) Powerline
Aggregates, Kolar, (5) Plant Quarantine Facilities, Faridabad, (6) Autocomponent Tech,
Ludhiana, (7) Small Hydel Resources, New Delhi, (8) Bio-Methanation Processes, New
Delhi.
CCF-I (1997-2001) –(1) Technology Management Programme – STEPS/TBIs, TN,WB;
(2) Community Empowerment for Poverty Alleviation, AP; (3) Food Security – Hybrid
Rice, AP; (4) Sustainable Dryland Agriculture by Mahila Sangathan, AP; (5)
Strengthening Natural Resources Management and Sustainable Livelihood for women in
Tribal Orissa; (6) Non-Mulberry Silk, Bangalore.

The funds allocated under the CCF-I are committed to the programmes / sub-
programmes. However, any new plan can be submitted by the Administrative Ministries /
Departments, in consultation with UNDP & DEA, depending on the availability of funds
under their respective programmes. Ministries, departments, state governments or other
entities wishing to benefit from UNDP assistance should plan sub-programs and
approach the Nodal Administrative Ministry / UNDP for consideration and approval. A
copy of the final plan shall be forwarded to the DEA by the Administrative Ministry for
further processing.
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INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

(IBRD)

International Bank for Reconstruction and Development (IBRD): The Bank provides
loans in various sectors to borrowers for projects that promise high real rates of economic
return to the borrower country. The Bank in turn borrows most of the money it lends,
through medium and long-term borrowings in capital markets across the globe, and also
from central banks and other government institutions at market based rates.
India has been receiving assistance from the International Bank for Reconstruction and
Development (IBRD) since 1949. Although non-concessional, IBRD loans give
reasonably favourable terms to commercial sources. IBRD Sovereign loans are mainly
used for infrastructure projects and poverty alleviation, rural development and human
capital development, etc. The IBRD aims to alleviate poverty by fostering sustainable
development through loans, guarantees and non-loan programmes.
Some of the major ongoing projects through IBRD assistance are the 'NH
Interconnectivity Improvement Project,' the Water Sector Improvement Project, the
Swachh Bharat Mission Support Service, the Second Karnataka State Highway
Improvement Project, the Eastern Dedicated Freight Corridor-I Project, etc. IBRD also
offers sovereign secured loans primarily to CPS Us and PSBs in the Power Sector.
IBRD loans, although non-concessional, are available on terms that are comparatively
more favorable than commercial loans. The IBRD is dedicated to projects in different
sectors such as transport, electricity, urban infrastructure (including water and sanitation)
and so on. The repayment period for IBRD loans is currently 20 years, with a grace
period of 5 years. The interest rate on Variable Spread Single Currency Loans is currently
LIBOR + 40 basis points (approximately). The commitment fee for the outstanding
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balance is actually 0.75 per cent. Since the Bank gives an annual exemption of 0.50 per
cent to all borrowers, the real commitment fee charged for this year amounts to 0.25 per
cent. A front-end fee of 1% of the loan sum is also payable, which currently provides
India with a 0.25% waiver for the financial year 2006 of the Bank.

IBRD IDA provide assistance in various sectors such as agriculture, irrigation, electricity,
oil and gas, rail, urban development , water supply, transport, fertilisers, industry,
telecommunications, health , nutrition, education, poverty alleviation, population,
environment, forestry, rural development, etc. In particular, IDA provides funding for
projects in the social sectors, rural development and agriculture, although there are no
limitations on any sector as such.

The World Bank has one overarching goal: helping its borrowers reduce poverty and is a
partner in strengthening economies and expanding markets to improve the quality of life
for people everywhere, especially the poorest. The IBRD provide loans to borrower
governments for projects and programs that promote economic and sound progress by
helping raise productivity so that people may have better lives.
Details of major projects assisted:

1. Industrial Pollution Control
2. Oil and Gas Sector Development
3. Power Utilities Efficiency
4. Second National Highway
5. Second Maharashtra Power
6. Financial Sector Development
7. Bombay Sewage Disposal
8. Orissa Power Sector Restructuring
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9. Andhra Pradesh Irrigation

10. Andhra Pradesh Economic Restructuring
11. Andhra Pradesh Power Sector
12. Tamil Nadu Urban Development
How to pose the projects:

(a) What kind of project?
The World Bank lends for developmental projects. The Bank’s main business is to lend
for specific projects, carefully selected and prepared, thoroughly appraised, closely
supervised, and systematically evaluated. Mainly the Bank lends for specific projects
such as schools, crop-production programmes, hydroelectric power dams, roads, and
fertilizer plants. The Bank is both a developmental and financial institution, and each
project for which it lends must satisfy both features. Every Bank –assisted project must
contribute substantially to development objectives and be economically, technically and
financially sound.
(b) Who can borrow?
Borrowers from the Bank include a member government, a public agency or corporation,
or a private body or corporation with the government’s guarantee.
(c) Steps in posing projects (from Bank’s point of view):
(i) Project Identification
(ii) Project Preparation
(iii) Project Appraisal
(iv) Negotiations and Board Presentation
Identification: Borrower should identify projects that have a high priority, that appear
suitable for World Bank support, and that the Bank, the government, and the borrower
are interested in considering. The projects should meet the prima facie test of feasibility –
that technical and institutional solutions are likely to be found at costs commensurate
with expected benefits.
Ashok Kumar 152

Preparation: Formal responsibility for preparation of the project rests with the borrower
although Bank assists the eventual borrower to prepare sound projects and also provides
technical and financial assistance for preparatory work. Project preparation entails close
collaboration between the Bank and the eventual borrower. A ‘ project brief ’ is prepared
for each project, describing its objectives, identifying principal issues, and establishing
the time- table for its further processing. This process may take 1-2 years.
Appraisal: This is solely the Bank’s responsibility and is conducted by the Bank staff.
Appraisal covers four major aspects of the project-technical, institutional, economic, and
financial. The bank ensures that projects are soundly designed, appropriately engineered,
and follow accepted standards. The appraisal mission looks into technical alternatives
considered, solutions proposed, and expected results. During economic appraisal, the
project is studied in its sectoral setting. The investment programme for the sector, the
strengths and weaknesses of public and private sectoral institutions, and key government
policies are all examined. In the financial aspect of the appraisal it is ensured that there
are sufficient funds to cover the costs of implementing the project. Financial appraisal is
also concerned with recovering investment and operating costs from project beneficiaries.
The appraisal mission prepares a report that sets its findings and recommends terms and
conditions of the loan. Negotiations, Board Presentation: Negotiation is the last stage at
which the Bank and the borrower Endeavour to agree on the measures necessary to assure
the success of the project. After negotiations, the appraisal report, amended to reflect the
agreements reached, together with the President’s report and the loan documents, is
presented to the Bank’s Executive Directors. If the Executive Directors approve the
operation, the loan is signed in simple ceremony that marks the end of one stage of the
cycle and the beginning of another.
(d) Steps in posing projects (from Government of India point of view): All project
proposals are required to be technically cleared by the concerned Line/ Administrative
Ministry. In the case of state sector projects approval of the State Government is also
required. The State Government is also required to give an assurance that they would
make adequate budget provisions in the State Plan for implementing the project. In the
Ashok Kumar 153

case of Central Projects approval of the Planning Commission is required. Once all the
necessary approvals have been obtained Department of Economic Affairs, which is the
nodal department for receiving external assistance, poses the project to the World Bank.
In case of Central Projects, negotiations are held after PIB/EFC clearance.
INTERNATIONAL DEVELOPMENT ASSOCIATION (IDA)

International Development Association (IDA): IDA provides credits to the poorest
countries – mainly those with an annual per capita gross national product in 1998 of US$
895 or less. Most of the IDA funds are contributed by its richer members, although some
developing countries contribute as well. In addition, IDA receives transfers from the net
earnings of the IBRD and repayments on its credits.
IDA is the concessional arm of the World Bank and plays a vital role in promoting the
Bank's effort to alleviate poverty. IDA is expanding soft loans to its member countries.
IDA Credits are currently repayable over 25 years, with a grace period of 5 years.
IDA funds are primarily used in social sector programmes that lead to the achievement of
the MDGs. Some of India’s flagship development programmes such as the PMGSY
Rural Roads Project, the National Rural Livelihood Project, the Second Technical /
Engineering Education Quality Improvement Project, the Secondary Education Project
and the National AIDS Control Support Project are funded by IDA credits, which are
mostly denominated in SDR but paid out and repaid in USD.
IDA, the World Bank's Soft Loan Partner, relies primarily on the contributions made
from time to time by the wealthier member countries for their financial capital and on the
repayments earned from earlier loans. IDA assistance to India started in June 1961 and
has since been an essential component of the external assistance programme.
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IDA obligations, known as "Credits," actually have a grace period of 10 years and are to
be repaid over 35 years. Credits to India accepted up to 30.06.1987 are repayable in 50
years, including a grace period of 10 years, and those accepted after 01.07.1987 are
repayable in 35 years, including a grace period of 10 years. IDA credits have no interest
charge but a service charge of 0.75 per cent per year is levied on the amount paid out. In
addition, there is an annual commitment charge of up to 0.5 per cent per year on the
unpaid balance.

IDA provide assistance in various sectors such as Agriculture, Irrigation, Power, Oil and
Gas, Railways, Urban Development, Water Supply, Transport, Fertilizers, Industry,
Telecommunications, Health, Nutrition, Education, Poverty Alleviation, Population,
Environment, Forestry, Rural Development etc. In particular, IDA provides funding for
projects in the social sectors, rural development and agriculture, although there are no
limitations on any sector as such.

The World Bank has one overriding objective: to help its creditors reduce poverty and to
be a partner in improving economies and expanding markets to improve the quality of life
of people everywhere, particularly the poorest. IDA is offering loans to borrower
governments for projects and initiatives that foster economic and sound growth by
helping to improve productivity so that people can have better lives.
Details of major projects assisted:

1. Technical Education II
2. Child Survival and Safe Motherhood
3. Tamil Nadu Water Resources Consolidation
4. Orissa Water Resources Consolidation
5. II National Highway
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6. Social Safety Net Sector Adjustment

7. Second Integrated Child Development
8. UP Basic Education
9. Water Resources Consolidation
10. Maharashtra Emergency Earthquake
11. District Primary Education
12. Second State Health System Development
13. Second District Primary Education
14. AP Irrigation 3rd Phase
15. Malaria Control
16. Third District Primary Education
17. Reproductive and Child Health
18. Andhra Pradesh Economic Restructuring
19. Uttar Pradesh Sodic Lands II
20. Women and Child Development
21. 2nd National HIV/AIDS Control
How to pose the projects:

(a) What kind of project?
The World Bank lends for developmental projects. The Bank’s main business is to lend
for specific projects, carefully selected and prepared, thoroughly appraised, closely
supervised, and systematically evaluated. Mainly the Bank lends for specific projects
such as schools, crop-production programmes, hydroelectric power dams, roads, and
fertilizer plants. The Bank is both a developmental and financial institution, and each
project for which it lends must satisfy both features. Every Bank –assisted project must
contribute substantially to development objectives and be economically, technically and
financially sound.
(b) Who can borrow?
Ashok Kumar 156

Borrowers from the Bank include a member government, a public agency or corporation,
or a private body or corporation with the government’s guarantee.
(c) Steps in posing projects (from Bank’s point of view):
(i) Project Identification
(ii) Project Preparation
(iii) Project Appraisal
(iv) Negotiations and Board Presentation
Identification: Borrower should identify projects that have a high priority, that appear
suitable for World Bank support, and that the Bank, the government, and the borrower
are interested in considering. The projects should meet the prima facie test of feasibility –
that technical and institutional solutions are likely to be found at costs commensurate
with expected benefits.
Preparation: Formal responsibility for preparation of the project rests with the borrower
although Bank assists the eventual borrower to prepare sound projects and also provides
technical and financial assistance for preparatory work. Project preparation entails close
collaboration between the Bank and the eventual borrower. A ‘ project brief ’ is prepared
for each project, describing its objectives, identifying principal issues, and establishing
the time- table for its further processing. This process may take 1-2 years.
Appraisal: This is solely the Bank’s responsibility and is conducted by the Bank staff.
Appraisal covers four major aspects of the project-technical, institutional, economic, and
financial. The bank ensures that projects are soundly designed, appropriately engineered,
and follow accepted standards. The appraisal mission looks into technical alternatives
considered, solutions proposed, and expected results. During economic appraisal, the
project is studied in its sectoral setting. The investment programme for the sector, the
strengths and weaknesses of public and private sectoral institutions, and key government
policies are all examined. In the financial aspect of the appraisal it is ensured that there
are sufficient funds to cover the costs of implementing the project. Financial appraisal is
also concerned with recovering investment and operating costs from project beneficiaries.
Ashok Kumar 157

The appraisal mission prepares a report that sets its findings and recommends terms and
conditions of the loan. Negotiations, Board Presentation: Negotiation is the last stage at
which the Bank and the borrower Endeavour to agree on the measures necessary to assure
the success of the project. After negotiations, the appraisal report, amended to reflect the
agreements reached, together with the President’s report and the loan documents, is
presented to the Bank’s Executive Directors. If the Executive Directors approve the
operation, the loan is signed in simple ceremony that marks the end of one stage of the
cycle and the beginning of another.
(d) Steps in posing projects (from Government of India point of view): All project
proposals are required to be technically cleared by the concerned Line/ Administrative
Ministry. In the case of state sector projects approval of the State Government is also
required. The State Government is also required to give an assurance that they would
make adequate budget provisions in the State Plan for implementing the project. In the
case of Central Projects approval of the Planning Commission is required. Once all the
necessary approvals have been obtained Department of Economic Affairs, which is the
nodal department for receiving external assistance, poses the project to the World Bank.
In case of Central Projects, negotiations are held after PIB/EFC clearance.
EUROPEAN UNION BANK
The European Investment Bank is the European Union's financing institution which was
established in 1958 under the Treaty of Rome to provide financing for capital investment.
The EIB will lend India 450 million (3300 crore approximately towards constructing
23KM long Lucknow Metro rail line.
GLOBAL FUND ORGANIZATION
The Global Fund to fight AIDS, Tuberculosis and Malaria (GFATM) is an international
funding agency with the goal of attracting and disbursing additional resources to prevent
Ashok Kumar 158

and treat HIV and AIDS, tuberculosis and malaria. The organisation launched operations
in January 2002. GFATM funded services in India are initiated by the Ministry of Health
and Family Welfare. Three ongoing programmes are currently being implemented with
the assistance of the Global Fund Supported Aid Control Project 'Increasing Access and
Supporting Comprehensive Care,' 'Support and Treatment,' 'Intensified Malaria Control
Project-3' and 'Tuberculosis.'
INTERNATIONAL FUND FOR AGRICULTURAL DEVELOPMENT (IFAD)
The International Fund for Agricultural Development (IFAD) was founded in 1977 as the
13th specialised agency of the United Nations since 1979. IFAD has funded 32
Government projects in the agriculture, rural development, tribal development, women's
empowerment, natural resource management and rural finance sectors.
Currently, total 18 projects assisted by IFAD are under implementation. Some of the
major on-going projects are integrated Livelihood Support Project and Jharkhand Tribal
Improvement and Livelihood Project.
The International Fund for Agricultural Development (IFAD) was set up in 1977 to
finance agricultural development projects aimed primarily at the expansion of food
production in developing countries. 163 countries are members of the IFAD and are
divided into three lists. List A is made up of developed countries, List B is made up of oil
producing countries and List C is made up of developing countries. India was re-elected
to the Executive Board of the IFAD for the term 2006-2008.
IFAD loans are repayable over a period of 40 years including a grace period of 10 years
and carry no interest charges. However, a service charge at the rate of 0.75% per annum
is levied on the loan amount withdrawn and outstanding.
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NEW DEVELOPMENT BANK (NDB)
NDB has been established by BRICS (Brazil, Russia, India, China and South Africa)
countries in Shanghai, China. The first loan extended by NDB loan in India is for USD
350 million to fiance major district roads in Madhya Pradesh.
ASIA INFRASTRUCTURE INVESTMENT BANK (AIIB)
Asia Infrastructure lnvestment Bank (AIIB) is multilateral bank extending loans primarily
in energy, transportation and telecommunication, rural infrastructure and agriculture
development. In India, two loans have been signed with AIIB in power and
road sector in 2017.
UNITED NATIONS DEVELOPMENT PROGRAMME (UNDP)
The overall mission of the UNDP is to provide assistance to programme countries

through capacity development in Sustainable Human Development (SHD) in the form of
grant. The current Country Programme (CP) 2013-17 would concentrate on namely
democratic governance, poverty reduction, HIV, energy & environment, Sustainable
Development and Gender Equality. The Country Programme is focused on economically
backward States.
4.3.5 India’s External Debt
Until the 1980s, India used external assistance primarily on concessional terms from
multilateral and bilateral sources. However, repayments to the IMF at the end of the
1980s, high fiscal deficits, the 1991 balance of payments crisis, subsequent economic
reforms in the 1990s, and insufficient domestic capital mobilization to meet the country 's
rising socio-economic and infrastructure development needs called for more external debt
Ashok Kumar 160

on commercial terms. As a result, the external debt stock, which amounted to US$ 83.8
billion in 1990-91, rose over the years to US$ 155 billion at the end of March 2007.
However, the severity of the debt situation of a country should not be measured by the
absolute amount of its debt. The structure and composition of the debt in terms of
maturity structure, currency composition, creditor and borrower classification and
concessionality are as important as the absolute sum of the debt in deciding the debt
issue. Thus, the debt-bearing potential of a nation can be best measured by the debt-to -
GDP ratio. India's external debt as a share of GDP, which was as high as 28.7% in 1990-
91, dropped to 16.4% in 2006-07.
The debt dilemma emerges essentially from problems associated with the satisfaction of
debt service obligations. The debt-service ratio, which expresses debt-service payments
as a proportion of current receipts, is one of the standard metrics for evaluating the
country's debt crisis. For India, the debt-service ratio has gradually declined from 35.3
per cent in positive signs due to prudent debt-management policies and strong export
growth.
Trends in External Debt
Government and non-government debt

Debt can be categorized as government and non-government debt. Government debt
includes multilateral and bilateral government borrowing on external assistance projects
as well as borrowing from the IMF, security debt and FII investment in government
securities. All other loans, including short-term debt, are part of non-government debt.
The proportion of government debt to total external debt, which showed an growing
pattern in the first half of the 1990s, decreased gradually thereafter relative to non-
government debt. The share of government debt in overall debt, which was 59.6 per cent
Ashok Kumar 161

at the end of March 1991, steadily decreased to 29.9 per cent at the end of March 2007.
As a result, non-government debt rose from 40.4% at the end of March 1991 to 68.6% at
the end of March 2007.
Short term debt

Under the international convention, debt of up to one year of maturity is known as short-
term debt. An unduly high proportion of short-term debt in total debt, due to the short
redemption period associated with such debt, poses a potential risk to balance of
payments management which, in the event of a sudden shift in international market
conditions or international investor trust in the country, may lead to a significant
reduction of foreign exchange reserves in the country. The Government of India has
always kept a watchful eye on the building up of short-term external debt.
India’s stock of short-term debt decreased from US$ 8.5 billion in 1991 to US$ 11.97
billion at the end of March 2007 (QE). While short-term debt at the end of March 2007 is
higher than at the end of March 1991 in terms of value, the ratio of short-term debt to
total debt, which measures the sensitivity of short-term debt, decreased sharply from
10.2% in 1991 to 7.7% at the end of March 2007. In line with this pattern, short-term
debt as a percentage of Gross Domestic Product estimated at 3.0% in 1990-91 decreased
to 1.3% in 2006-07. 8. Recognizing its volatile existence and characteristics, short-term
debt in the post-reform period was authorised by India only for commercial purposes
under normal conditions. In addition, short-term loans are typically not permitted to roll
over more than six months and RBI tracks the stock of short-term debt on an ongoing
basis. As a result, the short-term debt in India is far below the permitted amount. Some
increase has been recorded during the last two years as trade credits expanded
particularly under oil trade. Trade credit includes buyers’ credit of all maturities and
suppliers’ credit of 180 days to one year
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Long term debt

In total long-term debt, the proportion of long term debt to total debt rose from 89.8% in
1991 to 92.3% in 2007. This is indicative of reduced reliance on short term debt which is
more volatile.
Multilateral and bilateral debt

At end-March 1990, the share of multilateral debt was 28 per cent. The share of bilateral
debt (excluding rupee debt to Russia) in total long-term debt was 19.8 per cent at end-
March 1990. In 2007, the share of multilateral debt fell to 23% and bilateral debt to
10.4%.
Concessional debt
Debt from a range of multilateral organizations, such as IDA, the International Fund for
Agriculture and Development (IFAD) and the Organization of Petroleum Exporting
Countries (OPEC), which has a long maturity and a relatively low interest rate, is
regarded as concessional. However, loans from certain other multilateral outlets, such as
the IBRD, ADB, etc., are on similar terms to market rates and are listed as non-
concessional. Both Government borrowings from bilateral sources are subject to
concessional terms. Rupee debt, which is paid out by exports, is also treated as
concessional.
External debt stock has shown a structural change in terms of the decline in concessional
debt (which is mainly on account of the shrinking shares of official creditors and of
Government debt, which are mostly on concessional terms) from 45.9% of total debt in
1991 to 35.4% in 2001 and 25.7% in 2007. Despite the declining trend, India’s share of
concessional debt continues to be high by international standards.
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Currency composition of external debt

