The team, led by Reserve Bank of India (RBI) governor Bimal Jalan, is here to attend spring meetings of the World Bank and the International Monetary Fund (IMF), now in progress. Jalan also met IMF managing director Michel Camdessus and exchanged views on India's fiscal position and global issues.

Chief economic adviser (CEA) Shankar Acharya and additional secretary (external finance) V Govindarajan, who briefed the press, said the Bank had already sanctioned $1.3 billion to India in its fiscal year 1999, which began on July 1 and will end on June 30.

The country hoped to get another $700 million in the remaining two months of the Bank's current fiscal year. Govindarajan said the proposals forcredit of $700 million were in an advanced stage of consideration. The $2 billion that India hopes to secure this year would include about $800 million from the International Development Association (IDA), the Bank's concessionary lending affiliate. He said India had submitted loan proposals worth about $3 billion for the current year of which it expected to get around $2 billion. The Bank had stopped lending to India for infrastructural projects, apparently at the behest of the United States and its allies in the Group of Eight (G-8) industrial nations, to protest its nuclear tests.

Acharya said Jalan pleaded with Wolfensohn for the restoration of normal Bank lending to India. Lending had reached "near normalcy," he said, apparently in view of the recent approval of two loans totalling about $1 billion for Andhra Pradesh's power sector. He said the Bank was sanctioning loans only for "human need-related" projects. The category was being extended to include loans for road-construction and powerdistribution which otherwise come in the banned infrastructure category.

Jalan is understood to have argued that the Bank's charter does not permit denial of loans on political grounds, as had happened in the case of India after its nuclear tests. His plea was that the Bank should stick to the well-established concept of economic viability in deciding loan proposals.

Though Wolfensohn's response to Jalan's arguments was not known, the Bank chief is known to be sympathetic to India. At his press conference here last week, Wolfensohn said he was proud of what his lending agency had done in India despite nuclear-related sanctions. He said the Bank had worked out some basic human needs. The projects concerning these needs were exempt from the sanctions. Wolfensohn, however, said, "We cannot make political decisions at the management level, but our Board is capable of making political decisions. And I think what we've done with your country (India) actually is pretty damn good. We have managed to keep upthe essential programmes," he added.

Acharya said the International Finance Corporation (IFC), the Bank affiliate that helps the private sector, had almost given up the reservations that it had in extending credit to India. Both Wolfensohn and Camdessus appeared concerned about the political instability in India and its possible impact on the economic situation.

Jalan explained that the country would elect a new Parliament soon and a government would be in place immediately after. He tried to remove the impression that the current political situation would adversely affect the economy. The Vajpayee government had made three major policy statements before it was voted out -- the annual budget, promulgation of the exim policy update on April 1 and announcement of the monetary and credit policy by the RBI on April 20. They provide the guidelines for the economy, he pointed out.

Jalan explained that despite all problems, the economy had performed well. Inflation was down to 4.1 per cent, growthrate was 5.8 per cent, foreign exchange reserves were $6 billion more than what the country had in August last, and the exchange rate was stable.

The IMF chief is stated to have expressed concern over the slow opening of the financial sector and on non-performing assets. He also wanted a greater role for the private sector in India's banking industry.