§ 7 and 8. Mr. James Davidsonasked the Minister of Overseas Development (1) what is the policy of the Government in regard to the giving of grants in place of loans to India and to other territories facing difficulties in meeting interest and repayment obligations;
(2) what is now the general policy of the Government in regard to interest-free loans, and to the waiving of interest on loans previously made.
§ 9. Mr. David Steelasked the Minister of Overseas Development what is the policy of the Government with regard to offering long-term periods of repayment of loans to India and other developing countries comparable with the 50-year terms offered by the International Development Association.
§ Mr. PrenticeThe burden of indebtedness is one element that we take into account. In the case of India, for example, we provide interest-free loans with a maturity of 25 years and a seven-year grace period for all purposes, including debt relief. It is not our general policy to provide debt relief by waiving interest due on past lending, or otherwise varying the terms of previous loans, nor by giving grants or loans on softer terms than those now applicable to India—which are among the most generous terms given by any donor country.
§ Mr. DavidsonIn thanking the Minister for that Answer, may I ask whether he would agree that the real return which we get on this sort of aid is an increase in trade in the sale of capital equipment in due course and that, therefore, we should aim at being lenient in our terms in all respects?
§ Mr. PrenticeWe have given a lead in being lenient in our terms. We have done this because this is the kind of aid which is most useful to India. But it also has indirect benefits to this country of the kind mentioned by the hon. Member.