The currency composition of India’s external debt is weighted in favor of the US dollar.
The share of US dollar debt has also increased over the years and accounted for 49.1 per
cent of the total debt at the end of March 2007 as against 41.4 per cent at end-March
1994.
Policy on external debt management

As the 1991 balance of payments crisis caused an unsustainable amount of external debt,
the policy followed by the Government of India with regard to external debt since then
reflects a conservative approach to keeping external debt within manageable limits.
Policy focus has been put on concessional and less costly loans with longer maturity
profiles, tracking short-term debt, early retirement of high-cost external loans, and relying
less on debt-creating capital flows to fund the external current account deficit. Some of
the significant policy steps taken over the last few years to consolidate the external debt
portfolio are summarized below:
i) Premature repayment of high-cost external loans

Over the last three-four years, the Government of India has prematurely repaid a large
portion of both multilateral and bilateral sovereign loans under external assistance
schemes, with the exception of Japan, Germany, the United States and France. In 2006-
07, a Japanese loan of US$ 61.1 million was prepaid.
ii) Policy on Non-Resident Indian Deposits

During the pre-reform era, policy measures were aimed at attracting non-resident deposits
by providing a range of incentives, including exchange guarantees and higher interest
rates. After 1991, these deposits have been simplified by removing the exchange
guarantee schemes, eliminating the short-term components in a staggered manner,
reviewing the maturity structure of the deposits to facilitate long-term deposits, enabling
Ashok Kumar 164

banks to determine interest rates on foreign currency deposits subject to a cap dependent
on the LIBOR / Swap rate for corresponding maturities, discontinuin.
iii) Policy on ECBs

Private sector loans from foreign capital markets with a maturity of more than three years
are known as ECBs. While those with a maturity of less than one year fall into the
category of short-term loans, loans with a maturity of 1 to 3 years are known as
commercial loans. The ECB proposals are accepted within the overall annual ceiling set
by the Ministry of Finance, taking into account the sectoral criteria and the medium-term
balance of payments outcome.
iv) Policy on short term debt

The policy on short-term debt is basically to strike a balance between the twin objectives
of providing ample short-term loans to meet import requirements and keeping the amount
of such loans under control to avoid any payment problems. In the Indian sense, short-
term debt consists of short-term commercial loans and NRI deposits of one year or less.
Although NRI deposits of one year or less have been completely abolished since April
2003, short-term commercial credits are only permitted for import purposes. Short-term
commercial credits are under strict oversight of the RBI.
Sovereign External Debt Management

As regards the organizational structure of external sovereign debt management, all new
loans are negotiated by the Front Office, while external debt calculation, monitoring and
policy formulation is conducted by the Middle Office. The Back Office is responsible for
auditing, accounting, data consolidation and the work of the Trading Office.
The Minister of Finance is the final authority to give approval for raising both internal
and external debts. The role of the Front Office is played by all credit negotiating
divisions within the Ministry of Finance, Fund Bank, ECB Division, ADB Division, EEC
Ashok Kumar 165

Division, Japan Division, etc. as well as the Reserve Bank of India (for IMF loans). The
External Debt Management Unit (EDMU) of the Ministry of Finance performs the duties
of the Middle Office. The Office of the Controller of Aid Accounts & Audit (CAA&A),
Ministry of Finance, serves as the Foreign Debt Back Office.
Sovereign external debt in India takes two forms, namely 'external government debt' and
'other external government debt.' While the former, which is a major component, consists
of outstanding loans from multilateral and bilateral sources to the Government of India
under the foreign assistance programme, 'other government foreign debt' includes IMF
debt, security debt and FII investment in government securities.
The Government of India also offers guarantees for external borrowing by public sector
firms, emerging financial institutions and a small number of private sector companies. It
also raises external loans on its own account under the external assistance programme.
Loans raised under the external assistance programme also have a non-government
component. All loans obtained by the non-governmental sector under the external
assistance programme from multilateral and bilateral creditors are guaranteed by the
Government. Such guarantees given by the government form part of the sovereign
liability as the guarantees could be invoked in the case of default by the borrower in
which case the government will have to honour the payment obligations. Thus,
guarantees are a contingent liability of the Government.
India’s External Debt as at the end of June 2020

The major developments relating to India’s external debt as at end-June 2020 are
presented below.
 At end-June 2020, India’s external debt was placed at US$ 554.5 billion, recording a
decrease of US$ 3.9 billion over its level at end-March 2020 (Table 4.2).
 The external debt to GDP ratio increased to 21.8 per cent at end-June 2020 from 20.6
per cent at end-March 2020.
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 Valuation loss due to the depreciation of the US dollar vis-à-vis major currencies
such as euro, yen and SDR2 were placed at US$ 0.7 billion. Excluding the valuation
effect, the decrease in external debt would have been US$ 4.5 billion instead of US$
3.9 billion at end-June 2020 over end-March 2020.
 Commercial borrowings remained the largest component of external debt, with a
share of 38.1 per cent, followed by non-resident deposits (23.9 per cent) and short-
term trade credit (18.2 per cent).
 At end-June 2020, long-term debt (with original maturity of above one year) was
placed at US$ 449.5 billion, recording a decrease of US$ 2.0 billion over its level at
end-March 2020.
 The share of short-term debt (with original maturity of up to one year) in total
external debt declined to 18.9 per cent at end-June 2020 from 19.1 per cent at end-
March 2020; the ratio of short-term debt (original maturity) to foreign exchange
reserves declined to 20.8 per cent at end-June 2020 (22.4 per cent at end-March
2020).
 Short-term debt on residual maturity basis (i.e., debt obligations that include long-
term debt by original maturity falling due over the next twelve months and short-term
debt by original maturity) constituted 44.0 per cent of total external debt at end-June
2020 (42.4 per cent at end-March 2020) and stood at 48.2 per cent of foreign
exchange reserves (49.6 per cent at end-March 2020) (Table 4.3).
 US dollar denominated debt remained the largest component of India’s external debt,
with a share of 53.9 per cent at end-June 2020, followed by the Indian rupee (31.6 per
cent), yen (5.7 per cent), SDR (4.5 per cent) and the euro (3.5 per cent).
 The borrower-wise classification shows that the outstanding debt of both government
and non-government sectors decreased at end-June 2020 (Table 4.4).
 The share of outstanding debt of non-financial corporations in total external debt was
the highest at 42.3 per cent, followed by deposit-taking corporations (except the
central bank) (28.1 per cent), general government (18.0 per cent) and other financial
corporation’s (7.4 per cent).
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 The instrument-wise classification shows that the loans were the largest component of
external debt, with a share of 35.4 per cent, followed by currency and deposits (24.3
per cent), trade credit and advances (18.8 per cent) and debt securities (16.3 per cent)
(Table 4.5).
 Debt service (principal repayments plus interest payments) increased to 8.1 per cent
of current receipts at end-June 2020 as compared with 6.5 per cent at end-March
2020, reflecting lower current receipts (Table 4.6).
Table 4.2: External Debt - Outstanding and Variation
(US$ billions)
Component Outstanding as at Absolute Percentage
end of variation variation
June March June Jun-20 Jun-20 Jun-20 Jun-20
2019 2020 2020 over over over over
PR PR P Jun-19 Mar- Jun-19 Mar-20
20
1. Multilateral 59.0 60.0 64.8 5.8 4.8 9.8 8.0
2. Bilateral 26.5 27.2 27.5 0.9 0.3 3.6 1.1
3. IMF 5.5 5.4 5.5 -0.1 0.0 -1.0 0.8
4. Trade Credit 7.8 7.2 7.0 -0.8 -0.2 -9.7 -2.2
5. Commercial 213.7 220.1 211.1 -2.6 -9.1 -1.2 -4.1
Borrowings
6. NRI Deposits 133.6 130.6 132.7 -0.9 2.1 -0.6 1.6
7. Rupee Debt 1.1 1.0 1.0 -0.1 -0.1 -13.4 -5.2
8. Short-term Debt 109.7 106.9 105.0 -4.7 -1.8 -4.3 -1.7
Short-term trade 104.4 101.4 101.2 -3.2 -0.2 -3.1 -0.2
credit
Total External Debt 556.9 558.4 554.5 -2.4 -3.9 -0.4 -0.7
Memo Items:
A. Long-term Debt 447.2 451.5 449.5 2.3 -2.0 0.5 -0.4
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(original maturity)@
B. Short-term Debt 109.7 106.9 105.0 -4.7 -1.8 -4.3 -1.7
(original maturity)#
PR: Partially Revised P: Provisional
@: Debt with original maturity of above one year.
#: Debt with original maturity of up to one year.
Table 4.3: Residual Maturity of Outstanding External Debt as at end-June 2020

(US$ billion)
Sector Short-term up to 1 to 2 2 to 3 More Total
one year years years than 3 (2 to 5)
years
1 2 3 4 5 6
I. General Government 5.5 7.5 7.9 79.0 99.9
I.A. Short-term 0.2 0.2
(original maturity)
I.B. Long-term 5.3 7.5 7.9 79.0 99.7
(original maturity)
II. Central Bank 0.2 0.0 0.0 0.0 0.2
II.A. Short-term 0.2 0.2
(original maturity)
II.B. Long-term 0.0 0.0 0.0 0.0 0.0
(original maturity)
III. Deposit-Taking 96.1 22.0 11.1 26.4 155.6
Corporations, except the
Central Bank
III.A. Short-term 1.7 1.7
(original maturity)
III.B. Long-term 94.4 22.0 11.1 26.4 154.0
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(original maturity)
IV. Other Sectors 137.4 24.8 26.4 86.7 275.3
IV.A. Short-term 102.9 102.9
(original maturity)
IV.B. Long-term 34.5 24.8 26.4 86.7 172.4
(original maturity)
IV.1. Other financial 6.7 5.2 9.0 19.9 40.9
corporations
IV.1.A. Short-term 1.7 1.7
(original maturity)
IV.1.B. Long-term 5.0 5.2 9.0 19.9 39.2
(original maturity)
IV.2. Non-financial 130.7 19.6 17.4 66.8 234.4
corporations
(original maturity)
IV.2.B. Long-term 29.5 19.6 17.4 66.8 133.2
(original maturity)
IV.3. Households and 0.0 0.0 0.0 0.0 0.0
nonprofit institutions
serving households
(NPISHs)
(original maturity)
IV.3.B. Long-term 0.0 0.0 0.0 0.0 0.0
(original maturity)
V. Direct Investment: 4.8 2.9 2.7 13.0 23.4
Intercompany Lending
A. Total Short-term 105.0 105.0
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Debt (original maturity)

B. Total Long-term 138.9 57.2 48.2 205.2 449.5
Debt (original maturity)
C. Total External Debt 244.0 57.2 48.2 205.2 554.5
(A+B)
Memo Items:
Short-term Debt (residual maturity) as 44.0
per cent of Total External Debt
Short-term Debt (residual maturity) as 48.2
per cent of Foreign Exchange Reserves
Table 4.4: Government and Non-government External Debt

(US$ billion)
Component End-March End-
June
2018 2019 2020 2020
PR PR P
1 2 3 4 5
A. Government Debt (I+II) 111.9 103.8 100.9 99.9
(As percentage of GDP) (4.3) (3.8) (3.7) (3.9)
I. External Debt on Government Account under 68.6 68.8 72.7 77.3
External Assistance
II. Other Government External Debt @ 43.4 35.0 28.1 22.6
B. Non-government Debt 417.3 439.3 457.5 454.6
B.1. Central Bank 0.3 0.2 0.2 0.2
B.2. Deposit-taking Corporations, except the Central 154.6 164.3 158.2 155.6
Bank
B.3. Other Financial Corporations 26.4 31.2 40.9 40.9
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B.4. Non-financial Corporations 220.4 226.4 235.4 234.4

B.5. Households and nonprofit institutions serving 0.0 0.0 0.0 0.0
households (NPISHs)
B.6. Direct Investment: Intercompany Lending 15.7 17.1 22.8 23.4
C. Total External Debt (A+B) 529.3 543.1 558.4 554.5
@: Other government external debt includes defence debt, investment in
Treasury Bills/government securities by FPIs, foreign central banks and
international institutions and IMF.
Table 4.5: Outstanding External Debt by Instruments

(US$ billion)
Instrument End- End-
March June
2018 2019 2020 2020
PR PR P
1 2 3 4 5
1. Special Drawing Rights (allocations) 5.8 5.5 5.4 5.5
2. Currency and Deposits 127.6 134.4 134.1 134.6
3. Debt Securities 98.3 91.9 97.5 90.5
4. Loans 178.7 189.0 194.2 196.6
5. Trade Credit and Advances 103.2 105.2 104.3 104.0
6. Other Debt Liabilities 0.0 0.0 0.0 0.0
7. Direct Investment: Intercompany Lending 15.7 17.1 22.8 23.4
Total External Debt 529.3 543.1 558.4 554.5
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Table 4.6: India’s Key External Debt Indicators

(Per cent, unless indicated otherwise)
End- External Ratio of Debt Ratio of Ratio of Ratio of Ratio of
March Debt External Service Foreign Concessional Short- Short-
(US$ Debt to Ratio Exchange Debt to Term Term
billions) GDP Reserves Total Debt Debt to Debt
to Total Foreign (original
Debt Exchange maturity)
Reserves to Total
Debt
1 2 3 4 5 6 7 8
1991 83.8 28.3 35.3 7.0 45.9 146.5 10.2
1996 93.7 26.6 26.2 23.1 44.7 23.2 5.4
2001 101.3 22.1 16.6 41.7 35.4 8.6 3.6
2006 139.1 17.1 10.1# 109.0 28.4 12.9 14.0
2007 172.4 17.7 4.7 115.6 23.0 14.1 16.3
2008 224.4 18.3 4.8 138.0 19.7 14.8 20.4
2009 224.5 20.7 4.4 112.2 18.7 17.2 19.3
2010 260.9 18.5 5.8 106.9 16.8 18.8 20.1
2011 317.9 18.6 4.4 95.9 14.9 21.3 20.4
2012 360.8 21.1 6.0 81.6 13.3 26.6 21.7
2013 409.4 22.4 5.9 71.3 11.1 33.1 23.6
2014 446.2 23.9 5.9 68.2 10.4 30.1 20.5
2015 474.7 23.8 7.6 72.0 8.8 25.0 18.0
2016 484.8 23.4 8.8 74.3 9.0 23.2 17.2
2017 471.0 19.8 8.3 78.5 9.4 23.8 18.7
2018 529.3 20.1 7.5 80.2 9.1 24.1 19.3
2019 543.1 19.8 6.4 76.0 8.7 26.3 20.0
PR
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2020 558.4 20.6 6.5 85.6 8.8 22.4 19.1

PR
End- 554.5 21.8 8.1 91.2 8.9 20.8 18.9
June
2020 P
# Works out to 6.3 per cent with the exclusion of India Millennium Deposits (IMDs)
repayments of US$ 7.1 billion and pre-payment of external debt of US$ 23.5
million.
4.3.6 Summary of observations

An unduly high proportion of short-term debt in total debt poses a potential risk to
balance-of - payment management which, in the event of a sudden shift in international
market conditions or international investor trust in the country, may lead to a severe
reduction of foreign-exchange reserves in the country. Caution must be practised to keep
short-term debt under control.
Prudent debt management requires not only that short-term external debt be retained at
sustainable levels by its original maturity, but also that long-term maturation
commitments be avoided in order to hold the overall short-term debt at a comfortable
level by remaining maturity. This needs to be kept in mind at the time of approval.
Over the last three to four years, the Government of India has prematurely repaid a large
portion of both multilateral and bilateral sovereign loans under the foreign assistance
programme. However, some low interest-bearing loans have been repaid while high-cost
loans remain on our portfolio. At the same time, we continue to contract high-cost loans
such as those of IBRD and ADB. This questions the economic logic and needs to be kept
in mind when formulating future pre-payment proposals.
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4.4 POLICIES FOR ACCESSING EXTERNAL ASSISTANCE: INDIAN

GOVERNMENT CONTEXT
4.4.1 Pattern of External Assistance in brief

At the time independence the economic development in the country was not so vibrant.
At that time we were in need of External Assistance from wherever it was coming i.e. in
the form of technology transfer or financial transfer. Over the period the results economic
planning and other policy undertaken the results were visible in the Government as well
as Non-Government Sectors in the late 80s and 90s. In late 90s a serious thought was
given to the quality of the assistance coming to India. Every Assistance carries a cost of
transaction. Accordingly a conscious decision was taken in the year 2004-2005. The
details of the policy decision taken and the new approach are given in the succeeding
paras.
Subsequent to the budget announcement made in 2003-04, the Government of India

reviewed its policy of bilateral development co-operation in September 2004 to affirm the
liberalization and reform orientation in India’s economic policy. Revised guidelines were
issued in January 2005 that superseded all earlier guidelines in this regard. The highlights
of the extant policy are summarized below.
As per the extant guidelines, bilateral development assistance (including grants) is not
being availed by the Government and its subordinate and attached agencies (societies,
trusts, boards, companies, corporations, parastatals, etc) where the Government has
substantial control.
Bilateral development assistance is being accepted from all G-8 countries, namely,
U.S.A., UK, Japan, Germany, France, Italy, Canada and the Russian Federation as well as
from the European Commission. European Union countries outside the G-8 can provide
bilateral development assistance to India provided that they commit a minimum annual
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development assistance of USD 25 million to India. The Government of India does not
accept tied aid. Despite the change in policy, funding of all the ongoing programs and
projects was continued as per earlier provisions until their completion.
Bilateral assistance is welcomed if it is in the form of technical assistance programmes

that aim at enhancement of knowledge/skills of Indian nationals. A component for
provision of equipment/hardware is allowed, if the expenditure on these is insignificant
compared to the total project cost. However, the main emphasis is on enhancement of the
knowledge and skills of Indians.
Bilateral development assistance can also be received by the government, if the

assistance is routed through or co-financed with a multilateral agency and the proposed
programme/project is to be implemented by the multilateral agency under its own rules
and procedures. Such arrangements should be evolved between the participating
multilateral and bilateral agencies as part of their policies. Such co-financed programmes
or projects would be governed by the procedures applicable to the multilateral agency
spearheading the programme/project.
4.4.2 Policy on grant assistance to non-governmental organizations (NGOs),

autonomous institutions and other such bodies
All countries can provide bilateral development assistance directly to autonomous

institutions, universities, NGOs, etc. External development partners may consider
directing such bilateral assistance towards projects of economic and social importance
only.
A simplified policy to facilitate the flow of bilateral development assistance to non-

governmental organizations and autonomous institutions has also been put in place.
Bilateral development assistance to these organizations is governed by the Foreign
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Contribution (Regulation) Act, 1976 and only such organizations that are registered under
the said Act, may receive bilateral assistance. Organizations that are not registered under
Foreign Contribution (Regulation) Act should obtain prior permission from the
appropriate authority under the said Act.
The recipient NGOs, autonomous organizations etc. are required to fill a prescribed pro
forma and submit it through the concerned external development partner along with their
proposals. DEA does not entertain any direct proposals from NGOs, autonomous
organizations, etc. Department of Economic Affairs receives project proposals for
funding of NGOs, etc. throughout the year so that the process does not suffer delays. The
bilateral development partner sends project proposals to the concerned credit division in
DEA when the project concept paper is ready, accompanied by the pro forma check-list.
DEA processes the project proposals expeditiously in a time-bound manner. The bilateral
development partner country provides information in pro forma-II to DEA in April and
October every year on the extent of funding to various organizations and the status of the
project.
The bilateral partner may transfer funds directly to the accounts of the recipient
organizations, after the proposals are approved by DEA. They may also make their own
arrangements for monitoring the physical and financial progress of these projects.
Consequent upon policy decision the External Assistance was being received in un-tided
form. However, during last few years there have been a number of exceptions particularly
in Railway Infrastructure Projects tided Aid is being excepted with the condition that the
goods and other services will be accepted on single source basis from the Funding
Agencies i.e. Japan International Cooperation Agency (JICA) for dedicated freight
projects. Though the policy has been amended yet the broader objective in terms of cost
of the project is not being negotiated in anyway. At the time of negotiation on account of
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the single source procurement other aspect are negotiated in a way that it materialize the
cost impact.
4.4.3 Quantum of Assistance received during last 10 years.

