Chapter 23



Background :
23.1 India has been a recipient of Swedish assistance since 1964 although Sweden joined the Aid India Consortium as a full member only in 1969. The terms of Swedish Assistance have become progressively softer over the years. After 1976, Swedish Assistance is in the form of a 100% Grant and is mainly focused on the Social Sectors and the Energy Sector. In addition to grant assistance, Swedish Government has extended soft loans, for large power sector projects. Earlier Sweden used to allocate 0.91 per cent of its GDP for development cooperation. This was reduced to 0.7% of its GDP in the last year. The aim, however, is to restore the level to 1 per cent of the GNP as soon as the Swedish economy so permits. Despite the cut in the Swedish aid budget, taking into account SIDA grant-in-aid and concessional credits available from other Swedish Organisations, India becomes the largest recipient of Swedish assistance not only among the Asian countries but also among African and Latin American countries.

Future strategy for Indo-Swedish Development Cooperation (1997-1999)
23.2 Future strategy for Indo-Swedish Development Cooperation in the three year period of 1997-1999 covered by the new Development Cooperation Agreement dated 28.11.1996 focuses on poverty alleviation and infrastructure :-

  1. The broad areas of Swedish assistance are :-

  1. poverty oriented projects and programmes in the primary education and health sectors; environment, including natural resources management and the modern/industrial/urban sector;

  2. energy saving and other areas of importance to more efficient use of energy resources;

  3. Consultancy fund;

  4. activities aimed at encouraging sharing of experiences and experts between India and Sweden

  1. Since there is a high level of skills and knowledge that are to be found in both India and Sweden it was agreed that a gradually increasing amount should be used to stimulate the exchange of experiences and joint development of know-how between India and Sweden. This can be done within the framework of research cooperation, exchange of experts, contract financing, courses, and through cooperation between India and Swedish NGOs. The Indian side emphasized that they would like the maximum amount to be allocated under the country frame for projects where the funds are routed through the Government of India budget, especially for local cost projects.

  2. Sweden primarily concentrates its assistance in the States of Rajasthan, Tamil Nadu, Orissa and Himachal Pradesh. During the negotiations held in November, 1996, the Indian side indicated that Swedish support should be extended as far as possible to more number of States. This was again discussed during Annual Review Meeting held in February, 1998 and it was agreed that a certain geographical spread would be considered by the Embassy while initiating and identifying new projects.


  1. The quantum of Swedish assistance for the Consultancy Fund pertaining to the period 1st January 1997 to 31st December 1999 has been increased from SEK 12 million to SEK 27 million through the exchange of letters dated 13th April, 1998.

  2. On 26th August, 1998, the proposal of the Government of Karnataka for the entrustment of the feasibility study for Metro Bus Project in Bangalore city to M/s AB CONTRANS at a cost of SEK 2.15 million to be met out of the Consultancy Fund has been accepted subject to the condition that in case the feasibility study establishes that the Metro Bus Project is a feasible Project, then the buses would be procured on an international competitive bidding basis and the KSRTC/Bangalore Metropolitan Transport Corporation would be under no obligation to procure the buses from Volvo, which means that the MoU route has to be abandoned and the MoU has to be formally terminated

  3. On 11th December, 1998 letters were exchanged between the Governments of India and Sweden whereby Swedish International Development Agency (SIDA) has provided to UNICEF grant assistance of SEK 48.5 million (Rs 24.25 crores) for the National Rural Water Supply and Sanitation(WATSAN) Programme of the Government of India. For the past, over three decades, UNICEF has been a partner of the Government of India in the Rural Water Supply and Sanitation (WATSAN) sector in India. The programme, being implemented by the Union Ministry of Rural Areas & Employment in partnership with UNICEF, envisages reduction in the mortality, morbidity and malnutrition among children below 5 years, the drudgery of women and water and sanitation related diseases, and also improvement in the provision of water and sanitaion facilities.

As against a target of Rs 39.17 crores, the total disbursement of Swedish assistance during 1998-99 through Government of India Budget was of the order of Rs 40.57 crores.

As an immediate reaction to Pokhran-II, Sweden terminated its three-year Development Cooperation Agreement with India (1997-1999) amounting to SEK 900 million (Rs 450 crores), with the implications that SIDA's support to India would be available only for on-going Projects. With the passage of time, the Swedish stand on sanctions got diluted in the sense that notwithstanding formal sanctions still in force, letters were exchanged between the Governments of India and Sweden on 11th December, 1998, whereby the Swedish International Development Agency(SIDA) has provided to UNICEF grant assistance of SEK 48.5 million (Rs 24.25 crores) for the National Rural Water Supply and Sanitation (WATSAN) Programme of the Government of India, in the five 'focus' states of Bihar, Orissa, Rajasthan, Madhya Pradesh and Uttar Pradesh. 80% of the budget is earmarked for these five states and 20% is earmarked for national level activities.

The details of Grants are given in Annexure II.