The government on Wednesday extended for five years its economic assistance programme IDEAS under which line of credit is provided to African as well as other developing nations and will have a financial implication of about Rs 3,771.77 crore.
The decision was taken by the Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi.
Government has been providing Line of Credit (LoC) under the Indian Development and Economic Assistance Scheme (IDEAS) since 2005-06. The first extension to the scheme was granted in 2009-2010.
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“Since the objectives of the scheme continue to be relevant, it has been decided to give second extension to the scheme for another five years i.e. from 2015-16 to 2019-20,” an official statement said.
Financial implication is towards payment of interest equalisation support to the lending bank, for which budgetary provision shall be made by the Department of Economic Affairs every year, it said.
The amount includes the interest equalisation support on existing LoCs as well as new LoCs to be issued during 2015-16 to 2019-2020.
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“The IDEA Scheme, with suitable modifications and amendments, will continue to be implemented through the Department of Economic Affairs (DEA),” it said.
The Ministry of External Affairs will select specific projects keeping in view diplomatic considerations and requests received from various developing countries.
According to the project proposals shall be examined by the standing committee.
On receiving approval of the External Affairs Minister on the recommendations of the Standing Committee, MEA shall forward the proposal to DEA for seeking the approval of the Finance Minister.
IDEA will then issue a formal letter conveying sanction of the Line of Credit.
“The LoC will be operated through Export Import Bank of India or any other willing bank/ lending agency decided with the approval of the Finance Minister,” it said.
The lending bank will raise resources from the market to finance the LoCs.
“The recipient/borrowing country shall provide sovereign guarantee to the lending bank. The government of India will provide the Interest Equalisation Support (IES) and further guarantee to the lending bank,” it said.
These LoCs form an important component of India’s diplomatic strategy and have been very useful in generating goodwill and building long term partnerships.