The external Assistance received in India comprises of different states and central
projects in different sectors. The assistance received consist of Loan/Credits and Grant
from various sources. An analysis of the assistance received reveals that the amount of
the Loan received varies between Rs. 19787.78 crore and Rs. 45514.78 crore in case of
loans. The quantum of grant ranged Rs. 979.23 crore and Rs. 3384.14 crore.
A further analysis of the loans availed reveal that majority of the amount is being utilized
for railway infrastructure particularly for urban public transport (MetroService). In case
of Grants the quantum of receipt is declining from bilateral sources. The assistance from
United Kingdom has been stopped on official account.
The increasing trend of loans is an indicative of the fact that infrastructure projects are
being funded heavily from external sources. This is situation where appetite for projects
is on higher side but due to scarcity of the resources Government is not always in a
position to carry on the project. In Infrastructure projects the pay-out ratio and breakeven
point are very crucial. These two indicators are ignored to great extent or completely
under the umbrella of socialism. The authorities need to give a signal that all sectors are
related to socialism directly or indirectly and if this trend continues then ultimately the
burden will come on exchequer. The underline message is that there are number of
programmes with External Assistance under social sectors such as Education, Health and
Drinking water and sanitation. The loans/ Grants undertaken on project basis should
always be viewed on commercial angel and viability point of view.
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4.4.4 The current approach of the development partners in developing countries.

The development community has adapted much about the sources of growth and poverty
reduction. Development relies upon two pillars, which together help sustained growth
and poverty reduction:
Countries must form a decent investment climate—an environment in which the private
sector will contribute and create proficiently, in a way that produces occupations and
productivity growth. The investment climate comprises of the considerable number of
factors that most impact private-sector choices: macroeconomic stability and
transparency, governance and institutions, and infrastructure. The "private sector" ought
to be comprehended not just (or even fundamentally) to incorporate substantial firms and
multinationals, yet in addition ranchers and little and medium endeavours (SMEs).
Countries must enable and put resources into poor people, with the goal that they can
partake in growth. We realize that sustained growth is fundamental for poverty reduction,
so the investment climate center is itself an apparatus for poverty reduction. In the
meantime, governments need to target poverty all the more directly, remarkably by
outfitting poor people with the apparatuses important to add to growth, for example,
education and health, and by giving them access to infrastructure and financial services.
People are enabled when they are given the capacity to shape their own lives, regardless
of whether through more prominent capabilities or through interest in basic leadership.
Direct activities by government, international organizations, and NGOs are important to
enable this to happen.
Numerous countries have developed these two pillars in late decades and have seen the
rewards: quick growth and poverty reduction. Albeit excessively numerous different
countries keep on falling behind economically, a larger part of the developing world's
population lives in countries that have developed quickly and are shutting the gap with
the rich countries. Indeed, even the countries that have stagnated economically have,
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generally, seen material improvements in social indicators, for example, health and
education measures.
Development assistance has quickened this progress. It goes for helping countries
fabricate the two pillars: enhancing the investment climate (through building the factors
that add to investment and growth), and empowering people (through education, health,
and social security). Part 2 elucidates the setting for development assistance, by laying
out in more noteworthy detail the channels through which assistance can influence
growth—that is, the factors that give rise to growth and poverty reduction. It likewise
compresses the achievement and failure of countries at producing growth. Parts 3 through
5 underneath demonstrate that these endeavours have had extensive rewards.
4.4.5 What drives the growth of GDP and productivity?

Approaches: Understanding wellsprings of growth to build incomes, countries need to
enhance either of two fronts:
They can depend on factor accumulation: that is, they can amass a greater amount of the
factors of production, for example, physical capital (through investment) and human
capital (through higher levels of education and health among the population).
They can increment what economists call total factor productivity (TFP)— the efficiency
with which these factors create yield. TFP speaks to both the quality of the policy and
institutional environment, from one viewpoint, and knowledge and technology on the
other.
By and by, practically all sustained growth processes include some blend of factor
accumulation and expanded productivity, with the individual shares of the two differing
over countries and eras. In any occasion, this present reality normally opposes a spotless
breakdown into these two factors; the subject of how viably inputs are utilized enters not
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simply into productivity, yet additionally into the accumulation of capital. Numerous
development mediations are gone for quickening both factor accumulation and
productivity growth.
Our comprehension of the sources of growth of GDP and productivity depends on a few
sorts of research: cross-country regressions, growth decompositions, case studies, and
microeconomic studies of the wellsprings of productivity growth. All these approaches
have their shortcomings. For example, regressions and growth decompositions are
methods for assembling factually total indicators and endeavouring to recognize the most
vital illustrative factors. However while these methods uncover relationship between
factual factors, they can't demonstrate that one factor causes another. In addition, they put
excessive emphasis on a short-sighted total production function model of accumulation
and production. A great part of the growth originates from reallocation of assets to more
powerful sectors; from various methods for organizing productive activity; and from
intensification of entrepreneurship. None of these are illuminated by the total production
function approach.
The results from nation case studies don't experience the ill effects of these shortcomings;
however they might be as well nation particular to give lessons without anyone else's
input to different countries. By and by, together these methods sketch out a good picture
of what matters in spurring general income growth. While no single variable stands up as
a determinant of growth in all analyses of growth processes, certain factors give off an
impression of being especially vital; these are talked about below.
Extensively, unmistakably private-sector growth is fundamental to long-term

development. While the state can have some achievement in financing or inducing factor
accumulation over the medium term, it is far less fruitful at inducing productivity growth
when it plays a lead role in the economy. Notwithstanding when a state-dominated
economy oversees large quantities of investment, the quality of that investment is
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frequently low. Also, employment gives the fundamental long-term route out of poverty,
yet by far most of the world's poor workers are utilized in the private sector, not the
public sector. In addition, few of these private-sector jobs are in large firms; the greater
part of the world's poorest people work in small firms, most remarkably small farms.
Hence, any development strategy must have at its center a focus on building a good
climate for private-sector investment, productivity, and employment creation by all firms,
small and large.
Given this background, which factors most influence long-term financial growth and
poverty reduction? Although distinctive analysts will have fairly unique lists, most would
agree on a considerable lot of the factors recorded below. One approach to sort out these
factors is to group them in terms of the significant elements of the investment climate that
are amiable to direct action by governments: macro factors, for example, macroeconomic
stability and trade openness; governance and institutions, counting essential service
delivery in education; and infrastructure. Geography is additional factors that can't be
directly impacted by policy yet can effect sly affect growth and development.
4.4.6 Macro factors—macroeconomic stability and openness—are critical drivers of

growth.
4.4.6.1 Macroeconomic stability: Unstable fiscal accounts and high inflation undermine
the private sector by diminishing predictability and disheartening investment. The
slowing of growth rates in a great part of the developing scene after the 1960s and mid
1970s stemmed to some extent from macroeconomic instability, which diminished
confidence in government and in its capacity to keep up a stable climate for productivity,
jobs, and growth. While macro stability all alone is insufficient to kick off growth and
development, it is by and large an essential for sustained progress.
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4.4.6.2 International trade and investment : There stays some debate about the level of
trade progression that is fitting for poorer developing countries—debate fueled by the
perception that open domestic markets were not a precondition for fast growth in the East
Asian tigers, nor to be sure generally in a lot of Europe and North America. However it is
additionally evident that latest periods of quick growth have additionally been periods of
expanded engagement with the international economy. In the 1990s, for example,
developing countries that had fast export growth additionally had, all things considered, 1
percent higher yearly growth in GDP than those with slow export growth; in the 1980s,
the distinction was even greater. The domestic investment climate and the actions of the
domestic private sector are the key drivers of development; however international
engagement can assume an essential complementary role. Indeed, even in verifiably
closed economies, for example, China, which was a long way from totally open amid the
early change time frame, high growth was fuelled in part by expanded access to
international capital and markets. Where local conditions for entrepreneurship and
growth are good, introduction to international competition builds the productivity of
domestic firms and lowers input costs for downstream users, while foreign direct
investment carries with it new production and process technologies, organizational
capacity building, what's more, marketing networks.
4.4.7 Macro and structural factors—governance, education, and different elements

of the investment climate—likewise assume a major role in creating growth.
4.4.7.1 Physical capital investment: A significant number of the early analyses in the
empirical growth literature found that the level of investment in physical capital assumes
a role in determining growth rates. But resulting empirical research, together with the
anecdotal experience of countries that accomplished high investment rates yet slow
productivity growth, (for example, the Soviet Union), has moved consideration from
quantity to quality and productivity of investment. Factor accumulation without anyone
else's input leaves much to be clarified in growth regressions, and the evidence is that
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total factor productivity growth—which captures quality change—clarifies a noteworthy

offer of most scenes of long-term monetary growth.16 The lesson is that we have to focus
on the investment climate: the star grouping of basic factors causing growth of productive
investment.
4.4.7.2 Human capital investment through education and health: It is generally

imagined that an informed furthermore, healthy workforce likewise adds to growth, with
across the board fundamental education (primary and secondary) being particularly
important.18 Not every single empirical examination find such an impact. One reason
that the impacts of education have been difficult to pin down empirically is that the
quality of education matters as much as the quantity, but then we are greatly improved at
measuring quantity than quality. Another reason is that, as physical capital, human capital
might be generally unproductive from a societal standpoint if a feeble investment climate
inhibits development. But while the case isn't completely settled empirically, solid
fundamental education and sensible levels of health have been a precursor to numerous
development successes, and late analyses propose emphatically that additional education
does without a doubt goad development in the typical nation. At long last, as examined
below, the evidence on the generous returns to education at the microeconomic level is
unambiguous: education lifts people out of poverty, raising their earnings by somewhere
in the range of 5 to 10 percent for every time of schooling.
4.4.7.3 Sound institutions, governance, and rule of law: Stable and powerful
government institutions, regard for property rights, square with treatment under the law,
the absence of bureaucratic harassment, an absence of corruption, and protection from
organized crime all issue for growth. Investment and productivity rely upon
predictability, which thusly hinges on confidence that government won't act
opportunistically or capriciously. The "soft infrastructure" of an compelling legal and
judicial system is basic, regardless of whether for accomplishing financial growth,
empowerment of poor people, or security. Good governance additionally decreases the
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costs looked by producers. Sound supervision and regulation of financial institutions

diminishes the costs of capital to businesses and contributes significantly to
macroeconomic stability. Indeed, it has been contended that institutional quality and
governance are the fundamental factors that drive the greater part of the other growth-
upgrading factors.
4.4.7.4 Gender equality and social inclusion: Late research gives evidence that gender
equality— in health and education, as well as in voice and rights—is an imperative
element in development. Beside the conspicuous direct benefits for women, equality in
these dimensions likewise has instrumental benefits in terms of growth and poverty
reduction. Cross-country research proposes that low investment in female education has
been a barrier to growth in South Asia, Sub-Saharan Africa, and the Middle East and
North Africa, contrasted and East Asia, which shut the gender gap all the more rapidly.
Furthermore, even in the wake of controlling for income and different factors, more equal
rights and more prominent participation by women in public life is related with more
clean business and government and better governance, which thus promotes growth.
Inequalities along different dimensions, for example, race, ethnicity, or religion—can
likewise retard development.
4.4.7.5 Competition: Vibrant competition is imperative in spurring productivity growth.

Interventions that expand the degree of the market, including great domestic
infrastructure, diminish costs and enhance the selection of goods and services by
augmenting the number of competitors. The dynamic effects of such changes, which
work through the expanded productivity growth they spur, may significantly exceed the
one-time benefits to consumers of accessing goods from new suppliers at lower prices.23
Competitive pressures can come through different means. Openness to imports is
regularly the best source of competition—and the one that requires slightest
administrative capacity with respect to government—however other essential sources
have included well-functioning competition authorities and government-mandated
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"export tournaments". Guaranteeing that firms can both enter and exit markets is
additionally a critical element of competition.
4.4.7.6 Infrastructure: Physical infrastructure likewise matters an awesome arrangement

in terms of both investment climate and empowerment. Transportation and
communications infrastructure connect markets what's more, people, both domestically
and internationally.25. Better infrastructure hence diminishes the effects of geography,
diminishing costs to producers and enhancing the reach of government and private
services for consumers. In Sri Lanka, for example, the arrival of telephone benefit in rural
areas expanded farmers' share of the price crops sold in the capital city from 50 to 60
percent to 80 to 90 percent.26 In Peru, households with access to present day
infrastructure (water, sanitation, electricity, and telecommunications) had income growth
around 45 percent higher than households without these services.27 Availability of
affordable and reliable energy supplies is another imperative spur to production, while
great water and sewage infrastructure makes strides health and environmental outcomes.
How government can best give infrastructure, or facilitate its provision by the private
sector, is a key question for development assistance, as are the questions of the
prioritization and sequencing of infrastructure investment.
4.4.7.7 Geography: Geography genuinely hinders growth for a few nations, making
development considerably more difficult.28 If a country is landlocked, mountainous, and
encompassed by poor neighbours, or if its population centers are in remote areas, it might
encounter extra difficulties in creating domestic markets of efficient size, participating in
international trade, or securing technology from abroad. In such cases, it will be
particularly critical to build effective infrastructure joins, to enhance transportation and
communications both domestically and internationally. Regional integration and trade-
creating customs unions may likewise be essential in defeating geographic barriers.
Ecological delicacy is another geography-connected barrier to development: ecological
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stresses may most directly influence poor people, and these stresses as well require
particular policy and institutional responses.
4.4.8 Assembling these factors to spur sustained growth is a challenge: it requires

proper sequencing and selection of reforms, and in addition consistency after some
time, neither of which is simple to achieve.
In spite of the fact that our comprehension of the significance of these factors has
developed after some time, to put them together in a way that yields sustained growth
remains an overwhelming challenge. One noteworthy challenge for governments is to
choose where to center their endeavours as they endeavour to make the conditions for
growth as positive as could be expected under the circumstances. Procedures must be
resolved in every country context, however unmistakably administrative capacities of
low-income governments are typically so limited that an assessment of where they ought
to be engaged is fundamental: the government just can't push ahead effectively on all
fronts without a moment's delay. In the meantime, sequencing is vital. It is at this point
broadly perceived that the East Asian financial emergency of 1997– 98, which demanded
a substantial cost in poverty and lost output, stemmed in no little measure from financial
and capital-market liberalization that proceeded before the suitable regulatory safeguards
were in place. Yet, while some sequencing problems are simpler to recognize, finding the
best sequencing of ventures in a specific country context is an incredible challenge, and it
remains a range where our information needs to grow further.
Another significant challenge is sustaining growth. Rapid growth episodes of a couple of

years or 10 years are normal. For example, nations that effectively emerge from civil war
regularly experience generally rapid economic rebounds for a few years. What has been
substantially less common is sustained rapid growth over a period of decades, which is
what is important to eliminate supreme poverty. The requirement for consistency
underlines the significance of accomplishing sustained productivity growth. Just a portion
of growth is driven by increments in physical and human-capital intensity of production,
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which can be hard to sustain over long periods. Nations additionally require rapid growth
in productivity.
4.4.9 What factors drive poverty reduction?

The World Bank and its partners—United Nations offices, bilateral donors, and
governments— have committed to a common arrangement of poverty-reduction comes
about, including the Millennium Development Goals consented to by governments at
significant gatherings in the 1990s. The goals are joined by numerical targets expressed
in terms of changes in the vicinity of 1990 and 2015: diminishing the share of people
living in poverty worldwide by half; decreasing infant and child mortality by 66%;
diminishing maternal mortality by seventy five percent and enhancing access to
reproductive health services; and halting the expansion in frequency of communicable
diseases (Helps, intestinal sickness, TB) and decreasing malnutrition. What do we think
about the factors fundamental the reduction of poverty, in the two its income and social
dimensions?
4.4.10 Growth and poverty reduction

Economic growth is fundamental for sustained advance on poverty reduction. Nations
that have diminished income poverty the most are those that have become the fastest, and
poverty has developed fastest in nations that have stagnated economically. In the vicinity
of 1992 and 1998, for example, the share of the population in poverty fell an average of 5
to 8 percent every year in quickly developing Uganda, India, Vietnam, and China. In
Nigeria, by differentiate, per capita consumption fell percent in the vicinity of 1992 and
1996, and the poverty share expanded by half, from 43 percent to 66 percent of the
population.
4.4.10.1 Income distribution and poverty reduction: Some have expressed dread that
growth alone can't be depended upon to bring about critical poverty reduction in creating
nations. Evidence demonstrates that income distribution has not changed on average in
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periods of growth in the typical country, and that in this manner general growth has
implied that the incomes of the poor have expanded (once more, on average)
proportionately. In China, inequality increased with reform; however the expansion in
inequality was an inevitable component of the change in the incentive structure, which
prompted growth and poverty reduction. For sure, growth was strong to the point that
poverty fell sharply regardless of worsening income distribution. In other cases—
Uganda, for example—income distribution enhanced at any rate humbly with reforms
and growth.
By the by, the case nations with better income distribution see growth translate into
speedier poverty reduction. At a similar rate of GDP growth, a country with highly equal
distribution (that is, one with a Gini coefficient of 0.30) will see poverty fall twice as
quick as a highly unequal country (Gini of 0.60).35 also, the evidence recommends that
more noteworthy inequality of critical assets, for example, land and education, may retard
society-wide growth.
It is likewise the case that groups of poor people will experience reform and growth in an
unexpected way. An expansive increment in the income of one group might be
counterbalanced by a littler increment or even decrease in the income of another group.36
This underlines the significance of guaranteeing that there is adequate social protection in
place as a complement to structural adjustment measures. Social protection helps build
more extensive support for action, and it empowers individuals to go out on a limb
engaged with business enterprise. What's more, social protection isn't only an instrument
for accomplishing growth: it too targets poverty directly, by lessening the income
vulnerability that poor people recognize as one of the defining elements of a life in
poverty.
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4.4.10.2 Determinants of enhanced social indicators

When we recognize that poverty is about more than income, we see that there are other
determinants of poverty reduction past growth. Social indicators—health and education—
enhanced far faster in the twentieth century than we would have expected, given the rate
of income growth. Most nations have gained real ground in expanding educational
attainment and health outcomes by targeting these goals directly, and by applying new
knowledge and advances, instead of simply waiting for the effects of income growth to
enhance these indicators. At each level of income, infant mortality fell sharply amid the
twentieth century. For example, a typical country with per-capita income of $8,000 in
1950 (measured in 1995 dollars) would have had, on average, an infant mortality rate of
45 per 1,000 live births. By 1970, a country at a similar real income level would typically
have had an infant mortality rate of as it was 30 per 1,000; by 1995, just 15 per 1,000.38
similar reductions happened up and down the income spectrum, incorporating into the
poorest nations. The improvements in social indicators are remarkable by historical
standards. As noted in the preface, life expectancy in creating nations expanded by 20
years over a period of just 40 a long time, as it shot from the mid-40s to the mid-60s. By
correlation, it most likely took millennia to enhance life expectancy from the mid-20s to
the mid-40s. Literacy improvements have likewise been remarkable: though in 1970
almost two out of each four adults were illiterate, now it is as it was one out of each four.
These advances in education and health have incredibly enhanced the welfare of
individuals and families. Not exclusively are education and health valuable in
themselves, yet they additionally increment income-earning capacity. Where
macroeconomic analyses of the growth effects of education have been to some degree
ambiguous, the microeconomic evidence of the profits to education is overpowering and
robust. Each additional time of education builds the average person specialist's wages by
no less than 5 to 10 percent. And educating women is an especially effective way to raise
the human development levels of children. Moms who are more instructed have healthier
children, even at a given level of income. They are additionally more productive in the
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labour force, which raises household incomes and in this way builds child survival
rates—to some extent since, compared with men, women have a tendency to spend
additional income in ways that benefit children more.
These trends influence it to clear that public policy matters. Government has a role not
just in guaranteeing delivery of good basic services in health and education, yet in
addition in guaranteeing that technology and knowledge spread generally through the
economy. The dramatic improvement in life expectancy at a given income level is
attributable to environmental changes and is the consequence of public health actions.
The control of diarrheal diseases, including the development of oral rehydration therapy
to diminish child mortality, is one example; the education of women was a critical
component of these efforts. Smallpox destruction, made conceivable through a mix of
advances in public health research and effective program management, is another
example of a fruitful twentieth century public health exertion.
Bangladesh gives an astounding example of a country that has extended educational

access and enhanced neonatal and reproductive health dramatically and out of the blue in
a brief span. Growth has not been rapid, in spite of the fact that it has expanded in every
decade since freedom, and Bangladesh has experienced frail governance. In any case, in
light of the fact that Bangladesh has found a way to achieve health and educational goals
and has given a framework for dynamic NGOs to battle poverty, the country has achieved
much in a brief span. As the box clarifies, the World Bank and different donors gave
imperative analytical and financial support.
Additionally, Mexico has achieved substantial improvements in the educational

attainment and health of its poor citizens through its Progresa program, which it propelled
alone, without benefactor support . The program has been successful to the point that it is
being imitated in a number of different nations, with Bank advisory and financial support.
A third real example, talked about in section 5, is the Onchocerciasis Control Program,
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which has for all intents and purposes eliminated river blindness in 11 nations of West
Africa.
4.4.11 within this picture of strong development at the global level, we find divergent
country experiences with growth and poverty reduction.
Inside the overall picture of global development progress, the experiences of different
developing regions and nations have contrasted sharply. A few nations have become
rapidly, others scarcely at all in late decades. Figure 4.1 gives a delineation of this,
graphing median per capita incomes from 1970 to 2000 for two groups of developing
nations—ten of the fastest growing also, ten of the slowest-growing countries.40 The
difference over that period has been extraordinary: while the median "high group"
country has almost quadrupled the average income of its people more than 30 years, the
slow-growing nations now discover their people somewhere in the range of 40 percent
poorer on average than they were toward the start of the period. Comparisons of
individual nations make a similar point: The Republic of Korea had a lower nominal
GDP per capita than Ghana in 1960 ($155 versus $180). Be that as it may, on account of
Korea's growth, its average nominal income is presently 35 times that of Ghana—despite
the fact that Ghana isn't among the world's slowest-growing economies.
The fantastic health achievements additionally shroud regional and country divergences.
Like income growth, improvements in health status and life expectancy have not been
similarly distributed. The health status and life expectancy of the poorest nations linger
behind whatever remains of the world, and inside nations, the health of the poor is more
terrible than that of whatever remains of the populace. Poverty is the most critical basic
reason for preventable death, disease, and disability; and there is developing
acknowledgment that poor health, malnutrition, and extensive family size are key
determinants of poverty.
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The general picture for the developing world of course lies in the middle of these two
groups, however in emphatically positive territory. Since 1965, the per-capita GDP of the
developing world overall has expanded by an average of 2.2 percent per year, more than
doubling the income of the average developing-country resident. Once more, this is a
tremendous change by chronicled standards. And since 1990, developing nations have on
average become quicker in per capita terms than the wealthier nations. Given the great
strategies that developing nations have been setting up, we ought to anticipate that this
make up for lost time will proceed.
Successful authentic cases

