The government will pre-pay Rs 7,500 crore (Rs 75 billion) worth of bilateral aid this fiscal, besides swapping Rs 38,000 crore (Rs 380 billion) high cost state government debts, Finance Minister Jaswant Singh told Rajya Sabha on Tuesday.
"I am happy to inform that we are about to pre-pay about Rs 7,500 crore of bilateral aid," Singh said, winding up the two-day discussion on the fiscal responsibility legislation, which was later passed by the House.
Last year, the government had pre-paid $3 billion worth of World Bank and Asian Development Bank loans without causing any ripple to the exchange rate of rupee, stock market and foreign exchange reserves.
This year, the government has decided to pre-pay bilateral aid for the first time as the country no longer needed it, he said, adding that for the first time India has become a creditor to the International Monetary Fund and was no longer a borrower.
Elaborating on the debt swap scheme for states, Singh said last year Rs 14,000 crore (Rs 140 billion) worth of state debt was swapped and this year an additional Rs 38,000 crore would be swapped. In 2004-05, it would be over Rs 80,000 crore (Rs 800 billion).
"This will give a lot of benefits to the states," he said, admitting that the target for the buyback of high cost government securities held by the public sector banks was not met in 2002-03.
The government had targeted a buyback of over Rs 100,000 crore (Rs 1,000 billion) government securities held by banks to bring down the non-performing assets. But only Rs 15,000 crore (Rs 150 billion) worth of government securities were bought back.
The minister, however, said he was not "discouraged" by the response, as the buyback would lead to the saving of Rs 750 crore (Rs 7.50 billion) in interest cost annually.