Merchant bankers and economists gathered for the annual brainstorming, concurred that the implications of both the international credit ratings and the US sanctions were still unclear. ``It is a very fluid situation,'' said World Bank economist Clive Harris.

``I don't think anyone really understands what the implications are,'' said J P Morgan vice-president Fai Au Yeung. Harris hastened to differentiate between the Moody's downgrading of India's sovereign rating and the sanctions.

The US sanctions followed by India's five nuclear blasts at Pokhran. International credit rating agency, Moody's Investor Services downgraded the India to Ba2, or two notches below investment grade on June 19, a fortnight after the Union Budget was announced anda month after the country demonstrated its nuclear prowess in the deserts of Rajasthan.

The World Bank has already postponed discussions on loans for four projects, including one for renewable energy, building roads in Haryana and developing the national power grid.

``We are waiting to see what bank's executive board decides,'' replied Harris when asked if he felt that the postponed discussion was a prelude to loans being blocked. The board is made up of representatives from 24 countries, most of whom represent more than one state.

The loan commitments need 51 per cent votes to be vetoed, amounting to more than the combined voting strength of the G-8 countries of 45.35 per cent. ``What really counts is what proportion of the loan will be considered humanitarian,'' said Harris.

Other thinks tanks at the meet felt that not much of the roughly $ 2 billion of World Bank's annual disbursements to India could be disguised as humanitarian aid. They did agree with Harris, though, that some of the impact of a`possible dip' in multilateral funding for the country, could be circumvented by trimming red tapes, that delays fund disbursements within the country.

``It takes nearly nine months for loans to trickle through to the system,'' Harris explained, pointing out that sanctions by donor nations would not at any rate hurt World Bank disbursements to India this year. A cut down in the bank's commitments could affect some projects in the fiscal beginning 1999, when the impact could be evened out by speeding up the disbursement process.He pointed that infrastructure projects would really be hit by a scarcity of private capital. ``Our role (in funding projects) is much more catalytic,'' said Harris.

``It is not just the sanctions,'' he added, referring to the funds crunch of infrastructure projects. Earlier in the afternoon the World Bank economist had chaired a roundtable, at which institutional investors advocated policies changes that allow greater flexibility in achieving financial closures of projects.

Yeungsuggested, though, that raising funds for infrastructure projects may have proved easier before the nuclear tests in India. ``Before Pokhran,'' he told newspersons, ``India stood much higher in investor rating, compared to Asian economies hit by the currency crisis.

Yeung also did not give much significance to the downgrading by international rating agencies. ``Investor confidence in rating agencies have not been very good,'' he said in his presentation on `Infrastructure financing in Asia through the capital markets'.

The rating agencies had themselves lost their credibility with investors, for whom, Yeung said, risk perceptions varied from project to project. At the roundtable on ``Opportunities for infrastructure investment,'' other institutional investors had also emphasised that the credit-worthiness of power and other infrastructure projects, ultimately influenced investors.

The roundtable was attended by representatives of Prudential Asia Infrastructure Investors, ICICI, the Fieldstone PrivateCapital Group and the National Grid Company.