The development achievement of nations of East Asia, beginning with the "tiger
economies" of Japan, Korea, Taiwan area of China, Hong Kong (China), and Singapore,
is generally known and does not should be recapitulated in detail here.43 But rather there
are developing nations outside of East Asia, for example, Botswana, that additionally
have a consistent record of growth and poverty reduction more than a very long while.
What's more, different nations that are presently high-income, for example, Portugal and
Ireland, accomplished this status by developing more quickly than other OECD nations
over the past a very long while.
Later triumphs
A significant number of nations, with a vast offer of the developing world's populace,
have become quickly and diminished poverty over the most recent two decades. One
gathering of 24 nations that strongly expanded the exchange force of their economies
since the 1970s has seen per capita incomes increment by an average of 5 percent per
year in the 1990s. These nations are home to 3 billion of the developing world's 5 billion
individuals, and such quick growth in generally extensive nations is in charge of the
global progress in decreasing outright poverty. (For correlation, the rich nations
developed at only 2 percent per year.) Even with quickly developing China barred per
capita incomes in the rest of the nations, for example, Mexico, Thailand, Hungary, and
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Indonesia—grew an average of 3.5 percent per year. By authentic measures, this is an

extremely fast growth pace, sufficiently quick to twofold incomes in only two decades.
Policy reforms and institution-building have driven a lot of this growth. More noteworthy
integration with international markets was one factor, however in no way, shape or form
the just a single, or even fundamentally the most essential. By and large, growth came
just with improvements in the more extensive venture climate: macro stability and
additionally more noteworthy transparency, yet in addition better governance,
institutions, and infrastructure.
Surely, the 1990s were periods of significant policy reforms all through the developing
world. We can see this plainly, for instance, in the zones of macro stability and
transparency. The median inflation rate of developing nations was cut down the middle in
the vicinity of 1982 and 1997, from about 15 to 7 percent. In low-income nations, the
improvements were considerably more noteworthy. More vital, toward the finish of the
1990s just 5 percent of developing nations had inflation over 10 percent. Average tariff
rates have additionally declined forcefully in every developing locale. In South Asia, for
case, the un-weighted average tumbled from around 65 percent in 1980– 85 to 30 percent
in 1996– 98; in Latin American and the Caribbean, from 30 percent to under 15 percent.
Tariff averages are an imperfect measure of transparency, yet there have been
considerably more noteworthy decreases in the blackmarket exchange-rate premium,
which is an indicator of macroeconomic instability and in addition of the restrictiveness
of the exchange regime.
Help indicators of accomplishment

Another method for gagging development achievement is to take a gander at the numbers
of graduates from the World Bank's soft-and hard-credit windows (IDA loaning at
concessional terms and IBRD loaning at non-concessional terms, separately). We are not
recommending here or somewhere else that the Bank alone was in charge of these
improvements; in actuality, the Bank has, best case scenario, bolstered nations' own
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endeavours and those of others. Twenty-three nations have seen their incomes increment
to the point that they could move on from IDA and remain IDA graduates, borrowing just
from IBRD at non-concessional terms. (A couple of others moved on from IDA however
later needed to return, in light of the fact that their economic performance had
compounded and their financial soundness for IBRD loaning wound up plainly
restricted.) What’s more, 26 nations have moved on from IBRD. This incorporates Korea,
which had begun as a low-income IDA borrower however moved on from IBRD loaning
in 1994.46 About ten IBRD-qualified nations have created to the degree that they have
increased expansive, however volatile, access to international capital markets. The
greater part of these nations have prevented borrowing from the Bank for expanded
periods in which they have had great access to commercial financing, however keep on
valuing Bank bolster amid periods in which they are rocked by external shocks. They
likewise keep on drawing on the Bank for advisory and other nonfinancial services.
Slacking nations
Not the sum total of what nations have been this successful. In reality, the number of
nations that have developed gradually or stagnated in the course of recent decades is
bigger than the gathering of quick integrators recorded above, in spite of the fact that the
aggregate populace of these poor-performing nations is not as much as that of the more
successful countries.47 Most prominently, Sub-Saharan Africa as a region saw no
expansion in its per-capita incomes in the vicinity of 1965 and 1999, even with enhanced
performance in the 1990s. Furthermore, despite the fact that Africa made steady progress
on health and education indicators over a lot of that period, regardless of the absence of
income growth, the progress in expanding life expectancy has been turned around by the
AIDS epidemic in numerous countries, and also by malaria and tuberculosis.
The economic decline in quite a bit of Sub-Saharan Africa stems to some extent from
occasions past African countries' control, including large and persistent declines in the
prices of their export commodities. For instance, non-oil exporters in Africa (other than
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South Africa) lost a aggregate 120 percent of their GDP in the vicinity of 1970 and 1997
because of changes in import what's more, export prices. What's more, Africa has
confronted geographic challenges and ensured export markets, and in addition many
investors' hesitance to change their hazard perceptions of the continent.
Be that as it may, it isn't just external factors that clarify Africa's feeble performance.
Numerous shortcomings in domestic governance, shortcomings in institutions, and
misled policies and investments have additionally contributed. Excessively numerous
African countries have experienced an investment climate that has not demonstrated
conducive to growth and productivity. And mistakes by donors in some cases
compounded these issues, as talked about in part 3.
In huge numbers of the slacking countries, there are currently reassuring signs of
progress. Over the past decade, and particularly in the previous five years, Sub-Saharan
Africa has accomplished extremely huge enhancements in macroeconomic stability and
governance, including boundless democratization. For instance, the median inflation rate
has tumbled from 12 percent in 1990 to 4 percent in 2000. In 1990, 15 countries had
negative growth rates, and just 17 countries had growth rates more noteworthy than 3
percent. By 2000, just 8 countries had negative growth rates, while 22 had growth rates
more noteworthy than 3 percent. Maybe most amazing among these enhancements is the
serene transition from politically-sanctioned racial segregation to popular government in
South Africa and that nation's transition from hyperinflation to macro stability.
The New Partnership for African Development (NEPAD), proposed by a few

governments in the region, mirrors an appreciated recognition of the importance of
domestic responsibility. It calls for a partnership in which domestic reforms will be
upheld by expanded external assistance, counting debt relief and in reductions in
protectionist trade policies in rich countries. The Bank, alongside numerous others,
respected this partnership and is focused on working with African pioneers and different
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accomplices in guaranteeing that the following decade does in reality observe a wide
based turnaround in Africa's disillusioning development record.
The mixed experience of transition

In Eastern Europe and the previous Soviet Union, the experience of transition from a
midway intended to a market economy has changed incredibly crosswise over
countries.50 Every nation experienced a "transition subsidence" before yield started to
recoup, however the profundity and length of those recessions contrasted. Countries in
Eastern Europe—helped by related knowledge of markets and nationhood, and buoyed by
the prospect of accession to the European Union—all the more rapidly taken after
policies to scale down unfruitful ventures and support quick passage of new firms.
This strategy package prompted profound recessions, however these economies started to
recuperate after a few a long time of decline, and yield surpassed its pre-transition levels
by 2000. Today, the countries of Focal Europe and the Baltics have gained significant
ground with market-arranged reforms to the point where they are balanced for early
accession to the European Union.
Interestingly, the countries of the previous Soviet Union experienced a drawn out
subsidence, much more profound than the Great Depression. The seriousness of the
subsidence originated from different factors. The disintegration of the Soviet Union,
where industrialization had been founded on modest energy and subsidized transport,
disturbed production and trade relationships. CIS countries additionally did not have any
late memory of market economies, and in various cases, they experienced war and civil
strife. Except for the Baltics, where yield recuperated quickly in spite of the profound
beginning retreat, vested private interests caught the state in many CIS countries right on
time in the transition. The CIS additionally neglected to stop monetary and money related
spillage to unrewarding endeavours and to discipline managers by creating and
reinforcing institutions of corporate governance. The result was large-scale corruption
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that undermined trust in reforms. These countries too neglected to set up policies that
would empower new firms that can make wealth and add to economic growth.
Such measures incorporate combating crime, both organized and something else;
managing corruption; executing legal and judicial change to guarantee secure property
rights, streamlined business authorizing, and registration requirements; and building a tax
system that supports compliance as opposed to growth of a shadow economy.
4.4.12 Summary
We have adapted much about the general sources of growth and poverty reduction.
• Experience and analysis demonstrate that countries diminish poverty speediest when
they put in put two pillars of development: – make a decent investment climate—one that
energizes firms, both little and large, to invest, make employments, and increment
productivity; and – empower and invest in destitute people—by giving them access to
health, education, social protection, and mechanisms for taking an interest in the
decisions that shape their lives.
• Understanding of economic growth and its causes has enhanced enormously. We now
comprehend that supported growth relies upon expansive progress in various ranges:
macroeconomic stability and trade receptiveness; governance and institutions, including a
decent education system, powerful legal institutions, and professional bureaucracy;
vivacious competition; and satisfactory infrastructure, particularly in countries that are
landlocked or confront other geographical barriers.
• Poverty reduction depends intensely on managed economic growth. On average, income
distribution does not decline amid periods of economic growth, so the incomes of needy
people ascend at an indistinguishable rate from those of wealthier people. Countries that
developed rapidly in the 1990s—such as China, India, Vietnam, and Uganda—figured
out how to diminish the offer of their people in outright poverty by 5 to 8 percent for
every year.
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• But while growth is fundamental, countries can accelerate reduction of income poverty
by acting to guarantee that destitute people have the instruments important to add to
growth, for example, health also, education.
• Policies and investments pointed specifically at diminishing non income dimensions of
poverty can be very compelling. Countries can accelerate health and education progress a
long ways past what would come about essentially from economic growth.
• Globally, we see this in the emotional reductions in infant mortality, which has fallen
consistently at each level of income because of enhanced technology, knowledge, and
policies and institutions. The average nation with $8,000 per capita income in 1950
would have had an infant mortality rate of 45 for every 1,000 live births; by 1995, an
average nation at a similar income level would have had an infant mortality rate of only
15 for every 1,000 live births (a reduction of two thirds).
Countries have followed up on this knowledge by enhancing policies and institutions,

regularly with exceptionally positive growth comes about.
• The development progress seen in numerous countries ought to be ascribed principally
to activities by those countries themselves: particularly, enhancing the investment climate
and investing in people.
• For instance, macro stability and transparency have enhanced all through the creating
world in the course of recent decades. The median inflation rate of creating countries was
cut in half in the vicinity of 1982 and 1997, from around 15 to 7 percent. Average duty
rates have likewise declined pointedly in every single creating region. In South Asia, for
instance, the un-weighted average tumbled from around 65 percent in 1980– 85 to 30
percent in 1996– 98; in Latin American and the Caribbean, from 30 percent to under 15
percent.
• A group of countries that has integrated most rapidly with the worldwide economy—
thanks to more prominent receptiveness and enhanced investment climates—has become
rapidly. This group of "rapid globalizers," which represents somewhere in the range of 3
billion of the building up world's 5 billion people, saw per capita incomes increment by a
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surprising 5 percent for each year in the 1990s. Indeed, even with quickly developing
China prohibited, the average was 3.5 percent. Be that as it may, development has been a
long way from all inclusive, and the underlying foundations of moderate growth and
decline can commonly be followed to a terrible climate for investment and productivity.
• The economic decline in quite a bit of Sub-Saharan Africa stems partially from an awful
condition: large and persistent declines in the prices of exported commodities, high tariffs
on exports, and also antagonistic economic geography. Be that as it may, numerous
African countries have compounded these and other chronicled detriments by neglecting
to embrace great policies and institutions. Despite the fact that policies have enhanced as
of late, governance and institutions remain a noteworthy problem in most SSA countries.
• Countries that have not developed rapidly—in Africa and somewhere else—have
regularly neglected to gain ground on key highlights of the investment climate. For
instance, they may have accomplished macro stability yet not social stability; or they may
have brought down trade barriers however not constructed the essential infrastructure
important for international trade.
4.5 IMPLEMENTATION AND ACHIEVEMENTS OF SUSTAINABLE

DEVELOPMENT GOALS IN INDIA
4.5.1 Introduction
India played an important role in forming the SDGs. Unsurprisingly; therefore, the
national development priorities of the country are expressed in the SDGs. As such, India
was effectively committed to achieving the SDGs long before they were formally
crystallized. As Prime Minister Narendra Modi said, "These goals reflect our evolving
understanding of the social, economic and environmental ties that define our lives." The
Indian Development Slogan "Sabka Saath Sabka Vikas" (Collective Effort, Inclusive
Development) and the related national programmes closely monitor the SDGs. As one of
the countries that volunteered to take part in the VNRs at the High-Level Political Forum
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(HLPF) 2017, India appreciates the emphasis on 'Eradicating poverty and fostering
prosperity in a changing world.' The SDGs discuss the root cause of poverty and are an
elaborate exercise to help nations move towards a unifying development agenda.
Although concentrating on economic growth, infrastructure development and
industrialization, the country's poverty war has become more and more focused on social
inclusion and empowerment for the poor. Several major projects have been initiated to
resolve these goals and to fulfill the economic, social and cultural needs of diverse
communities. This analysis points out the initial measures taken to achieve India's
development agenda and, hence, the SDGs. Given India's federal governance framework,
the emphasis has been on laying the groundwork for shared understanding and
cooperation and developing monitoring and reporting mechanisms.
Responsibilities have been divided among the different bodies that will lead the efforts of
central and state ministries, departments and agencies to execute them. The National
Transforming India Institution (NITI Aayog), chaired by the Prime Minister, is committed
to providing overall coordination and leadership.
The Indian statistical system and institutions collect data and report on specified
parameters in different sectors. National SDG indicators are currently being developed to
better capture the context and needs of India. In addition to the creation of national SDG
metrics, the statistical framework is also structured to assess accomplishments at sub-
national level.
While reporting about the various facets of the SDGs, this VNR focuses on the progress
made towards achieving Goals 1, 2, 3, 5, 9, 14 and 17. These Goals have been agreed
upon in the HLPF as focus areas for this year. The nature of SDGs is such that the
advancement of one global goal may lead to progress in other
goal as well. Indeed, one set of SDGs effectively serves as instruments to achieve another
set of SDGs. For instance SDG 8 (“decent work and economic growth”) is perhaps the
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most effective means to achieving SDG 1 (“No poverty”). Hence, to some degree, the
progress in SDGs discussed in this report also represents progress in achieving some
other SDGs.
4.5.2 Methodology and Process for Preparation of the VNR
After the SDGs were adopted, the National Institution for Transforming India (NITI
Aayog), the premier policy think tank of the Government of India, was assigned the
responsibility of overseeing their implementation. As a part of its oversight
responsibility, NITI Aayog has led the process of VNR preparation. A multi-disciplinary
VNR Task Force was constituted to coordinate the review and process
documentation. From the sub-national level, state and union territory governments
reported on their perspectives and progress on the various programmes and initiatives.
NITI Aayog also conducted a series of consultations at the national as well as sub-national
levels in which state governments, local governments, Civil Society Organizations,
technical experts, academics, international organizations and
other stakeholders participated. The VNR Task Force has reviewed information collected
from different sources, deliberated upon it and analyzed and covered it extensively in this
report.
India also benefited from participating in the preparatory workshops of the United
Nations Department of Economic and Social Affairs at global and regional level (Expert
Group Meeting held in December 2016, VNR Regional Workshop held in March 2017).
These workshops shed light on the experiences and initiatives of the countries presenting
the VNRs in 2016 and preparing the reports for the HLPF 2017. The participation of
India in the UNESCAP meeting on VNR, the 4th session of the Asia-Pacific Forum on
Sustainable Growth, the 73rd session of UNESCAP and the 20th session of the UN
Commission on Science and Technology for Development were also useful for
generating knowledge from different countries on institutional structures, policies and
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programmes implemented and emerging good practices. All available information on the
specific aspects of the established SDGs and related goals has been taken into account for
this analysis.
4.5.3 Policy and Enabling Environment
Strengthening India's commitment to the national development agenda and SDGs, the
country's Parliament organized a number of forums, including the February 2017 South
Asian Speakers' Summit, which centered on poverty eradication, gender equality, climate
change and resource mobilization for SDGs. The Speakers' Study Initiative was launched
to provide Members of Parliament with SDG-related perspectives.
NITI Aayog continues to maintain its commitment to timely achievement of the SDGs
and to improve the ongoing country-wide contact mechanism, both formally and
informally. This process has provided considerable insights and feedback for the VNR. In
addition, NITI Aayog is keen to encourage States and Union Territories to share, among
other things, any new information or good practice from different fields in order to speed
up the implementation of SDGs across the world. For instance, all states and union
territories participated in a national workshop on best practices in the social sector. NITI
Aayog has also published a volume of such best practices from various states in
the country, which has been shared with the states and all ministries and departments of
the central government.
An important role is being played by Civil Society Organizations that have been working
on SDG-related issues from the grassroots to the national level. Working individually and
in coalitions, they have also partnered with the government to provide inputs, create
awareness and offer feedback. Their initiatives span the following:
 Preparing information education and communication materials on SDGs,
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 Preparing information education and communication materials on SDGs, conducting

capacity building workshops and awareness campaigns; Supporting states with
integrating SDGs into the planning and implementation process;
 Highlighting issues of sustainable energy management and climate justice for
necessary policy action at the state and national levels; and Conducting research and
documentation on SDGs as well as their relevance to the rights and entitlements of
various vulnerable sections of society.
Corporate sector organizations, including business groups, have held consultations and
implemented actions in a number of fields, including environmental protection, creative
climate change and inclusive growth strategies. In addition to partnering with business
associations and related industries, they have also partnered together with the government
and civil society to develop creative solutions.
NITI Aayog has carried out a thorough mapping of the 17 Goals and 169 targets for the
Nodal Central Ministries, the Centrally Funded Schemes and major government
initiatives. The results of the mapping exercise have been circulated to the Central
Ministries and posted on the NITI Aayog website to encourage better knowledge, shared
understanding and faster implementation of the SDGs. The majority of sub-national
governments carried out a similar mapping of the SDGs and goals for the departments
and programmes in their respective countries. Periodic consultations with the Chief
Secretaries of the sub-national governments have also been held to deliberate on
strategies for achieving the SDGs. The Ministry of Statistics and Program
Implementation (MoSPI) is on the verge of completing an initiative to develop national
indicators in the light of global SDG indicators. The Ministry held a series of meetings,
accompanied by a national workshop, to establish a reporting system for SDG indicators.
On the basis of comprehensive consultations, MoSPI has drawn up a list of draught
national indicators and put them in the public domain for wider consultation. It is
heartening to note that MoSPI has received a wealth of feedback from a variety of
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stakeholders across the region. These inputs will help finalize the collection of metrics
that will eventually be used to track progress. In addition, the NITI Aayog recently
published a draught three-year action agenda spanning the years 2017-2018 to 2019-20.
The Action Plan addresses the unique issues facing the country and outlines steps to
speed up the national development agenda at the same time, progress on a 15-year vision
and 7-year plan document is in advanced stages. Reflecting the long-standing federal
tradition of the country, these documents are being prepared with the active participation
of sub-national governments. Several initiatives have been initiated by the Government of
India to introduce the SDG agenda, some of which are highlighted in this VNR. The
Pradhan Mantri Jan Dhan Yojana (PMJDY), the largest financial inclusion programme
in the world, is a noteworthy initiative. By exploiting the PMJDY, the Government has
been able to pay a cumulative sum of INR 1.6 trillion (USD 25 billion at INR 64 per
USD) to 329 million beneficiaries via Direct Benefit Transfers (DBT). This is a big step
in improving the performance of government services. At the sub-national level, state
governments are at different stages of their 15-year vision and policy roadmaps. Most
state governments have aligned strategic perspectives from the national growth and 2030
agendas with their own unique contexts and goals. The State Planning and Development
Departments also serve as focal points to promote the implementation of the SDG
process by providing the necessary information and resources. India has a history of
strong local governments: Panchayati Raj Institutions (PRIs) in rural areas and urban
local authorities (ULBs) in urban areas. Following considerable financial devolution to
the PRIs under the 14th Finance Commission, the Ministry of Finance of Panchayati Raj
is assisting village-level PRIs in the planning and implementation of development
initiatives in their respective areas. The National Development Strategy for the SDG
framework directs the capacity building of the PRIs as well as the actual planning
process.
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4.5.4 State-Level Initiatives on SDGs
Assam has set up a Centre for SDGs under the Planning and Development Department
and an integrated framework for implementation has been adopted. The state has also
developed its own vision for realizing the SDGs, namely, ASSAM 2030. A pilot is being
undertaken in a few villages and towns for demonstrating full attainment of the SDG
agenda. Further, a robust technology platform is also being set up for tracking the
progress pertaining to the SDGs.
Andhra Pradesh as part of its Vision 2029 has identified indicators for each of the 17
SDGs. It has also outlined the baseline, targets, milestones as well as key strategies for
realizing the SDGs.
Bihar is in the process of finalizing the roadmap for SDG implementation. The state
government is already focusing on a number of areas that are covered under the SDGs
including road connectivity and drainage, toilets, clean drinking water, electricity, higher
education, skill development and gender equality.
Haryana has prepared its Vision 2030 document following extensive consultations with
a range of stakeholders. The strategies outlined in the document are based broadly on five
principles – integrated planning and decentralized implementation, equitable
development, building human capital, promoting citizen centric services and green
growth.
Maharashtra is focused on balanced regional development and emphasizes sustainable

