Washington, DC (BBN) -The World Bank (WB) has announced US$ 4.3 billion in loans to India, including $2.0 billion for the banking sector, aiming to help strengthen its economy amid the global meltdown.
“The World Bank on Tuesday approved four projects worth $4.3 billion to India, designed to support the government’s infrastructure agenda and bolster its economic stimulus program,” the WB said in a press statement.
After a period of high economic growth –which reached 9.7 percent in 2006-07 – the onset of the global financial crisis in 2008 saw India’s growth rate fall to about 5-6 percent in the fourth quarter of 2008-09.
“Although there is uncertainty about the pace of the economic recovery, current trends suggest that a growth rate of between 5.5 and 6.5 percent for 2009-10 is realistic,” the WB added.
Under the projects, $1.2 billion loan to the India Infrastructure Finance Company Ltd. (IIFCL) is designed to support its role to catalyze private financing for public-private partnerships in (PPPs) in infrastructure and stimulate the development of a long-term local currency debt financing market.
The loans (banking sector and Powergrid) from the International Bank for Reconstruction and Development (IBRD) have a 30 year maturity including a 5-year grace period, the WB said, adding that IBRD loan to the India Infrastructure Finance Company Limited (IIFCL) has a 28 year maturity including a 7.5-year grace period.
The credit from the International Development Association (IDA), the WB’s concessionary lending arm, carries a 0.75 percent service fee, a 10-year grace period, and a maturity of 35 years, according to a press statement.
“This is a crucial time to support India,” Roberto Zagha, World Bank Country Director for India, said in the statement. “While the worst of the crisis seems to be behind us, doubts linger about the strength of the comeback, partly because the strength of the global recovery is uncertain. Today’s support will help maintain credit growth and continued infrastructure investments,” he added.
BBN/SS/SI/AD-24September09-2:30 am (BST)