External aid and development strategy in Rajasthan

Abstract

Over the past decade it has been observed that state governments are being drawn towards externally aided projects. The lure seems to be of additional funds to supplement state financial resources. This study looks at the impact of 11 such externally aided projects in Rajasthan. On the point of additional financial resources it is found that the state had little to gain from such projects since during the period 1974-81, the state spent Rs. 153.62 crores on such projects whereas it received only Rs. 22 crores as additional assistance. A portion of the aid is retained by the central government and the terms on which it is passed on to the state government are more severe as compared to the terms on which aid is received by the central government. Therefore, the debt burden of the state is considerable.