livelihoods, taking initiative to improve management of water, land and forests, improve
access to health and education, and developing skills for employment generation.
Kerala has set up elaborate indicators and standards for achieving the SDG 3 on health.
The state has sector specific plans for 2030 with emphasis on encouraging
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entrepreneurship in production sectors, developing the key bases of knowledge economy

in the areas of education, S&T, etc., and ensuring environmental and social sustainability.
Karnataka focuses on technology in 12 sectors: education, medical science and health

care, food & agriculture, water, energy, environment, habitat, transportation,
infrastructure, manufacturing, materials and ICT.
Tamil Nadu focuses on infrastructure development in six major sectors: energy,

transportation, industrial and commercial infrastructure, urban infrastructure and services,
agriculture and human development.
Punjab has set up a SDGs Support Unit under the Planning and Development
Department. The SDGs Support Unit serves as a conduit for technical support at the state
level and acts as a nudge unit for providing evidence, analysis and perspectives to inform
public policy in the context of SDGs.
Madhya Pradesh has also established an SDG cell. The Madhya Pradesh State Planning
Commission has also established Planning and Policy Support Unit, Project Monitoring
Unit, Knowledge Management Unit and International Division, in order to meet
challenges of perspective planning and SDGs.
4.5.5 Progress towards Specific Goals
SDG 1: No Poverty | End Poverty in All its Forms Everywhere

Past Poverty Reduction
Rapid growth (SDG 8) is the key weapon in any country’s arsenal to combat poverty. On
the one hand, it creates well-paid jobs, which place necessary purchasing power in the
hands of households to access food, clothing, housing, education and health. On the
other, it brings ever-rising revenues to the government to finance social spending. India
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has continued its programme of economic reforms to achieve sustained rapid growth. The
reforms have included fiscal consolidation, inflation targeting, improved governance all
around, accelerated infrastructure development (SDG 9), curbing of corruption (SDG 16),
Aadhaar Act (for providing unique identity), Insolvency and Bankruptcy Act, Goods and
Services Tax, further liberalization of foreign direct investment and closure of sick units
in the public sector. As a result, India is the fastest growing major economy in the world
today. It increased 7.5 per cent in fiscal year 2014-15, 8 per cent in 2015-16 and 7.1 per
cent in 2016-17. Currently, the official poverty line in India is the Tendulkar Line, named
after India's leading poverty expert, the economist Suresh Tendulkar. There is now
convincing evidence that India's rapid growth, following the economic reforms
introduced in 1991, has contributed to a substantial reduction in poverty. This is seen in
the figure below. Between 1993-94 and 2003-04, India increased by an average annual
rate of 6.2 per cent and by 8.3 per cent between 2004-2005 and 2011-12. Both periods
saw a substantial decline in poverty, but the decline was substantially sharper during the
latter period, marked by faster growth. The figure shows the national degree of
agricultural, urban and total poverty. But evidence shows that poverty fell across all
economic, social and religious groups nationally and in all states in the post-reform era.
Figure 4.1: Poverty in India at the Tendulkar Line
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Anti-Poverty Programmes
Growth has brought with it an rise in revenue, which, in turn, has allowed the government
to maintain a high level of social spending, while directly addressing poverty. An
significant anti-poverty initiative focused on creating jobs through public works that help
grow agricultural infrastructure, productive assets and opportunities for entrepreneurship-
based livelihoods.
The Mahatma Gandhi National Rural Jobs Guarantee Act (MGNREGA) offers a legal
guarantee of a minimum of 100 working days per household per year for unskilled
workers in rural areas. The programme has provided more than 2 billion person-days of
employment (SDG 8) over the last year. Women and vulnerable groups were the largest
beneficiaries (SDG 5 and SDG 10) of the initiative, accounting for 56 per cent and 39 per
cent of the day-to-day work created over the last year.
Another initiative related to this aim is Pradhan Mantri Jan-Dhan Yojana (PMJDY),
which was introduced in 2014 to ensure access to the full spectrum of financial services,
including banking, credit, insurance and pensions. So far, 280 million new accounts have
been opened under this scheme, with deposits amounting to INR 639 billion (USD 9.9
billion). By promoting the delivery of government benefits directly to recipient accounts
and minimizing leakage, the programme has improved the efficacy of many national
social security schemes.
Further, the Deendayal Antyodaya Yojana, the National Livelihoods Mission, is devoted
to creating skilled employment for the poor. The Mission aims to bring one female
member each from a large number of poor households in rural areas into Self-Help
Groups in a phased manner.
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Figure 4.2: Person-days of employment generated under MGNREGA (millions)
In a significant move towards addressing multi-dimensional poverty, data from the

SocioEconomic Caste Census, 2011 is being used to identify beneficiaries for
development programmes based on various deprivations suffered by households. This is
aligned with the policy of ensuring that ‘no one is left behind’.
Figure 4.3: Cumulative Number of Self-Help Groups (millions)
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Strengthening Social Safety Nets

The National Social Assistance Programme provides pension to the elderly, widows and
differently-abled individuals. Additionally, three initiatives have been launched to
facilitate access to life insurance, personal accident insurance as well as pension for
workers in the unorganized sector. The schemes focusing on insurance have collectively
reached out to 130 million subscribers.
Ensuring Access to Basic Services

Enabling access to quality primary education and affordable healthcare forms an
important part of the poverty elimination strategy. Under the National Health Mission, a
broad spectrum of interventions focused on universalizing primary healthcare is being
implemented. The Integrated Child Development Services (ICDS) attempts to ensure that
maternal and child malnutrition are addressed in a systematic manner.
In addition, Janani Suraksha Yojana (JSY) provides conditional cash transfers to support
institutional deliveries between women from remote areas. Particular focus is focused on
bridging disparities in human capital for healthcare at all levels of service delivery.
Similarly, the National Education Mission focuses on ensuring universal access to
education, bridging gender-related inequities and enhancing student learning outcomes.
The Legislation on the Right to Education has provided an effective legal structure for all
children (6-14 years of age) to have free and compulsory education based on the values
of equality and non-discrimination. Another ambitious initiative is 'Housing for all by
2022.' This policy offers assistance (e.g. in the form of credit-linked interest subsidies) to
disadvantaged households for housing construction. An estimated 5 million houses will
be constructed for the poor in rural areas during the current year.
Food deficiency is a direct result of poverty. To resolve this problem, the National Food
Security Act provides a basic amount of food grain to nearly 75% of the rural population
and 50% of the urban population at affordable prices under the Targeted Public
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Distribution System. The programme provides 5 kg of wheat or rice per person per month
at subsidized rates. The related programme offers 35 kg of subsidized wheat or rice each
month to the poorest households. In order to meet the clean cooking needs of the poor
and thus protect the health of women and children, Pradhan Mantri Ujjwala Yojana was
introduced in 2016. The scheme will provide 50 million Liquefied Petroleum Gas
connection to poor families over the next 3 years. Over 22 million connections have
already been made under the system. Furthermore, the focus is on facilitating access to
adequate and safe drinking water as well as sanitation for the entire population. Under the
National Rural Drinking Water Programme, more than 77.5 per cent of dwellings have
been equipped with 40 litres of per capita drinking water per day. To date, another 18.9
per cent of the dwellings have been partly covered. The government's flagship initiative
is the Swachh Bharat Mission (Clean India Mission), which aims to ensure an open
defecation free India by 2019. Over the past two and a half years, more than 39.5 million
household toilets have been installed under this mission.
Figure 4.4: Number of Houses Constructed in Rural Areas under Government

Programs (millions)
Additionally, 193,000 villages and 531 cities have been successful in ending the practice
of open defecation. For spurring improvements, cities and village councils are being
ranked on levels of cleanliness. For enhancing connectivity, 70% of the targeted rural
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habitations have been connected by all-weather roads thus far under Prime Minister’s
Rural Roads Programme. It is envisaged that by March, 2019, all habitations of 500
population or larger will be connected by all-weather roads. Green technologies are
increasingly being leveraged for the construction of roads in rural areas.
Figure 4.5: Households with Access to Sanitation Facilities (%)

Promoting Resilience against Disasters
According to the India Disaster Knowledge Network, 85% of the country’s land is
vulnerable to natural disasters, which affect the poor disproportionately. As mandated
under the Disaster Management Act, 2005, there is a comprehensive National Policy on
Disaster Management (2009), which articulates a proactive prevention and mitigation
approach. The National Disaster Management Plan, 2016 focuses on disaster resilience
and integrates the Sendai Framework for Disaster Risk Reduction as well as the SDGs.
SDG 2: Zero Hunger | End Hunger, Achieve Food Security and Improved Nutrition
and Promote Sustainable Agriculture
Significant progress has been made in improving food and nutrition security.
Nevertheless, challenges remain. For instance, a substantial reduction in stunted and
underweight children has been achieved between 2005-06 and 2015-16. But the absolute
levels of stunted and underweight children remain high.
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Figure 4.6: Improvements in Nutrition Indicators of Children Under 5 Years (%)
Access to Nutritious Food

India's food security programmes are among the largest in the world and cover more than
800 million people across the country by providing affordable access to grain.
Recognizing the empirical evidence that women pay more attention to food safety, the
ration card is given on behalf of the senior female household member. Food governance
has significantly improved in terms of responsiveness, transparency and responsibility.
Nearly 232 million ration cards that entitle people to food and other supplies have been
digitized. In addition, 77% of the ration cards were linked to a particular identification
number, allowing cash transfers to encourage dietary diversity. Almost 20 out of 29
countries in India have electronic supply chains and fair price stores (delivery outlets).
An online grievance redress system has also been introduced across the country. Other
projects aim to address the food security of specific population groups. For instance,
ICDS caters to the nutritional requirements of over 83 million young children and 19
million pregnant and lactating mothers in the country. The Mid-Day Meal Programme
delivers nutritious cooked meals to 100 million children in primary schools.
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Sustainable and Adaptive Agriculture

India is the largest producer of milk, pulses and spices in the world. It also has the largest
area under cultivation for rice and cotton. Approximately 55% of India’s croplands are
rain-fed and it has vast coastal lands under agriculture. Food production in the country is
therefore vulnerable to climate change.
Figure 4.7: Sustainable and Adaptive Agriculture

The National Mission on Sustainable Agriculture (NMSA), in partnership with other
Missions under the National Climate Change Action Plan, is working to mitigate the
effects of climate change and sustain agricultural productivity. Under NMSA, Soil Health
Cards are provided to farmers for the purpose of providing crop-wise nutrient
management recommendations and enabling them to increase soil fertility and crop
productivity. So far, more than 62 million cards have been issued. Land under organic
farming has grown more than 17-fold over the last decade.
Efforts have also been made to reshape crop insurance support to reduce risks sustained
by farmers and to provide broad single-window risk coverage for different crops. 30 per
cent has already been achieved against the goal of covering 50 per cent of the total
cropped area in the country during 2016-19. Further access by farmers to new knowledge
and skills is being improved. For example, 652 Agricultural Technology Management
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Agencies have been formed across the country to disseminate the latest technology to
farmers. These agencies collectively reached 1.2 million farmers in 2016-17, half of
whom were women. The management of seed quality and variety is another significant
feature of sustainable agriculture. For example, the National Bureau of Plant Genetic
Resources has a list of 257,432 germplasm accessions. Several research-based and
creative approaches are also being promoted. For example, the Central Soil Salinity
Research Institute has successfully developed and deployed customized salt-tolerant
varieties in major crops like rice, wheat and mustard.
Agricultural Productivity and Farmers’ Income

Small and marginal farmers make up almost 80% of all Indian farmers. More than 90%
of them are engaged in rain-fed agriculture. It is therefore important to increase the
income of farmers by following various strategies. Several countries in India have made
progress in the revision of their Land Leasing Acts in line with the Model Act established
by NITI Aayog. The Model Act aims to protect the interests of the tenant while also
ensuring that the landowner does not run the risk of losing control of his land to the
tenant.
Figure 4.8: Doubling Farmers' Income by 2022
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Micro-irrigation occupies an area of almost 1.3 million hectares in 2015-17. The average
productivity of fruit and vegetables improved by 42.3 per cent and 52.8 per cent ,
respectively, due to crop spacing, sound use of water and other inputs. Approximately
38,000 hectares were covered in rain-fed areas during 2016-17 under the Integrated
Farming Method. This initiative connects the farming system with activities such as
horticulture, livestock farming and fisheries to increase productivity. It also helps secure
farmers ' incomes from the vagaries of nature.
Nearly 250 wholesale agricultural markets across 10 countries have been aligned with the
National Agricultural Marketing Network. A number of other agricultural reforms are
being implemented in collaboration with state governments, including the direct
purchasing of agricultural products from farmers, the promotion of etrading and ensuring
the validity of a single national trading licence.
SDG 3: Good Health and Well-Being | Ensure Healthy Lives and Promote Well-
Being for All at All Ages
India has made significant strides in improving various health indicators. The country’s
strategy in health is focused on providing essential services to the entire population, with
a special emphasis on the poor and vulnerable groups.
Figure 4.9: Reduction in Infant & Child Mortality Rates (Per 1,000 Live Births)
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Improving the health status of women and children

India has built a Roadmap, the 'India Newborn Action Plan,' to meet the goals set out in
the global 'Every Newborn Action Plan' by 2030, five years before the global deadline.
Other flagship programmes include ICDS, Rashtriya Bal Swasthya Karyakram (a child
health screening and early intervention programme) and JSY. A number of projects in
this field are using technology to improve the health metrics of women and children. For
example, ANMOL (Auxiliary Nurse Midwives Online) is a tablet-based application
launched by the Ministry of Health & Family Welfare to enable Midwives Auxiliary
Nurse to enter and update data electronically for recipients in their jurisdictions.
Similarly, the digitization of ICDS centers allows real-time monitoring of service
delivery throughout the region.
Progress Made in the Areas of Family Planning, Maternal Health & Child Health
Figure 4.10: Improvements in the vaccination coverage of children between 12-23

months (%)
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Figure 4.11: Total Fertility Rate (children per woman)
Figure 4.12: A Minimum of 4 Antenatal Care Visits (% of last births in the past 5
years)
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Figure 4.13: Increase in Institutional Deliveries Under Janani Suraksha Yojana (%)
Preventing Communicable Diseases

Priority has been given to the prevention and control of six diseases, including Malaria,
Japanese Encephalitis, Dengue, Chikungunya, Kala-Azar and Lymphatic Filariasis, under
the National Vector Borne Disease Control Programme. In addition , the Government has
recently initiated a National Strategic Plan aimed at eliminating TB by 2025. A new
medication, Bedaquiline, has also been introduced to treat drug-resistant TB. In addition,
the Integrated Disease Surveillance Program provides early warning signals for prompt
action to resolve health problems in the region.
Reducing the Burden of Non-Communicable Diseases
The National Program for the Prevention of Non-Communicable Diseases, including
Cancer and Cardiovascular Diseases, focuses on the promotion of healthy lifestyles in
cooperation with a variety of stakeholders, including civil society and the media. A
National Non-Communicable Diseases Cell has been developed along with 36 and 318
cells at the state and district levels. In addition, 71 Cardiac Care Units and 61 Day Care
Centers for Chemotherapy have been built in various districts across the country. The
government has also initiated a mobile health project, mDiabetes, to increase awareness
of the disease.
As heart disease affects a large number of people in the country, the government has
taken measures to ensure that coronary stents are available at affordable rates. In
addition, the National Dialysis Services Program for patients with renal disease has been
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launched. Recognizing the enormous burden of mental health problems, the Indian
Parliament recently passed the Mental Healthcare Bill, which decriminalizes suicide and
safeguards patients' property rights.
Ensuring access to basic health facilities for all

The National Health Mission offers flexible support to state governments to develop
district and sub-district facilities. INR 267 billion (USD 4 billion) was allocated to the
Mission in 2017-18, making it one of the largest centrally funded schemes of the
Government of India. In addition, the Government has introduced a National Health
Insurance Program to offer financial support to families who are below the poverty line
and have lost their primary wage earners. These families will be provided with health
benefits in the amount of INR 100,000 (USD 1,563). To ensure the availability of
adequately qualified physicians, the government creates an additional 5,000 postgraduate
seats each year. In addition, steps are being taken to transform the regulatory system for
medical education and practise in the region.
Index for Spurring Improvements in Health

The Ministry of Health & Family Welfare and NITI Aayog are leading the Health Index
initiative. The Index has been established to monitor the performance of the various
health indicators at the state level. The goal is to enable States to improve their data
collection processes as well as their health outcomes. The Index provides metrics relating
to health sector operations, governance structures and outcomes.
Traditional and Alternative Systems of Medicine

The Ministry of AYUSH (Ayurveda, Yoga and Naturopathy, Unani , Siddha and
Homoeopathy) was founded in 2014 to promote indigenous and alternative health
systems in India. There are currently 0.8 million registered AYUSH practitioners in India
who practice traditional Indian medicine as a complement to modern medicine. There is
also a huge infrastructure for AYUSH in the country with 3,277 hospitals and 24,289
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clinics. In addition, many national programmes have been undertaken to align AYUSH
with health care initiatives. In Tamil Nadu, for example, a pilot project was initiated to
provide AYUSH services as part of the nutrition scheme. The programme has produced
positive results in the form of a decrease in infant and maternal mortality rates as well as
anaemia among children. Yoga practise began in India thousands of years ago. Promotes
and avoids wellbeing Psycho-somatic conditions. Given the immense popularity of Yoga
across the world, the Indian Prime Minister moved a draft resolution, endorsed by 175
member states, for celebrating the International Day of Yoga. Since 2015, International
Yoga Day is celebrated across the globe on 21st June every year.
SDG 5: Gender Equality | Achieve Gender Equality and Empower All Women and
Girls
While much more progress remains to be made, a number of indicators pertaining to the
status of women in India have moved in the right direction over the years.
Figure 4.14: Progress With Respect to Gender-Related Indicators (%)
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Addressing discrimination against women

The Government of India has introduced a variety of laws and welfare programmes to
curb the practise of female feticide and sex-selective abortion. In addition, the
government has initiated a Beti Bachao Beti Padhao (Save the Girl Child, Educate the
Girl Child) campaign to catalyse change of mind and to protect and educate the girl child.
Mukhyamantri Balika Cycle Yojana (Chief Minister’s Cycle Initiative for a Girl Child)-
The scheme for reducing school dropout rates for girls was introduced in the state of
Bihar. Under the system, every girl in the state who entered Class 9 or Class 10 was
given a cycle. Following the implementation of the scheme, a major decline in the drop-
out rate of girls from school has been achieved.
Beti Bachao Beti Padhao- The Campaign links interventions at the national, state and
district levels with community-level action in 100 selected districts low in Child Sex
Ratio, for achieving accelerated impact. For ensuring survival, protection and education
of the girl child, efforts are being made to converge the initiatives of the Ministry of
Health & Family Welfare as well as the Ministry of Human Resource Development.
Women often face other forms of discrimination. For example , a study on Gender and
Livelihood Impacts of Clean Cook Stoves in South Asia shows that Indian women spend
approximately 374 hours a year collecting firewood. Otherwise, this amount of time may
be spent on schooling or productive jobs. In response to this issue, the government
launched Pradhan Mantri Ujjwala Yojana to provide clean cooking fuel in the form of
Liquefied Petroleum Gas connections.
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Figure 4.15: A Significantly Larger Percentage of Households Now Have Access to

