World Bank Refuses to Finance India's Purchase of Condoms

Sources: India in Dispute Over the Price of Condoms, HIV/AIDS - India, South Asia - AIDS in South Asia Report

India is the site of more than 60% of Asia's HIV infections. UNAIDS approximates that, as of 2005, 5.7 million Indians could be carriers of HIV. In response to the first reported AIDS case in India in 1986, the government established a National AIDS Control Program, whose primary goals include monitoring HIV infection rates and prevention. In a recent effort to keep the epidemic under control, the Indian government has made a bid for aid from international financial institutions to fight the epidemic; however, the request was subsequently denied. The World Bank and the UK's Deptartment for International Development rejected India's request for financing the Indian government's purchase of condoms, citing a lack of transparency in procurement procedures as the reason behind the refusal.
The Indian government purchases condoms from state-owned latex manufacturers. The complaints harbored by many HIV prevention organizations is that the government of India is giving prefernce to domestic manufacturers - a preference that translates into the government's paying 25-40% more for condoms than the average world market price. The director-general of the National Aids Control Organization, K. Sujatha Rao, defends the multi-million dollar contracts with domestic companies by claiming that the quality of condoms from international manufacturers have questionable quality.
Although the World Bank has refused to provide financing for this leg of India's program to fight the HIV/AIDS epidemic, it has provided aid to India to help control the infectious disease. For instance, it credited the government of India with $84 million to help launch the first National AIDS Control Project. The World Bank later financed India with $191 million for the second National HIV/AIDS Control Project.

Questions:
1) Should the World Bank and other international financial institutions deny India financing in this situation?
2) Should India assign some of its contracts for condoms to international manufacturers?
3) What would be the major benefits and disadvantages if India chose to keep the contracts with domestic manufacturers?