External Assistance Current Affairs

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India to give Rs 35 cr to children of freedom fighters in Bangladesh

India will give Rs. 35 crore rupees to children of freedom fighters in Bangladesh under the new ‘Muktijodha scholarship’ scheme in the next five years. Under the scheme, students at higher secondary level will get a one-time grant of Tk 20,000 (Rs 15,370) and students at the undergraduate level will get a grant of Tk 50,000 (Rs 38,430). In addition, all freedom fighters will be eligible for multiple entries on Indian visa for a period of five years. Also, every year 100 of them will be entitled to free medical treatment in Indian hospitals.

Background

Muktijodha Scholarship Scheme was initiated in 2006 to support the descendants of the 1971 Freedom Fighters. So far, more than 10,000 scholarships worth Tk150 million have been granted to the descendants under the scheme. It is India who aided Bangladesh to gain independence from Pakistan in 1971.

During Bangladesh Prime Minister Sheikh Hasina’s recent visit to India, Prime Minister Narendra Modi had announced that India will provide scholarships to another 10,000 students under the new ‘Muktijodha scholarship’. During the visit, India and Bangladesh had signed 22 agreements in various fields such as defence, nuclear cooperation, judicial sector, earth sciences, navigation, peaceful uses of outer space, to boost bilateral cooperation. India also announced concessional Line of Credit (LoC) of $4.5 billion to Bangladesh for projects in priority sectors. Moreover, India also gave LoC of $500 million to Bangladesh for defence purchases.

Bangladesh gives away ‘Friends of Bangladesh Liberation War Award’ to individuals and organizations who had extended the most crucial support for Bangladesh’s independence struggle. Former Indian Prime Minister Indira Gandhi was the first to be honoured with this award. The other prominent recipients include President Pranab Mukherjee and former Prime Minister Atal Bihari Vajpayee.

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Union Cabinet approves policy guidelines to allow state entities to directly borrow bilateral loans

The Union Cabinet has approved the policy guidelines to permit financially sound State Government entities to borrow directly from bilateral ODA (Official development Assistance) partners for the purpose of implementing vital infrastructure projects. The approval is subject to fulfilment of certain conditions and all repayments of loans and interests to the funding agencies.

As a corollary to the new decision, the Mumbai Metropolitan Region Development Authority (MMRDA) has been permitted to borrow directly from Japan International Cooperation Agency (JICA) Official Development Assistance (ODA) loan for implementation of Mumbai Trans Harbour Link (MTHL) project.

Present guidelines

At present, external assistance from bilateral and multilateral sources is received by the union government for:

  • projects/programmes in the Central sector;
  • projects executed by Central Public Sector Undertakings;
  • on behalf of the State Governments for State sector projects/programmes implemented by the State Governments and/or local bodies and public sector undertakings.

The existing guidelines prohibit State Government from borrowing directly from external agencies. In addition, the amount borrowed by the state governments would become a part of their FRBM (Fiscal Responsibility and Budget Management).

Salient highlights of new guidelines

  • The State government which gets the loan will furnish guarantee for the loan and the Government of India will provide counter guarantee for the loan.
  • The state entities can directly approach bilateral agencies and the funding would not fall under state FRBM target.
  • The eligibility criteria for state entities would be a revenue of over Rs 1,000 crore.
  • In case of infrastructure projects, the cost criteria will be Rs 5,000 crore.

Need

Major infrastructure projects of several State entities have huge funding requirements, and borrowing of the State Governments for implementing such projects exhausts their respective borrowing limits. Therefore, it was considered necessary to facilitate direct borrowing by the State Government entities from bilateral external agencies. As per the new guidelines, State entities can directly borrow and repay the loan without burdening the State exchequer.

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