Clean Fuel
Women are also impacted overwhelmingly by the lack of sanitation facilities at home. In
addition, the lack of sufficient facilities for sanitation and menstrual hygiene management
in schools is one of the factors that lead to girls leaving secondary school. This problem
is being tackled via the government's flagship sanitation programme.
Increasing access to employment

The Labor Bureau study shows that the female labour force participation rate in India was
as low as 23.7% in 2015-16. To counter this, the Government has initiated a range of
initiatives, some of which are highlighted below. In addition to the programmes and
schemes of the central and state governments, a variety of policies are also in effect. The
Indian Parliament recently released a Maternity Care Bill offering 26 weeks' paid leave to
working women who are pregnant. The underlying purpose of these policies is to
empower and provide legal and constitutional protections for women.
Initiatives for Improving Female Labour Force Participation

Mahila E-HAAT is a bilingual direct online marketing platform leveraging
technology for supporting women entrepreneurs and Self-Help Groups for showcasing
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their products and services. It was adjudged as one of the top 100 projects in India during
2016.
Stand Up India was launched in 2016 for providing bank loans to woman borrowers for
setting up a Greenfield enterprise.
Mahila Shakti Kendra is an initiative that supports establishment of Women
Empowerment Centres at the village-level. The Centres aim to converge action in several
areas including skill development, employment, digital literacy, health and nutrition to
provide a comprehensive package of services.
Women Transforming India is an online contest launched by NITI Aayog, in
partnership with United Nations, India and MyGov for crowdsourcing stories of women
who are making a difference in their respective fields. The best stories are awarded.
Strengthening Social Protection and Security

One Stop Trauma Centers are being set up throughout the country to provide organised
assistance to violence-affected women in both private and public spaces. The
programmes provide medical support, psychosocial counseling, legal assistance, shelter
and a video conferencing system to facilitate police and court proceedings. Women's
Helpline initiative has since been incorporated with the One Stop Crisis Centers. The goal
is to provide an urgent response to women affected by violence through a number that is
active 24 hours a day. Trafficking of women for commercial sexual exploitation is
another problem. The Government has introduced a range of initiatives to address this
issue.
Initiatives by State Governments on Women’s Safety

Bharosa (trust): An Initiative of the Hyderabad City Police & Telangana. Provides in one
place a range of support services to women affected by violence. The focus is on enabling
women to deal with the challenges they are facing in a confident manner.
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Himmat (courage) Safety Solutions for Women: Delhi Police Emergency

Services for Citizens. Is a 24x7 police emergency service, providing free
services including legal support. It also provides ambulance assistance to citizens.
Further, an application called ‘Himmat’ has been launched for enabling the safety of
working women who travel to their homes late at night.
SDG 9: Industry, Innovation and Infrastructure | Build Resilient Infrastructure,

Promote Inclusive and Sustainable Industrialization and Foster Innovation
Building Resilient Infrastructure

All modes of transport-roads, rail, civil aviation and waterways-are being rapidly
expanded. A total of 8,231 km of national highways were built during 2016-17. To date,
70% of targeted rural dwellings without road connectivity have been connected to all-
weather roads. In addition, the construction of 37 national waterways is scheduled for the
next three years. This would have a positive impact on the reduction of total logistic costs
and the environmental impact. Over the next 5 years, 106 cities will now have a
combined length of 8,000 km of pavements and bike tracks to facilitate non-motorized
transport and reduce the carbon footprint. In 2017-18, 3,500 km of railway lines will be
built to reinforce the rail sector. The Government has set an investment target of INR 25
trillion (USD 390 billion) for infrastructure growth over a three-year period (2016-19).
Efforts are also made to mobilize additional capital. For example, the monetization of 75
public-funded highway projects worth INR 356 billion (USD 5.6 billion) through the toll-
transfer mode would finance the construction of 2,700 km of highways. In addition, an
INR 350 billion (USD 5.5 billion) is being set up by the Indian Railways Development
Fund to act as an institutional framework for raising market funds. In 2016 , India
advanced to 19 positions in the World Bank Logistics Efficiency Index, finishing 35 out
of 160 nations.
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Another area that is being prioritized is ensuring access to electricity for all citizens. The
Deen Dayal Upadhyaya Gram Jyoti Yojana aims to provide a continuous supply of
power to all parts of rural India. Thus far, over 99% of villages have been electrified.
Strengthening the Manufacturing Sector

The National Manufacturing Strategy focuses on sustainable job development in the
sector in collaboration with sub-national governments. The policy increased the target
production from 16% of GDP to 25 % by 2025, along with the creation of 100 million
jobs. National Investment and Manufacturing Zones (NIMZs) have been implemented as
a significant instrument. Eight NIMZs have been approved along the Delhi-Mumbai
Industrial Corridor and three are being built in the states of Andhra Pradesh, Telangana
and Odisha. These zones are envisaged as integrated industrial townships with state-of-
the-art infrastructure, energy-efficient technology and skills development facilities for the
provision of an enabling environment for manufacturing industries. Clean technologies
are being promoted through the provision of suitable incentives. For eg, buildings with a
green rating qualify for an incentive grant of INR 200,000 (USD 3.125).
In addition, many policy initiatives have been implemented to improve the employment-
intensive segments of the manufacturing sector. For small and medium-sized companies,
the initiatives provide tax exemption, preferential access to bank financing and expanded
access to risk capital options. For example, the income tax rate has been reduced to 25%
for companies with revenue of up to INR 500 million (USD 7.8 million). The recently
launched Pradhan Mantri MUDRA Yojana (Micro Unit Production and Refinancing
Agency) provides easy credit to small business entrepreneurs. A special package for job
development and export promotion in the textile and clothing sector has also been
implemented. It is aimed at the production of over three years. This is expected to
increase the participation of women, in particular as they make up approximately 70% of
the workforce in this sector. As far as foreign direct investment ( FDI) is concerned,
many policy reforms are underway, including an increase in the FDI cap to 100 per cent,
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with 49 per cent under the automatic defense route, as well as a 100 per cent FDI under
the government approval trading route. These reforms have resulted in an inflow of USD
156 billion over the previous three fiscal years, including a record-breaking USD 56
billion in the last fiscal year. Another project launched by the Government to draw
investment to 25 industries, including engineering, is 'Make in India.' These efforts have
significantly accelerated foreign direct investment (FDI) inflows and helped the country
maintain an average growth rate of 7.5 per cent over the last three fiscal years (2014-15
to 2016-17).
Overcoming the Digital Divide and Leveraging ICT

Several initiatives are being introduced to allow the digital empowerment of society. For
example, Aadhaar now covers more than 90 % of the country’s population. In addition,
DBT has transformed the distribution of services to 329 million beneficiaries in the
majority of government programmes with a total disbursement of INR 1,6 trillion (USD
25 billion). In addition, Bharat Broadband Network Ltd. The goal of the initiative is to
provide high-speed broadband connectivity to 2,47,864 villages or clusters in the country.
Internet penetration is also increasingly expanding. Currently there are 432 million
Internet users in India. Another essential project is DigiLocker, which offers access to 1.7
billion digitized documents (driving license, school certificates, etc.).
Strengthening Capabilities in Science, Technology & Innovation

India is one of the world's leading countries in the field of scientific research and one of
the top five in space exploration. The number of scientific papers written and patents
filed is ranked 9th and 12th in the world. Significant breakthroughs in the field of
information communication technology systems and e-government have been made in
recent years. These include Aadhaar, DBT and decision-making support structures based
on Geographic Information Systems. India is also emerging as a major research and
development centre for information technology and electronics. India accounted for 40%
(USD 13.4 billion) of global engineering research and development in 2016. The Atal
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Innovation Mission, which aims to change the landscape of innovation and

entrepreneurship in the country, is a recent government initiative. More than 500
Tinkering Laboratories are set up in schools across the country. These Labs aim to
facilitate the holistic development of students by providing them the space to experiment
and put their ideas into practice. Further, the India Innovation Index Framework has been
launched for tracking and identifying promising innovations in the country. The President
of India recently hosted a landmark event, the Festival of Innovation, for reinforcing the
inclusiveness of the innovation ecosystem.
Figure 4.16: Increase in Installed Electricity Generation Capacity (GW)
Note: Over the last five years, there has been a consistent growth in installed electricity
generation capacity. The installed capacity in non-fossil-fuel sectors has grown by 51.3%
and more than doubled inthe renewable energy sector (solar, wind, bio- and small hydro
power).
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SDG 14: Life below Water | Conserve and Sustainably Use the Oceans, Seas and
Marine Resources for Sustainable Development
India has taken various steps to protect and enhance the coastal and marine ecosystem.
The first Maritime Summit was organized in the country in April 2016. More than 4,500
delegates from across 40 countries participated in the Summit.
Mangroves and Coral Reefs

India has a long tradition of forest mangrove management. The mangroves of
Sundarbans, found in the Bay of Bengal, were the first in the world to be put under
scientific control. The Government of India funds research and development programmes
focusing on mangrove biodiversity. There was a net increase of 112 square kilometres in
the mangrove area of the country compared to the previous assessment. In fact, there are
more than 15,000 ha. Mangroves have been planted in Gujarat alone through the active
participation of local communities under the Integrated Coastal Zone Management
project. In addition, India is part of the regional project 'Mangroves for the Future,' which
is being organised by the United Nations Development Program and the International
Union for the Conservation of Nature. Four major coral reefs have also been designated
for intensive protection and management in the region.
Ensuring Sustainability of Fisheries

India has the world’s largest community of fishing communities. These groups are spread
out across 3,600 fishing villages. More than 14.50 million people rely on fishing for their
livelihoods. A number of steps have been taken by the Government to ensure the
sustainable development of the industry, with a focus on the creation of livelihoods and
the conservation of resources. Some of the steps include the creation of a future fishing
zone advisory programme, the modernization and upgrade of fishing centers and the ban
on mechanized fishing in certain areas. The Prime Minister of India has stressed the need
for a "Blue Revolution." In line with its vision, a central strategy, Integrated Fisheries
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Production and Management, has been formulated. A comprehensive Integrated National

Fisheries Action Plan 2016 has also been drawn up. The plan envisages linking 15
million beneficiaries to livelihood opportunities through a range of interventions. Further,
the government has emphasized maintenance of the ecological integrity of the marine
environment, in order to ensure that there are no adverse effects on endangered marine
species.
Protection of Coastal Ecosystems

Various national and sub-national legislation for the management and security of the
coastal and marine environment is in effect. India has also ratified several international
treaties on the use of oceans and their energy, including the United Nations Convention
on the Law of the Sea. An online tool for forecasting oil spill movements, the Online Oil
Spill Advisory System, was introduced in 2015. In addition, the updated National Oil
Disaster Contingency Plan 2015 reflects important national regulations as well as existing
international standards. Furthermore, the level of marine pollution is tracked by the
Government at various locations along the coast of the country via the Coastal Ocean
Monitoring and Prediction System. India is also setting up a Coastal Marine Observation
System to gain a better understanding of coastal processes and to track water quality.
Figure 4.17: National Policy on Marine Fisheries, 2017
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Holistic Development of Islands and Coastal Areas

In 2016, the Prime Minister of India launched a flagship initiative, Sagarmala, to
encourage port connectivity, growth and industrialization in a phased manner between
2015 and 2025. The holistic and sustainable development of coastal communities ,
especially those engaged in fishing, is one of the main pillars of the programme. Coastal
tourism is also being promoted within the context of the programme to encourage access
to better livelihood opportunities.
SDG 17: Revitalize the Global Partnership for Sustainable Development |

Strengthen the Means of Implementation and Revitalize the Global Partnership for
Sustainable Development
Financing the SDGs in India and Status of Official Development Assistance (ODA)
Globally
Although working to revitalize the global partnership for the achievement of the SDGs,
India reaffirms the concept of mutual yet differentiated responsibilities. Despite
considerable efforts to mobilize domestic capital, India is unlikely to collect adequate
revenues to achieve the SDGs. India therefore reiterates that industrialized countries have
an indispensable responsibility to provide financial assistance to developing countries , in
particular to global public goods such as climate change mitigation and pandemic
prevention, so that they can completely achieve the SDGs. India also underlines the need
for international cooperation to curb illicit financial flows, to identify assistance clearly
and to develop robust structures for monitoring the commitments made by donor
countries. Against this backdrop, India is making every effort possible to increase its own
revenue capital as mentioned below.
Improving Taxation Capacity and Compliance

The tax-to - GDP ratio in India is slightly lower than the average for the BRICS
countries. There is therefore significant potential for improving domestic capital by
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expanding the tax base and enhancing the tax administration system. The Government of
India has committed itself to introducing an aggressive tax reform programme, including
the Goods and Services Tax (GST) and direct tax reforms to increase domestic capital
mobilization while committed to sustaining public debt in the medium term. An
innovative tax such as the Swachh Bharat Cess (Clean India Cess) has also been imposed
for the mobilization of money for the Clean India Campaign. In addition, the introduction
of budgetary accountability legislation guarantees predictable and balanced budgeting as
well as sustainability of long-term debt. A critical constraint in India's efforts to boost the
effectiveness of tax collection is the lack of adequate global cooperation on money
laundering and slow progress on mutual administrative assistance in tax matters. Global
cooperation that decreases this restriction will enhance the capacity of India and the
entire developing world to secure the means of implementation of the SDGs. It is
estimated that developing countries lose nearly USD 1 trillion per year as a result of illicit
financial flows (black money created by money laundering and adverse financial
transactions such as under-or over-invoicing). Global tax havens and tax avoidance make
it very difficult for countries to mobilise money at home.
India has repeatedly highlighted the extent of sales losses in developing countries as a
result of multinationals' profit-shifting activities (transfer pricing). One of the major
challenges is that developing countries are often forced to comply with the norms that
have been established by the developed world. India, backed by the G77 and China,
introduced stronger international tax rules and favored an intergovernmental tax body.
However, this attempt has not been successful. India’s modest achievement (hailed as
important in diplomatic circles) has been the implementation of new modalities in the
constitution of the UN-promoted International Tax Committee (the Committee of Experts
on International Cooperation in Tax Matters under the UN Economic and Social
Council).
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Strengthening Sub-National Governments

States and local authorities will be at the forefront of the adoption of the SDG strategy in
India. The fiscal relationship between the national government and sub-national
governments is experiencing paradigm shifts. The Fourteenth Finance Commission raised
the share of tax devolution from 32% to 42% of the divisible pool. In addition , special
purpose grants to ensure universal primary education, wellness, jobs, affordable housing
and urbanization provide a strong mutual confidence base for SDGs. In addition, the
Center also complements the finances of the Local Body by providing them with
adequate fiscal space. Targeted and well-funded programs to encourage gender equality
and empowerment and address the unique needs of vulnerable groups are crucial to
India's development strategy.
Enhancing Efficiency of Expenditures

On the expenditure front, the government has fully restructured the expenditure budget
system. This restructuring will allow the government to track the effects of various public
spending initiatives in terms of their effect on the SDGs and, where appropriate, to make
course corrections. The implementation of sunset clauses for all public procurement
programmes would enable the government to divest itself of unproductive 'league'
expenditure and deploy the freed money for programmes that will contribute to the
achievement of the SDGs. A robust public financial management system is now
operational that enables the government to monitor spending flows to the end of targets in
real time, thus leading to improved efficiency in the management of public expenditure.
These major changes in the quality and predictability of public spending would play an
important role in ensuring the funding of the SDGs.
Establishing Strong Partnerships with the Private Sector

India has had one of the largest public-private partnership (PPP) projects in the world.
Given the considerable funding requirements for SDGs, it is important to continue to
concentrate on PPP initiatives and to overcome the complexities of their roll-out. Given
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the vast funding needs, it is critical for the private sector to have access to global finance.
To this end, the government has embarked on a comprehensive series of reforms aimed at
attracting FDI, including opening up key sectors such as the defense and rail sectors to
such investment. Increased private investment would be crucial to ensuring high growth,
employment and improved productive performance. Thus, India has framed clear policies
that open up the economy to FDI to accelerate financing from this source; last year saw
an increase of 36% in FDI inflows amid a 5 percent reduction in global FDI inflows.
Here too, India faces a challenge needing international action. India has had one of the
largest public-private partnership (PPP) projects in the world. Given the considerable
funding requirements for SDGs, it is important to continue to concentrate on PPP
initiatives and to overcome the complexities of their roll-out. Given the vast funding
needs, it is critical for the private sector to have access to global finance. To this end, the
government has embarked on a comprehensive series of reforms aimed at attracting FDI,
including opening up key sectors such as the defence and rail sectors to such investment.
Increased private investment would be crucial to ensuring high growth, employment and
improved productive performance. Thus, India has framed clear policies that open up the
economy to FDI to accelerate financing from this source; last year saw an increase of
36% in FDI inflows amid a 5 percent reduction in global FDI inflows. Here too, India
faces a challenge needing international action.
Promoting South-South Cooperation

In order to achieve the objectives of the SDGs in the sense of shared prosperity and
destiny, especially in the area to which it belongs, India has adopted the principles of
South-South cooperation in its bilateral and multilateral commitments. This helps to
promote the Southern narrative on growth and sustainability in multilateral fora. South-
South collaboration is especially advantageous in the exchange of best practices, the
sustainable use of regionally accessible resources and joint development initiatives on
common challenges.
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Reforming the Aid System and Honouring Existing ODA Commitments

While domestic resource mobilization is becoming increasingly necessary, high-income
nations that are part of the Development Assistance Committee (DAC) still need to
honour their commitments to provide 0.7% of GDP as an ODA. ODA is particularly
important in the sense of global public goods such as climate change mitigation, habitats
and biodiversity, as well as pandemics. For example, at the 21st Conference of the Parties
to the United Nations Framework Convention on Climate Change, developed countries
reiterated their pledge to mobilize USD 100 billion of additional resources annually by
2020 through the Green Climate Fund to meet the needs of developing nations. On
average, DAC members account for just 0.3 per cent of GDP, with a handful of countries
reaching or exceeding 0.7 per cent. Ironically, the highest ODA-to-GNI ratio in 2016 was
for non-DAC members, the United Arab Emirates (1.12 per cent). During 2013, it was
estimated that if all DAC members had reached the 0.7% goal, an additional USD 184
billion could have been mobilised. Furthermore, there is a need to lay down specific
eligibility criteria and ensure greater clarity with regard to ODA. There is currently some
uncertainty as to what qualifies as help. For example, contrary to the spirit of the Cancun
Agreement, a large proportion of ODAs is sometimes counted twice – both for climate
finance and for ODA. In addition, comprehensive mechanisms for tracking assistance
commitments made by donor countries have not been placed in place.
Figure 4.18: ODA/GNI Ratio of Major Donor Countries (2016)
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Technology Facilitation Mechanism (TFM) for SDGs

The Addis Ababa Action Agenda developed a new framework for making technology
available to developing countries to adopt the SDGs known as the TFM. India, through
its submissions, has stressed that the urgent delivery of technology development ,
implementation, distribution and transition to developing countries requires an adequate
response. This requires continued focus by all countries on improving enabling
environments, promoting access to technology and funding that leverages private sector
capital.
Data, Monitoring and Accountability

The Indian Statistical Structure operates within the overall administrative context of the
country. The central and state ministries are responsible for collecting statistics on the
subject, depending on whether they are part of the central, state or concurrent lists of the
Constitution. MOSPI has overall responsibility for statistical coordination in the region,
including the definition of standards, as well as ensuring the quality and timeliness of
statistics. At the state level, the Directorate of Economics and Statistics performs a
similar role in accordance with the overall standards set by the MoSPI.
Legal Framework for Data Collection

Primary statistical information shall be obtained in accordance with the provisions of the
various Acts and Rules of Procedure. In addition, in 2011, MoSPI notified the survey
guidelines for the conduct of all-India surveys. Government agencies are obligated to
obey these guidelines when conducting national surveys in order to ensure consistency in
quality. In May 2016, the Government of India notified the 'Fundamental Principles of
Official Statistics' in the form of the 'Fundamental Principles of Official Statistics' and the
Survey Guidelines notified by the MoSPI may, after validation by the Ministry of
Government, be considered for SDG monitoring purposes. MoSPI periodically organises
conferences with data producers and users to provide updates, identify gaps in data and
statistical methods and initiate the required correction of courses.
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Monitoring Framework for SDGs

At the national level, efforts are underway to finalize metrics that will allow for the
tracking of progress achieved on the SDGs. In addition, there is a focus on evaluating and
enhancing the availability of data, as well as developing transparent monitoring systems.
India recognises that the successful monitoring of SDGs would require mechanisms to be
placed in place to produce a collection of data that is wider, more disaggregated and
accessible at shorter time intervals compared to the data currently used to review
development efforts. Disaggregated data is important as it enables the implementation of
successful policies targeted at particular disadvantaged groups and geographical areas in
the world. Through a series of technical workshops conducted by NITI Aayog in which
MoSPI was an active participant, draught indicators for SDG monitoring were assessed
on the basis of the regularity of data generation and availability of disaggregated data.
Civil society groups and other stakeholders also make important contributions to the
creation of the measurement system. In addition, the government aims to improve
processes for monitoring and reporting of SDGs via a dashboard currently under
development, with technical support from the UNDP. A number of priorities in the SDGs
do not enable the government to provide public services, but rather to establish and
implement the required policy and regulatory structures. Given the inter-relationship
between the objectives and objectives, the Government is also considering setting up a
high-level committee headed by the Chief Statistician of India to oversee the national
monitoring framework for SDGs. Steps are being taken to improve the country 's
statistical framework by appropriate financial and human resource investments. The
emphasis is also on bridging gaps and finding new sources for meeting rising data
requirements. For example, it has been agreed that Labor Force surveys providing
employment / unemployment estimates will be conducted on a quarterly basis for urban
India and annually for the country as a whole. In addition, it is proposed to carry out
Time Use surveys, which will serve as a significant source of data for the evaluation of
gender-related economic inequalities. Several projects are also being launched to
modernise the data system, including e-collection, e-dissemination and the use of space
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technology for household surveys. Although national initiatives are of vital importance,
global technical support is also important in numerous fields, including the development
of data collection methodologies as well as monitoring and evaluation. This is especially
relevant in the context of the fact that a number of the indicators for tracking SDGs at the
global level are not necessarily readily measurable at the country level. In its VNR last
year, Estonia had highlighted that following their initial review of 231 global sustainable
development indicators; only 14% were found to be measurable.
4.5.6 Achievements of Sustainable Development Goals in India
With world leaders expected to meet in September 2015, a great deal of energy is being
spent deliberating about what the new targets that are currently in the form of the draught
Sustainable Development Goals (SDGs) should be. The SDGs would be more ambitious
than the Millennium Development Goals, addressing a wide variety of interlinked topics,
from economic growth to social issues to global public goods. The implementation of the
SDGs requires each country to prioritise and change the priorities and objectives in line
with the local challenges, capacities and resources available. After the Third International
Conference on Financing for Growth held in Addis Ababa in July 2015, world leaders
have also begun to shift their attention to the crucial issue of how to fund the post-2015
agenda.
Financial resources are a crucial factor for a number of other capital and human
resources. As a consequence, the availability and management of finance is one of the
initial measures to achieve the post-2015 growth agenda. This report is drawn up with the
intention of performing a financial assessment for India in order to achieve the SDGs.
The report assesses the public services currently available under different government
initiatives and policies. In particular, it looks at initiatives and policies that are consistent
with the SDGs to estimate the additional funding needed and the gaps for India to achieve
the SDGs. With the scope of 17 goals and 169 targets drawn up by the Open Working
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Group on SDGs, this research must be viewed as a simple exercise offering minimalist
estimates; the actual finances needed could be much higher.
What is the Post 2015 Development Agenda?

