Pact for credit from PL-480 funds signed

New Delhi: The governments of India and the United States concluded here today an agreement providing for a line of credit of `288.40 crores from PL-480 funds to India. The Government of India will draw upon this credit to finance economic development projects mutually agreed upon by the two governments.

S. Jagannathan, secretary, ministry of finance, department of economic affairs, and John P. Lewis, minister-director, US agency for International Development (US Aid Mission to India), signed the agreement.

India pays for food, cotton and other supplies provided by the United States under Title I of the US Public Law 480 (Food for Peace) programme in Rupees. Today’s agreement relates to the disposition of rupees arising from the sale of these agricultural commodities, supplied under five PL-480 supplemental agreements, concluded between September 1965 and May 1966. These supplemental agreements stipulated that 75 per cent of the sales proceedes would be loaned to the Government of India by the United States. Today’s pact implements this provision and states the terms of such loans.

The rupee loans from PL480 funds are payable over a period of 40 years. India will pay interest at the rate of one per cent per annum during the first 10 years and two and one-half per cent per annum for the remaining 30 years.

No repayment of principal is due during an initial grace period of 10 years. These terms are similar to those applicable to dollar loans extended to India under USAID.

After 10 years, repayments of principal will be made half-yearly, instalments have been fixed on a gradually rising scale. The first instalment, due in March 1977, is `15 lakhs. This rises to a final payment of `9.3 crores 30 years later. The loans will be repaid in Indian rupees or, at the option of India, in US dollars.