Japan -- which is India's largest bilateral donor -- has kept a crucial window open for fresh loans while the UK and the EC have indicated to the finance ministry that they will continue to consider fresh loans.

France has gone a step ahead and is sending a team to North Block on July 8 for appraisal of fresh projects.

On the flip side, Germany -- a large donor -- has imposed a complete ban on all, including humanitarian, aid. The Scandinavian countries have gone along with Germany in banning aid to India. Netherlands, however, has only suspended what it calls "macroeconomic support", but all other forms of aid will be available. Japan has communicated to the finance ministry that it will not provide any new OECF -- the country's soft aid agency -- loans. But it has included an important caveat in its communication which is cause for cheer to NorthBlock officials. It has said that the "second and subsequent tranche for ongoing loan projects will be considered on a case-by-case basis.

The finance ministry has interpreted this caveat to mean that extensions of existing OECF-financed projects or phase II expansions will continue to get the support of the Japanese government. The ministry plans to tread sensitively on the issue and intends to put up phase II proposals in power and other infrastructure sectors before OECF for consideration. Japan, like Germany, is also not providing humanitarian aid. But the hope is that it will soon resume such aid, like it did with China (after a natural disaster struck) soon after the latter exploded a nuclear device in 1964.

The position paper says that `there is no evidence to suggest that the UK is witholding developmental aid.'

According to North Block, the British government will extend bilateral aid for new projects. The EC -- which provides aid independently to India -- has also not indicated suspensions andthe assumption in the finance ministry is that fresh aid will come.

The French have made their position clear to North Block--that it is business as usual. To back this up, Paris is sending the usual team of officials on a project appraisal trip. The North Block gossip is that the French and the British had objected to imposition of sanctions on India at the meeting of G-8.

Germany, along with the US, continues to remain adamant in continuing with the sanctions in letter and spirit.

North Block sources said that the German support was essential in ensuring that the G-8 adopted the motion to impose sanctions. The bilateral aid component from the US is very low but Germany and Japan together account for a whopping 75 per cent of the total bilateral aid to India.

The Scandanavian countries have decided to follow Germany in suspending all aid to India. Fresh loans are unlikely to come through. But Netherlands has indicated that only "macroeconomic support"--which translates into minor "debt relief"according to North Block parlance--will be discontinued. Pertinently, this relief was not available last year because of budgetary problems in that country. All other aid will continue to be available.