The lifting of sanctions by the US would mean that it would not oppose non-humanitarian loans by multilateral financial institutions. And secondly the pressure would increase on G-7 and Japan to soften their stand against India.

India gets around $3 billion of fresh sanctions from the World Bank each year, and immediately after the sanctions loan applications worth $1.2 billion -- including National PowerGrid's $450 million were frozen, and not considered by the Bank's board.

The law, if finally passed, will also ensure significant pruning of the `entities list', or the list of around 300 Indian companies that US companies could not do business with, as these companies were believed to be involved, directly or indirectly, in supporting India's nuclear programme.

As far as US is concerned, it wouldtake some time for the Congress to approve lifting of sanctions which would ultimately have to be ratified by the US President. The process may take up to three months before the sanctions are finally lifted.

After nuclear explosions, the US under its Nuclear Proliferation Prevention Act 1994, which also included the Glenn Amendment to the Arms Export Control Act, ordered sanctions against India in May 1998. The sanctions, apart from various other things, involved denial of credit and credit guarantees by US government entities like Exim Bank and Overseas Private Investment Corporation (OPIC). What hurt India most was the decision of US to oppose WB and ADB loans.

However, in November 1998, on the basis of the authority given to the US President by the Brownback Amendment, sanctions were partly lifted. The activities of Exim Bank and OPIC were restored. The part lifting of sanctions also led to resumption of US bank activities in India.

Unfortunately, the G-7 and more significantly Japan continued withtheir policies of blocking non-humanitarian aid to India and more significantly opposing proposals in the multilateral agencies. As a result there was a virtual freeze on non-humanitarian loans by the World Bank and Asian Development Bank. Japan, which is the single largest bilateral donor to India, also refused to significantly change its position despite pressure.

Fortunately for India, the ongoing projects did not suffer with WB, ADB and Japan continuing to provide assistance.

In addition to US, Japan and multilateral lending agencies, various other countries like Germany, UK, Netherlands, Sweden, Denmark, Switzerland, Norway and Canada suspended aid support to India. With the exception of France, the countries refused to sanction new projects. However, the inflow of fund was not affected as the countries and agencies continued to fund the committed projects.