After a committed and clear effort over the last year, the global community has built an
agenda that aims to resolve human development issues for everyone while preserving the
sustainability of the earth and its ecosystems. The post-2015 UN Development Agenda is
a specific participatory exercise that led to the development of a sustainable development
structure consisting of 17 objectives addressing key human issues and 169 interlinked
objectives that represent the dynamic and interlinked existence of the social, economic
and ecological well-being parameters.
The post-2015 UN Development Agenda, consisting of 17 Sustainable Development

Goals (SDGs), will be implemented in September 2015 to replace the Millennium
Development Goals (MDGs). These enthusiastic and aspiring SDGs call for major
rethinking of construction processes around the world. They also call for significant
resources to be allocated and invested in priority areas as set out in the priorities and
goals for each Member State.
Role of SDGS in India

In recent years, India has focused its development direction towards meeting its priorities
of jobs, economic growth, food, water and energy protection, disaster resilience and
poverty alleviation. India also aims to restore its natural resources and to create
transparent and robust governance along democratic lines. However, emerging threats to
climate change effects, rising inequities and lagging human development indices are well
known by both residents and the government. The post-2015 UN Sustainable
Development Agenda Framework offers an opportunity to renew and incorporate efforts
to meet, to a significant degree, national and global aspirations within a given timeframe.
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Finance
The SDGs would be more ambitious than the MDGs, addressing a wide range of
interconnected topics, from economic development to social issues to global public
goods, and a just-as-ambitious funding and implementation strategy is required. The size
of the SDG funding challenge far exceeds the ability of any entity and calls for a strong
collaboration between governments, the private sector and development organizations.
The SDGs would have very important global resource consequences. At the global level,
UNCTAD's overall investment needs range from USD 5 billion to USD 7 trillion per
year. Total investment needs in developing countries alone may be around USD 3.9
trillion per year, primarily for basic infrastructure (roads, rail and ports, power stations,
water and sanitation), food security (agriculture and rural development), climate change
mitigation and adaptation, health and education. Actual investment in these sectors is
around USD 1,4 trillion, leaving a deficit of around USD 2,5 trillion and an annual
investment gap of between USD 1,9 billion and USD 3,1 trillion (UNCTAD, 2014).
India’s Finance Gap

The first stage of forecasts indicates a financial deficit of INR 533 lakh crores (USD 8.5
trillion) over the 15-year period for the achievement of SDGs1. On average, this amounts
to INR 36 lakh crores or USD 565 billion per year. (Note that this is just the financial
distance to meet the SDGs, not the total financial requirement.) This is a minimalist
calculation and the real sums are likely to be much higher. The table at the end of this
section summarises the projections for each objective. These figures reflect a fraction of
the global estimates of USD 5-7 trillion per year needed to reach the SDGs according to
the 2014 UNCTAD report. Estimates of investment needs in developed countries vary
from USD 3.3 trillion to USD 4.5 trillion per year. The SDGs would entail a step-by -
step shift in the level of public and private investment in all countries. Developing
countries alone face an annual deficit of USD 2.5 trillion at current levels of investment
in SDG-relevant sectors.
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The WRI compiled by Adam Fishman for the International Research Forum shows that
public domestic finance in developing countries more than doubled between 2002 and
2011, increasing from USD 838 billion to USD 1.86 trillion. However, as analysed by
Kharas et al, "there is an issue of a 'missing center' where foreign public funding is
dropping faster than the increase in tax and government revenues, leading to a net
decrease in overall available public finances relative to national ones" (Kharas, Prizzon,
& Rogerson, 2014). OECD countries collect 34% of their GDP as a tax; developed
nations collect half of that rate (DCR 91) (Fishman, 2015). It is also clear that public
funds alone will be insufficient and that even the available private finance will not be
sufficient to fill the holes that have been projected. There is a need to reassess financial
requirements from a perspective of innovative policy strategies to address the core needs
of poverty eradication, gender, equity, governance issues sustained growth, investment in
fundamental natural resources and climates response, in a synchronised and systemic
manner.
The table below compares the estimates of the UNCTAD study and the present study
about financial requirements and gaps. The methodology used by UNCTAD for
estimating global investment needs and gaps for achieving SDGs has certain similarities
and differences with the methodology of this study, as highlighted in the box in the
following page.
Study Finance required Gap

UNCTAD: annual investment needed USD 5-7 trillion
globally to achieve SDGs
UNCTAD: annual investment needed in USD 3.9 trillion USD 2.5 trillion
developing countries to achieve SDGs
Present study: annual spending needed in USD 0.96 trillion USD 0.56 trillio
India to achieve SDGs
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Estimates of the financial deficit can be put into perspective by comparing it with existing
public spending in India, as illustrated in the table below. The annual financial gap
calculated in the study is more than twice the projected and non-planned budgeted
expenditure of the Union budget of India. The annual difference is almost equal to the
total budgeted spending of the Center and the Member States for 2013-14. Interestingly,
the annual financial difference for achieving the SDGs is one-fourth of India's GDP in
2014-15.
Comparison Value Source/Remarks

Plan and non-plan budgeted USD 0.2 trillion Union Budget of India
expenditure, Union Budget of 2015-16
India 2015-16
Combined budgeted expenditure USD 0.5 trillion Indian Public Finance
of centre and states, 2013-14 Statistics 2013-14, Ministry
of Finance
GDP of India, 2014-15 USD 2.3 trillion Nominal, April 2015, IMF
Current: India’s progress across the SDGs
India, home to one-sixth of all mankind, holds the key to the success of the 2030 Agenda.
India's second VNR turned the model into a "whole-of-society" approach, with the
Government of India engaging sub-national and state governments, civil society
organisations, local societies, citizens in disadvantaged circumstances and the private
sector. India’s commitment to the SDGs is expressed in its convergence with the national
development agenda as reflected in the Sabka Saath Sabka Vikaas slogan (Collective
Efforts for Inclusive Growth). Based on evidence from the SDG India Index, which
tracks progress at the sub-national level, the country has developed a robust SDG
localization model focused on adoption, implementation and monitoring at the state and
district levels.
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The following narrative further encapsulates India’s progress across the SDGs.
Sashakt Bharat - Sabal Bharat (Empowered and Resilient India): India has
successfully lifted more than 271 million people out of multidimensional poverty through
economic growth and empowerment. Enhanced access to nutrition, child health,
education, sanitation, drinking water, electricity and housing, has led to reduced
inequalities especially among people in vulnerable situations.
Swachh Bharat - Swasth Bharat (Clean and Healthy India): Through a nationwide
initiative triggered by the Clean India Campaign and the National Nutrition Mission,
India achieved 100% rural sanitation and sharp reduction in stunting and child and
maternal mortality rates. Universal health coverage has been institutionalized through
Ayushmaan Bharat, the world’s largest health protection scheme which provides an
annual cover of USD 7,000 to 100 million families, covering nearly 500 million
individuals. India is at the forefront in the call for joint global action to address the
COVID-19 pandemic. The country has extended medical assistance to several countries
and has operationalized the SAARC COVID-19 Emergency Fund with an initial
contribution of USD 10 million. Domestically, India’s response to the COVID-19
pandemic includes an initial USD 22.5 billion economic stimulus package,
comprehensive health coverage for front-line workers and direct cash transfers for the
most vulnerable.
Samagra Bharat - Saksham Bharat (Inclusive and Entrepreneurial India): Social
inclusion is pursued through universalizing access to nutrition, health, education, social
protection, and developing capabilities for entrepreneurship and employment. Financial
inclusion through Jan Dhan-Aadhaar-Mobile (JAM) trinity – near universal access to
bank accounts aided by the Jan Dhan Yojana (National Financial Inclusion Scheme);
Aadhaar card (National unique identity number) for over 90% of the population; and
expansive access to mobile phones, has propelled new avenues of credit, insurance, and
Direct Benefit Transfers (DBT) to the poor, including to over 200 million women,
thereby accelerating their economic empowerment.
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4.6 EXTERNAL ASSISTANCE AND ITS SIGNIFICANCE UNDER HEALTH

SECTOR IN INDIA
The growth of any country/economy is directly linked to the quality of Human Index. In
India since very long the quality of human index has been hovering at a low level on
account of many factors. Some of the important factors leading to low human index
consist of lack of quality education, malnutrition, suffering chronic and other deadly
disease. In addition the climatic conditions and its impact on environment also add to the
quality of Human Index. Since independence India has been concentrating on some of the
chronic diseases to prevent the deterioration of health conditions of the citizens. The
chronic disease includes tuberculosis, malaria, polio, chicken-pox, small-pox.
Due to lack of awareness, education and non-availability of quality medical service for
time immemorial Inhabitants resort to superstitious method, religious profession and also
approaching quack. In all these remedial measure there is no surety of success in the cure
aliment. Wherever, the patient get relief on account of his/her on efforts and better
immune system the credit always goes to above mentioned traditional methods. In some
of the cases the patient glorifies the traditional practioner to such an extent that they
overpowered the modern medical science. In such a situation the result are bound to be
disastrous. Three particular diseases namely Tuberculosis, Malaria and polio were
targeted after independence under different Government projects/schemes. External
Agencies such as UN bodies, Global Fund and Germany under Bilateral cooperation also
extended helping hand to the government measure in tackling these diseases. With the
intervention of Government and assistance received from external sources two diseases
namely tuberculosis and polio have been eradicated. Polio in particular was controlled in
recent past and India was declared free of polio. For polio disease the technology and
assistance provided by the Germany was really remarkable. Global Fund an umbrella
organization for the funds provided by World Bank and Other Agencies is also actively
undertaking various measure in our country for cure of tuberculosis and malaria.
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Tuberculosis and malaria has also been controlled to a great extent with all these efforts
the infant mortality rate has been reduced significantly. The mortality rate in some reason
is competing with the developed countries. Government of India is encouraging the
intervention for controlling these diseases from UN bodies, Multilateral and Bilateral
agencies. The details of External Assistance through Loan/grant during last ten year were
as under.
Table 4.7: Assistance received from Multilateral and Bilateral sources under Health
Sector as Loan.
Sector /Donor ADB Asian GODE IDA Total

Development Germany International
Bank Development
Association
Currency INR INR INR INR
2008 - 2009 0 2,678,903.35 11,860,601.70 14,539,505.04
2009 - 2010 0 2,797,886.21 10,320,245.77 13,118,131.98
2010 - 2011 0 334,459.21 7,693,949.24 8,028,408.45
2011 - 2012 0 244,278.73 14,365,718.15 14,609,996.88
2012 - 2013 0 -537.96 15,261,758.25 15,261,220.29
2013 - 2014 0 13,857.40 4,299,348.83 4,313,206.22
2014 - 2015 0 1,206,827.65 4,112,068.53 5,318,896.19
2015 - 2016 2,678,560.00 1,966,267.33 5,929,162.68 10,573,990.01
2016 - 2017 3,037,147.50 0 10,244,384.30 13,281,531.80
2017 - 2018 5,172,964.00 0 6,727,177.04 11,900,141.04
Source: Ministry of Finance, Aid, Accounts & Audit Division
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Table 4.8: Assistance received from Multilateral and Bilateral sources under Health Sector as Grant.
Sector EEC European GLF Global GODE GOJP Japan GOUK United GOUS IDA UNDP U. N. UNFPA Total
/Donor Union Fund Germany Kingdom United International D.P. United
States of Development Nations
America Association Population
Fund
INR
2008 - 0 5,419,626.07 532,901.04 0 8,699,157.08 511,496.07 0 32,871.31 16,176.55 15,212,228.11
2009
2009 - 0 7,687,976.25 311,373.95 0 8,454,630.96 141,596.06 0 189,030.77 705,139.10 17,489,747.09
2010
2010 - 0 4,580,140.49 1,021,767.26 0 7,239,887.07 305,298.97 0 97,416.55 178,672.62 13,423,182.96
2011
2011 - 2,103,420.00 7,350,297.97 402,710.47 0 8,035,533.61 551,008.15 -2,987.00 96,496.45 210,066.75 18,746,546.40
2012
2012 - 0 6,689,214.19 8,707.99 0 5,068,072.20 236,081.50 0 81,453.58 157,974.48 12,241,503.93
2013
2013 - 3,106,298.00 17,289,123.72 -13,276.00 0 5,305,242.30 434,183.54 0 55,219.39 6,519.45 26,183,310.39
2014
2014 - 0 6,955,035.16 20,013.61 0 2,968,799.45 0 0 46,504.24 14,070.63 10,004,423.09
2015
2015 - 0 14,777,214.41 99,981.63 290,565.93 0 46,947.03 0 10,499.14 12,144.56 15,237,352.70
2016
2016 - 0 7,348,685.98 0 360,205.00 0 0 0 11,164.11 0 7,720,055.09
2017
2017 - 0 10,968,499.24 0 0 0 0 0 0 0 10,968,499.24
2018
Source: Ministry of Finance, Aid, Accounts & Audit Division
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From the above tables 4.7 and 4.8, it is evident that external development partners are
closely associated with the national health programmes undertaken in various region. The
contribution and support of Germany in eradication of polio was really remarkable. The
contribution of International Development Agency (Soft window of World Bank) is
primarily in Integrated-Child Development programme. The quantum of the loan availed
by our country signifies that, we have to go a long way. In this programme apart from
financial help operation of the willing workforce at ground level is very much important.
Self-help group and Anganwadi kendras are playing a very crucial role about awareness
of the programme. Resultantly, the indicators in the sector are very encouraging and in
near future we shall attain the reasonable level.
In recent past Japan Government also extended cooperation in Health Sector by way of
providing equipment’s for child care in certain select hospitals. From Multilateral side
latest entry is of Asian Development Bank from where substantial amount in the form of
loan under National Urban health Mission is coming. Now over a period the population
of the country is steadily shifting from Rural Areas to urban Areas and presently the ratio
is approximately 40% in Urban Areas. Being a predominantly Agriculture economy
Health sector projects were undertaken primarily in Rural Areas. However, the gap in
Health sector widen at a higher speed in urban areas because of higher migration. This
particular aspect has been taken care of and schemes have been evolved with the external
assistance. Certainly, the result of the efforts being made will be visible in the target
group. Though various schemes are being undertaken but monitoring and evaluation
techniques and mechanisms with reference to the EAPs is lacking in our system.
In general, the success of the programme is measured by way of the expenditure incurred.
This type of mapping is not giving the desired results for future policies. In order to have
an effective system a mechanism of impact and assessment of the projects undertaken on
continuous basis is required. This will enable the policy makers to evolve future policies
in a way that the targeted group is benefited to the maximum extent and the results are as
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per our objectives. In recent past there have been some efforts in this field and the newly
formed National Institution for Transforming India (NITI Aayog) has undertaken review
of some of the programmes including those where external assistance has been utilised.
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CHAPTER 5: CONCLUSION AND RECOMMENDATIONS
5.1 CONCLUSION
SD has attracted a great deal of interest in the research, governance, planning and growth
intervention space. It appears that a wide range of governmental and non-governmental
organizations have adopted it as an acceptable model for growth. This is because most, if
not all, of the supporters and advocates of the paradigm seem to believe that the problems
facing humanity today, such as climate change, depletion of the ozone layer, water
scarcity, loss of vegetation, injustice, unemployment, hunger, deprivation and poverty,
can be resolved by adhering to the ideals and principles of SD. The overarching goal of
SD is to achieve a balance between environmental, economic and social sustainability,
making it the foundation on which SD rests. Although not assuming a definitive role,
sustainability of society can be said to depend on the availability of sound health systems,
stability and respect for human rights, decent jobs, equality between men and women,
quality education and the rule of law. Sustainability of the economy, on the other hand,
depends on the adoption of appropriate production, distribution and consumption, while
environmental sustainability is driven by sound physical planning and land use, as well as
conservation of the environment or biodiversity. While there is literature
Awash with a multitude of SD meanings and interpretations, the idea of intergenerational

equity, which acknowledges both the short-term and long-term ramifications of
sustainability in order to meet the needs of both current and future generations, is implicit
in the broadening of the concept. SD cannot be accomplished by independent
programmes, but rather through integrated efforts at various levels, including social,
environmental and economic aspects. Effective implementation of the SDGs would be
focused on the detachment of dynamic relationships between the goals and their
objectives. More specifically, international institutions and agencies such as the UN,
governments of different countries, non-governmental organizations and civil society
Ashok Kumar 250

organizations have a vital role to play in managing sustainability and sustainable growth
tensions. SD thrives on people’s engagement and, thus, public involvement should be
improved in order to translate the idea into effect. Everyone must be aware that their
survival and the survival of the future generation rely on responsible actions in terms of
consumption and output, the environment and progressive social values. It is only by
combining the foundations that negative synergies can be arrested, that constructive
synergies can be promoted and that meaningful SD can be accomplished. It implies that
economic, social and environmental sustainability are elements of a complex system.
They cannot be followed in isolation for “SD” to flourish; hence all decisions should aim
to promote positive growth and equilibrium within the natural system. While ensuring
sustainable development is everyone’s business, multinational, regional, national
organizations as well as governments and civil society organizations are advised and
required to demonstrate ownership, leadership and citizenship.
In total, it merits a further accentuation of the complexity of explaining the conditions

and the end results of the assessment of development assistance. There are a few
explanations for this: no progress is made until improvements are completely asserted by
the government, so that an outside operator like the World Bank cannot and should not
offer primary praise for ordinary change; good development assistance includes
collaborations with numerous institutions, including the common community, NGOs and
others, both local and external; and, finally, the best. In any case, development assistance
has been related with real victories:
 In health, the usual future of nation-building has been extended for a long time since
1960. This progress owes much to the general economic growth that the guide has
sponsored, but also to the organisation of intercessions, such as immunisation
programmes that disposed of smallpox.
 In education, illiteracy in the world of creation has been split since 1970. As the
world's largest external funder of education, the World Bank has contributed
monetarily to this advance. More imperative — because outside assistance would
Ashok Kumar 251

