Chapter 8

Denmark

8.1. Denmark has been giving assistance to India since 1963. The assistance has been in the form of soft loans, tied grants for large value projects and grants for local cost projects. Upto 31.3.99, a total of Dkr.5848.14 million has been committed by Denmark to India, of which Dkr.1326 million is loan and Dkr.4072.114 million is grant. At present DANIDA assistance is entirely in grant.

Loan Assistance
8.2. The earlier loans were mainly for financing import of goods and services of Danish origin, basically for industrial projects. The loans were interest free repayable in 35 years with a grace period of 10 years (grant element 86%). Some of the major projects covered under loan assistance in the past were Aonla Fertilizer Plant, Laxmi Cement Plant and Incineration Plant at Delhi etc..

Tied Grants
8.3. Danish tied grants have been used for large value projects. Till March 1991 three tied grant agreements were signed (TG No. 1 for DKr 250 mln, TG No. 2 and 3 for DKr 142 mln and 184.7 mln respectively), the total of which amounts to DKr 576.7 million. Some of the major projects covered under Tied grant agreements are the Wind Mill Farm Project, Toolroom Training Centre and Optic Fibre Project..

Untied Grants
8.4 Denmark also provides grants for local cost projects in the areas of poverty alleviation and social development e.g. National Programmes under the health sector, Water Supply projects in Karnataka & TN , Women & Youth Training in Agriculture, Livestock development and Soil & Water conservation etc. Denmark had also given grant assistance to NGOs like CAPART & FRLHT under their bilateral aid schemes to India.

Technical cooperation Agreement
8.5. In 1989 Govt. of India signed a new Agreement which provides various facilities available to expatriate advisers attached to Danida projects in India.

Instruments for Industrial Development
8.6 During 92-93, Denmark decided to initiate two new instruments for Industrial Development, i.e. PSD Programme and the Credit Line Support.

  1. The credit lines are provided in the form of interest-free loan with overall concessionality of 35% because Danida grants were used for payment of Interest on the loan portion to Danish Export Finance Corporation. Two such projects under the credit line were IREDA’s Private Sector Wind Farm Project and ICICI-DEFC project in Food Processing for USD 15 million each.

  2. The agreement for the other instrument called PSD Programme (Private Sector Development) to support long-term collaborations between Danish and Indian business enterprises were signed with Govt. of Denmark on 19.11.93 for DKr 58.70 million as a Pilot Phase initially in the area of food processing. On 16.12.96 GOI signed an agreement for the Main Phase. No specific allocation has been made by Govt. of Denmark for the Main Phase and as such the disbursement entirely depends upon the absorption capacity. Essentially the programme has become wider in scope and geographical area vis-a-vis the pilot phase.

8.7. The total disbursements on account of Danish external assistance (loans and grants) routed through Govt. of India account during the financial year 90-91 to 98-99 are given below:

(Fig in DKr mln)

Year (April-March)

Loan

Grant

Total

1990-91

0.44

221.63

222.07

1991-92

7.13

137.10

144.23

1992-93

0.00

49.84

49.84

1993-94

0.00

67.19

67.19

1994-95

0.00

75.06

75.06

1995-96

0.00

29.00

29.00

1996-97

0.00

36.90

36.90

1997-98

25.50*

40.11

65.61

1998-99

0.00

46.71

46.71

*USD 3.98 Mln

8.8. The details of credit authorisation, utilisation and debt servicing thereof, are given in Annex.-I & the particulars of grant are given in Annex. II.