Sept. 23 – The World Bank has approved India’s US$4.3 billion loan to fund four projects dealing with the government’s infrastructure needs and economic stimulus plan.
Of the US$4.3 billion loan, US$2 billion will be used to boost the capital of state banks and maintain credit growth while US$1.2 billion will be used for roads, ports and power supply.
Another US$1 billion will be used to address India’s power needs with almost half of Indian households making do without electricity while US$150 million will be allotted for a Andhra Pradesh Rural Water Supply and Sanitation Project to improve water supply and sanitation services in 2,600 villages across 6 districts of the state.
The money “will help maintain credit growth and continued infrastructure investments,” Roberto Zagha, the World Bank’s country director for India, said yesterday in the statement. “While the worst of the crisis seems to be behind us, doubts linger about the strength of the comeback.”
“It’s a long-term need on infrastructure that India has so it makes sense to increase the spending to maintain the high level of employment,” Zagha was quoted by Bloomberg, adding that it’s “unusual to have such a large volume of loans.”
Just this week the Asian Development Bank shifted its growth forecast for India to 6 percent from 5 percent in March because of the government’s strong fiscal stimulus and aggressive monetary policy measures that has slowed down the effects of the global financial crisis.