dependably be at most a small amount of increased spending on education — the

Bank has endorsed innovative methodologies, such as those that have contributed to
better educational outcomes in Brazil, Bangladesh, and El Salvador.
 In more comprehensive economic development, the production of nation-wide growth
has all been considered to have exceeded the creation of nations by a small margin
since 1990 (and by a large margin for active reformers). Development assistance has
contributed to accelerating the decrease in growth and need since the 1980s — a time
when the number of people living in poverty worldwide has begun to decline as a
result of a large part of the past two centuries' expansion. Study and analysis have
shown the path to better strategies, including in areas such as macro-economic and
trade. In addition, limit building and lending has provided critical support for reforms.
This paper has identified a variety of forms of inquiries that support these decisions
on the adequacy of development assistance.
 Recently, the distribution of assistance has significantly changed from the point of
view of destitution. Evaluated poverty alleviation of ODA tripled in the 1990s, due to
a large extent to the end of the Cold War.
 Well-focused on aid, such as IDA crowds in private investment. In both low-and
middle-income countries, every dollar of IDA contributes to a typical increase in net
investment of almost two dollars and builds up FDI by some 60 pennies.
 High economic returns are well-focused on assistance. As IDA raises general incomes
as well as decreases needs, IDA loans are projected to have a general rate of return of
up to 40%.
 Development assistance has been added to highly effective reform initiatives in
countries as diverse as China, Poland, Mozambique, India, Vietnam and Uganda.
These nations have all undergone sharp rises in economic growth, and their
developments have pushed a significant number of people out of need.
 In each case, the country and its legislature have been the primary proponents of
reform and the fundamental producers of their method of growth. In either case,
additionally, advising and restricting building support usually assumed a vital part in
Ashok Kumar 252

enhancing the Earth's profitability and destitution in advance of the schedule for the
change era. When the earth was more conducive to growth, the Bank and the
numerous benefactors embraced a transition to larger-scale lending.
 Bank operations improve the profitability of borrowers. Bank ventures yielded high
returns, with the usual economic rate of return rising from 16% in the 1980s to 25%
in the 1990s.
 Calculated outcomes of bank operations have gradually increased, from less than 60
per cent in the late 1980s to more than 80 per cent today. At the global level, the Bank
has contributed to its successes in areas such as the Green Insurgency. CGIAR, a
research network set up by the Bank, has produced more than 500 grain varieties now
planted in poor countries and has helped to increase normal yields in target grains by
75% over three decades. There have been a few disappointments in the growth
conference, and the Bank and its partners have tried to make the best of them.
 Systemic reform loans in the 1980s, although they served a legitimate need, were
much less effective than trusted, owing to over-reliance on borrowing contingency
and under-weighting of social issues. In either case, due to learning, both in the sense
of internal and external inquiries, the Bank 's success in fundamental changes has
improved: changes in lending gradually lead to viable changes in governments, and
the rate of achievement of the undertaking has increased dramatically.
 So much funding in the 1970s and 1980s went to governments that were not set up to
make major reforms in order to minimise neediness. At any rate, they gained funding
for political reasons, most strikingly in the middle of the Cold War.
 Despite major developments in many parts of Eastern and Central Europe in the
1990s, the process of transition in the previous Soviet Union has been tweaking
information. Outer on-screen characters were, at first, unreasonably optimistic of here
and now opportunities, and gave very little weight to the development of the
structural basics of a market economy. Be that as it may, here too, progress has been
made: the subsidence’s of reform have finally stopped, and the reforms have begun to
flourish.
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There are always real obstacles. The AIDS pandemic threatens to cut the future in sub-
Saharan Africa, fixing several years of development. In Africa and elsewhere, outer
performing artists are grappling with the question of how best to help catalyse and
facilitate reforms in low-wage nations with the worst policies, structures, and governance.
In any case, the lessons gained are the acquisition of incentives for good national results
and better distribution of assistance and the end of the Cold War has made it possible for
aid to be better concentrated on destitution.
Debt servicing
It is encouraging that the external assistance policies adopted by India have borne fruit,
resulting in greater use and harmonization of the aid. Help use has increased from around
50 percent in the 1980s to more than 90 percent today. Our stance on debt servicing has
also seen a marked change over the years.
Short term Debt Management

In addition, policy makers have exercised due caution in keeping short-term debt under
regulation. An unduly high proportion of short-term debt in total debt poses a potential
risk to balance-of - payment management which, in the event of a sudden shift in
international market conditions or international investor trust in the country, may lead to
a severe reduction of foreign-exchange reserves in the country. The Government of India
has always kept a watchful eye on the build-up of short-term external debt, and as a
result, short-term debt now accounts for just 7.7% of the overall debt, compared to 10.2%
in 1991. Prudent debt management involves not only the preservation of short-term
external debt at manageable levels of maturity, but also the reduction of long-term
maturation commitments, in order to maintain the overall short-term debt at a fair level
through residual maturity. This needs to be kept in mind at the time of approval.
Pre-payments
Over the last three to four years, the Government of India has prematurely repaid a large
Ashok Kumar 254

portion of both multilateral and bilateral sovereign loans under the foreign assistance
programme. However, it has been noted that some low interest-bearing loans have been
repaid while high-cost loans have remained on our portfolio. Although prepaying low
interest loans on one hand, we continue to contract high-cost loans like those from IBRD
and ADB. This questions the economic logic and needs to be kept in mind when
formulating future pre-payment proposals.
Cost effectiveness of ADB/IBRD loans

Given the fact that IBRD and ADB loans are market-related and thus expensive, the rate
of these foreign loans remains below that of domestic borrowing. This is for the simple
explanation that the domestic interest rate is higher than the foreign interest rate, while
part of the interest rate advantage was offset by the rupee depreciation. Whether external
loans remain cost-effective in the coming years compared to domestic borrowing depends
on the difference in interest rates between domestic and international markets, as well as
on the Indian rupee's exchange rate movements vis-à-vis major foreign currencies.
Although the new foreign aid strategy of complementing government borrowing with
external borrowing continues, the IBRD and ADB loans cannot be removed from our
sovereign debt portfolio.
Shift in Sectoral focus

There has also been a change in the focus of the business. While the main infrastructure
sectors, such as power and rail, became more focused on externally funded projects in the
mid-1990s, there has now been some change to social sectors, such as health and
education. This move is essentially in line with the promises to achieve the Millennium
Development Goals.
Skewed Distribution of external assistance

The system of external assistance in India tends to be biassed in favor of a few
governments. Though central sector / multi-state projects and 7-8 prosperous countries
Ashok Kumar 255

account for almost 90% of disbursements, disbursements to countries like Bihar have
been negligible since 2001-02. North Eastern and Special Category States account for
just over 3% of overall disbursements. States such as Andhra Pradesh, West Bengal and
Gujarat continue to be the primary absorbers of external assistance. These problems need
to be discussed.
Multilateralism
Today, the importance of multilateralism is gaining ground in the international forum on
the grounds that too much proliferation and fragmentation of aid agencies puts an undue
burden on recipient governments faced with a large number of donors. Multilateral
agencies not only have a channel for joint action, they are more balanced, provide
economies of scale, minimize costs and result in better harmonization of assistance.
Although the international multilateral / bilateral mix of external assistance has stagnated
at around 30:70 since 1995, in the case of India, bilateral assistance accounts for only 30
% of total external assistance while the rest of external assistance is provided by
multilateral sources.
Technical co-operation vs. budget support

Another topic of discussion in the international forum is the shift of ODA towards
particular grants such as technical cooperation. Technical cooperation (TC) should be
complementary to the degree that it shares valuable expertise and skills, thus creating
enabling conditions that improve programme productivity and project effectiveness.
Although TC is welcome, the emphasis should be on cash / budget support. Untying TC
and offering it as budget support could result in savings through competitive recruitment
of experts.
Improving Aid Effectiveness

The push to harmonies, coordinate and manage development assistance in order to
achieve greater development outcomes has been gaining traction in the international fora.
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At the Paris High Level Conference on Aid Effectiveness held in 2005, donors and
partner countries recommitted to improving aid delivery by actively leveraging donor
capital to help achieve tangible country-level development outcomes. The Paris
Declaration set the benchmarks for 'scaling up' assistance, both in terms of quality and
quantity. India is well placed to face the challenges that lie ahead.
Implications for meeting the Millennium Development Goals

What does this examination infer for meeting the Millennium Development Goals? One
lesson is that outside resources alone won't be adequate to guarantee that global
objectives are met. The beneficiary nation's level of duty and the quality of its policies
and institutions are the primary determinants of advance. Experience and investigation
have shown us that outside guide can't substitute viably for these components.
In any case, a moment lesson of this paper is that when a nation is resolved to change and
neediness diminishment, outside support has significant payoffs. Outer support can take a
few structures counting, yet not restricted to, help.
One essential region where rich nations can offer help is through changes of their own
exchange policies. The outside condition impacts the returns to change in creating
nations. Powerful global growth is critical, however so is change of rich nations'
protectionist policies, which target such areas as farming and materials and are in this
way especially harming to poor nations. Open market access to poor nations, joined with
other exchange changes, would pull an expected 300 million individuals out of supreme
neediness, past the 600 million who might escape destitution with ordinary growth.
The second zone for support is through direct development assistance. The decrease in
help flows over the previous decade has come correctly when the returns to help have
expanded pointedly. Area 6.1 has compressed the proof on returns: if nations will make
the strides important to change, at that point assistance as limit building, budgetary
Ashok Kumar 257

assistance, and analytical support regularly has vast returns. With proceeded with change
force and unfaltering outer support, past experience recommends unequivocally that we
can expand and develop the advance of the past 50 years.
Streamlining of External Assistance to drive maximum benefit

In India the implementation of projects is linked to availability of budget and its approval
by the legislatives. The underline message for approval by legislatives is on account of
the fact that without approval of legislatives nothing can be spent from the Conoslidated
Fund of India also consolidated fund of states. The Budget activates government
machinery to implement the intended projects.
In case of EAPs particularly state projects the mechanism is very lengthy and full of
scopes for diversion of the funds temporarily. In state EAPs budgetary provisions is
provided in different forms depending upon the nature of the Project Implementing
Authority. The mandate of the central government is to transfer the funds received from
external agencies through RBI to the state treasury. Beyond this point, the flow of the
fund and its utilization is within the control of sub national government. There have been
instances where the funds borrowed from external sources were diverted for a purpose
other than the intended one. This type of transfer results in time and cost overrun at the
same time the intended beneficiaries are deprived of the benefits. In order to control this
type of diversion a mechanism of disbursement known as direct disbursement is resorted
to. However, this method has its own limitations wherein the provisions of General
Financial Rules get overlooked. This gives an opportunity to the supreme audit institution
of India to make the report critical.
This problem need to be tackled legislatively and administratively in case the EAPs are
implemented by the core government department then in the beginning of the Financial
year sufficient budget for the activities proposed to be undertaken be provided. Such a
provision will always allow the PIAs to undertake the execution of EAPs as per schedule.
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At the same time the expenditure by the PIAs will ensure reimbursement in the treasury
of the states. However, n case the PIAs are state PSUs then the transfer of the funds in the
form of equity participation or by way of loans should be given in the beginning of the
year primarily to avoid any kind of scarcity fund.
Till now we have explain the problems of state projects. EAPs of central government also
experience problem on account of low budget provisions. These essentially restrict the
expenditure which inter-alia results in time overrun. The budget exercise should be
undertaken in a way that EAPs expenditure will have a matching receipt. Therefore there
should not be any haircut in the budget provisions.
Scientific Assessment of the EAPs received from Special Category State

As explain in the preceding paras the EAPs in the special category states are financed at a
very low cost. Virtually, the majority of the cost is borne by the central government. The
projects of national and strategic importance are essentially to central government
account. However, many a time due to over enthusiasm the state government proposes a
number of EAPs without proper examinations. This attitude needs to be curbed. In case
of failure or derailment of projects the cost of the state government is miniscule and the
cost of the central government and nation at large is huge. Ultimately, the impact is felt
throughout country. In order to ensure that only viable projects are undertaken under
EAPs the techniques such as debt sustainability of the states, viability of the projects and
the pay-out ratio of the project need to be scrutinised thoroughly. In case of normal
category state these aspects are automatically taken care by the concerned state
government as the burden in any case is on their account.
5.2 RECOMMENDATIONS
 Governments of all countries should encourage "smart growth" through proper land
use and the alignment of their economies with the regeneration potential of nature.
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All countries should follow acceptable production and consumption policies that are
completely consistent with the ecological processes of the earth. This could be
achieved by tax and subsidy policies that accentuate reasonable outcomes and remove
unacceptable outcomes. In this regard, for example, in relation to emissions, all
countries should adopt the 'polluter-pays' concept, according to which governments
mandate environmental polluters to bear the costs of their pollution rather than to
impose such costs on others or on the environment.
 Population growth should be regulated by population policies backed by legal
structures. Unless specific action is taken, population growth, combined with
increased resource use beyond what the earth can sustain, would lead to a
deterioration or collapse of the ecosystem, the economy and society. All countries
need to have demographic policies aimed at managing unbridled population growth.
In this context, the UN should have a global policy on population growth and ensure
that Member States comply with the policy.
 All countries need to develop and enforce social policies that encourage peace, social
harmony and justice as the cornerstones of social interaction. This can be achieved by
enshrining universal human rights in the form of democracy, inclusion, justice and
effective democratic governance.
 Continuous education on SD should be offered by the UN and the governments of all
countries, as well as by civil society organisations, to all citizens living everywhere.
Sensitization initiatives should be aimed at ensuring that citizens of each nation
understand the idea and values of sustainable development and participate in
responsible environmental, economic and social behaviour, as well as responsible
governance.
 Sustainable development includes the generation and implementation of new
concepts, innovative design and techniques. For this purpose, the UN should
collaborate with governments, the private sector, development agencies and civil
society organisations (CSOs) to provide strong institutional and financial support to
universities and other research institutions in the fields of education, agriculture,
Ashok Kumar 260

physical development and land use, information and communication technology and
health systems. All these should be backed by appropriate legal frameworks and strict
enforcement of regulations to ensure that all the stakeholder comply with the SD
agenda.
 In implementing the SD agenda, the UN should identify and acknowledge various
national capacities and levels of development and respect national policies and
priorities. The UN should also ensure that all countries emphasise universality
through a country-specific approach to global objectives and encourage developed
countries to assist developing countries in implementing the global agenda.
5.3 LIMITATIONS AND SUGGESTIONS FOR FURTHER RESEARCH
This research must be viewed as a fundamental exercise in the financial evaluation of

SDGs in India. The estimates given are conservative and minimalistic. They should be
viewed as bare minimum numbers; in such a way that the actual finances needed cannot
be below what is presented here. This study has a number of limitations, as described
below. It is hoped that future research would draw on the methodologies provided here to
provide more reliable estimates.
First, the analysis does not take into account all possible pathways of growth that India
may choose. India can explore alternative strategies in different sectors in accordance
with the needs, availability, resources, expertise and political will of the Government of
India. This will have an impact on the funds needed and the deficit faced by the sector.
While this was not the scope of this report, such an assessment, if carried out in the
future, could help compare the relative costs and benefits of alternative scenarios and
help India to make a well-informed choice. It is hoped that these critical analyses will
provide more research.
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Second, the linkages at the goal level as well as at the target level have not been
extensively researched or understood in this review. The SDGs are full of ties, so that
financial flows towards one SDG target can easily affect other targets across targets and
vice versa. The figures presented here look at targets or particular target groups in
isolation without taking into account the full complexity of the linkages. It's just
discussed in passing what these connections could be. A further drawback is that, for
each target or target category, the number of government schemes/programmes
considered that could theoretically have an effect on the target is very small; there could
be other schemes beyond the nodal ministry that could also have an impact on those
goals.
Thirdly, a range of targets that could theoretically be assessed on an individual basis have
been assessed as a group. For example, Goal 3 (health) goals for reduced child mortality
and AIDS control have been pooled and measured together, and total expenditure
allocations for health care have been used to approximate funding needs and gaps. It
could have been necessary to view each aspect of health separately and to search for
disaggregated budgetary allocations for each of these aspects; however, such
disaggregation has not been achieved. Such a strategy lacks the specificity of certain
goals. Sector specialists may be able to perform financial analyses more comprehensively
and more precisely.
Fourthly, this analysis did not determine any of the goals due to the inability to locate
relevant data or suitable methodologies. However, it is suspected that the appropriate data
and methodologies still exist or can be established by those with a deeper understanding
of the field. Targets providing full and productive employment and decent work for all,
sustainable tourism, disaster management, providing legal identity for all and developing
capacity to collect and process monitoring and accountability data on the surface appear
to have well-defined costs, and there are already aligned government schemes. However,
these targets could not be determined in this review. One of the major criticisms that are
Ashok Kumar 262

often levied against recursive abstraction as an analytical method is that, depending on

how the summaries are carried out, the final conclusions could be remote from the
underlying results. The author, aware that there is no doubt that weak initial summaries
would produce an incorrect final report, took care to record, through systematic notes, the
rationale behind each summary phase concerning the inclusion and exclusion criteria in
the intermediate summaries. However, in view of the steps taken to prevent the effect of
this potential methodological error on the result of this study, the author does not assign
to himself the virtue of perfection in the development of the paper.
In addition, while about 98% of the materials consulted for this paper were in English,
the remainders were in other languages, such as Chinese, which were either translated
into English or used in other papers published in English by other scholars, academics
and practitioners. Possible inherent flaws in these respects are recognized irrespective of
the author's opinion, if any, in their negligible importance. In addition, while the paper
dealt with main SD issues, namely definitions, history, dimensions, principles, pillars,
and their implications for decision-making and action, three-dimensional pillar issues
need to be taken one by one and dealt with more intensively as they form the basis of the
SD agenda.
Ashok Kumar 263

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“Role of External Assistance in Assuring Sustainable Development: A Case Study in India”

LIST OF TABLES III

LIST OF FIGURES III

CHAPTER 1: INTRODUCTION 1-9

CHAPTER 2: LITERATURE REVIEW 10-71

2.8. Integration of Key Factors in Sustainable development

CHAPTER 3: MATERIALS AND METHODS 72-77

CHAPTER 4: RESULTS AND DISCUSSION 78-249

CHAPTER 5: CONCLUSION AND RECOMMENDATIONS 250-263

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Figure 4.5: Households with Access to Sanitation Facilities (%) 213

AAY – Antyodaya Anna Yojana

HLPF– High Level Political Forum

NFSA – National Food Security Act

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TSC – Total Sanitation Coverage

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Initially, this investigation utilizes the principal distinctive of logarithm frame to

This research underpins proceeding with the modification of domestic movement

So as to accomplish the objective of sustainable development, solid environmental and

1.2 PROBLEM STATEMENT

The Government of India's strong commitment is to achieve the Millennium

Economic growth is considered to be a crucial factor in achieving India's national

1.3 OBJECTIVES OF THE STUDY

1.4 RESEARCH QUESTION

be used to promote progress towards sustainability. Sustainable development is supposed

1.5 SCOPE OF THE STUDY

The aim of sustainable development is to balance our economic, environmental and

1.6 IMPORTANCE OF THE STUDY

Sustainable development is a development that addresses the needs of today without

The notion of environmentally sound economic development is not a fresh one.

1.7 LIMITATIONS OF THE STUDY

1.8 ORGANIZATION OF THE STUDY

CHAPTER 2: LITERATURE REVIEW

Sustainable Development (SD) has become a ubiquitous model of development — the

required to further illuminate the direction and trajectory of sustainable development in

2.2 THE KEY ISSUES

2.2.1. The concept of development

theories of Modernisation, Dependency, World Structures and Globalisation.

2.2.3 Sustainable development

2.3 HISTORY OF SUSTAINABLE DEVELOPMENT

Following these trends, the World Commission on Environment and Development,

2.4 RELATIONSHIPS AMONG THE ENVIRONMENT, ECONOMY AND

The idea of sustainability continues to continue to affect future debate on creation

poor and disenfranchised (social); if he is poor and disenfranchised, he has an opportunity

Figure 2.1: Relationships among social, environmental and economic sustainability.

2.5 PILLARS OF SUSTAINABLE DEVELOPMENT

As a visionary and forward-looking development model, SD emphasises an optimistic

2.5.1. Economic sustainability

2.5.2. Social sustainability

2.5.3. Environmental sustainability

2.6 THE SUSTAINABLE DEVELOPMENT GOALS

Sustainable development is related to the concept of achieving human development goals

2.7 PRINCIPLES OF SUSTAINABLE DEVELOPMENT

In addition, SD thrives on the promotion of progressive social values, customs and

2.8. THE INTEGRATION OF KEY FACTORS IN SUSTAINABLE

2.8.1. Road map of sustainable development

and environmental factors inside an all encompassing and adjusted sustainable

Figure 2.2: Road map for sustainable development in India

Effective implementation of sustainable development arranging requires accord and the

2.8.2. The integration between economic growth and social development

Economic growth itself is ruled by a few determinants, for example, an open-entryway

One idea of social sustainable development is community participation. Dynamic