International Development Association

The international development association (IDA) was established in 1960, affiliated to the World Bank. It was started to provide finance to less developed members on a “soft” loan basis that is on terms imposing a lower servicing charge on loans that what the conventional bank changes.

Objectives: Following are the principal objectives of the IDA.

1. To provide development finance on easy terms to less developed member countries.

2. To promote economic development, increase productivity and thus raise standards of living in the underdeveloped areas.

Thus, IDA is viewed as a means of furthering the development activities of the World Bank and as a supplement to the Bank’s activities. Under its charter, the IDA is to support projects which are calculated to contribute to the development of the country concerned, whether they are directly productive or not. The IDA credits would be called development credits to distinguish them from conventional loans, and these would be repayable mostly in the currency lent rather than in the currency of the borrower. Since IDA charges nominal rates of interest on its loans, it has also been nicknamed the “Soft-Loan Window”.

IDA has granted a number of credits to India for her development schemes. The grant of credits for development projects given by IDA to India has been in the nature of a continuous flow. But for the funds that have been made available by IDA to India, our development pace would have been considerably slower.

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