Jaswant Singh has set out an aid plan

It will give the debt relief to seven heavily indebted poor countries (HIPC) - Mozambique, Tanzania, Zambia, Guyana, Nicaragua, Ghana and Uganda.

The move is part of a package known as the India Development Initiative that Finance Minister Jaswant Singh unveiled earlier this year.

Its implementation comes just days after India's Prime Minister Atal Behari Vajpayee criticised the rich world's shaky progress on tackling world poverty and lowering trade barriers.

'Solidarity pact'

Mr Vajpayee made his criticisms alongside those of African leaders at the G8 summit of top industrialised nations in Evian, France, in early June, which developing countries attended as guests of the G8.

Anti-poverty campaigners have welcomed India's decision as likely to bring significant economic and political benefits to the seven.

"Every single additional dollar that the African countries have to spend on their development brings positive benefits," Ashok Sinhar, UK national co-ordinator of the Jubilee 2000 debt-relief campaign, told BBC World Service Radio.

The costs of "providing basic medicine, the costs of essential shelter, even roofing a school" were very little, so $20m could go a long way, he said.

He said India had also made a politically important gesture to show it was "standing shoulder to shoulder with some of the world's poorest nations" and put pressure on richer nations to meet their promises.

"There are a lot of countries, including G8 countries, which have still not completed their own commitments towards full write-off of the debts that African countries owe to them," he said.

Growth

India's economy has been performing relatively well, with growth of about 5% a year and substantial foreign exchange reserves being built up.

Mr Singh has said India's strong economic fundamentals and good debt repayment record have set the stage for "explosive growth" which could pull India into the developed world by 2020.

India's growth rate slowed to about 5% a year between 2000 and 2002, down from more than 7% during the mid to late 1990s.