The United States, which earlier this month pressed the World Bank to postpone $1 billion in loans to India because of its nuclear tests, backed a $543 million package by the bank to provide humanitarian aid for an Indian state.
The assistance package for Andhra Pradesh includes help in health education, nutrition and rural development, the bank said in a statement that did not refer to the nuclear question.The United States gave the assistance package a vote of support because it addresses pressing issues among the poorest segments of the population, said a Treasury Department spokeswoman, speaking on condition of anonymity.
She added that although the United States decided to impose sanctions against India after the testing, such aid packages for basic human needs fall under an exemption to the sanction laws.
"Loans in those categories will continue to go forward," the spokeswoman said.
As part of a new state-level lending operation, the money will target the poorest of Andhra Pradesh's 73 million people while helping the state shift its spending toward providing basic resources.
"Andhra Pradesh has demonstrated a strong commitment to reforms and has taken important steps to address pressing fiscal and sector difficulties," said Edwin Lim, World Bank country director for India. Andhra Pradesh will be the first to benefit from the bank's new type of state-focused lending.
The decision to provide the aid comes several weeks after the World Bank, at the urging of the United States and other countries, put on hold more than a $1 billion in loans to India. Among projects it foresaw were a renewable energy program, a national power grid, an agricultural program and a highway project.
The cutoff was spurred by a series of underground nuclear explosions detonated by India beginning May 11. Indian spokesmen said at least five devices were exploded.
Under U.S. law, any country that conducts a nuclear test and has not previously declared a nuclear capability automatically faces sanctions. The sanctions laws also oblige the United States to oppose loans from international development banks, where Washington has a major voice.
The Clinton administration failed to muster enough support for an outright rejection of the loans. The bank opted instead for delays.
The bank's assistance package of $543.2 million will go toward the $830 million costs of the state project. The venture will target several key areas of development in Andhra Pradesh.