India to get $4.2-bn World Bank loan

The pact was signed Tuesday by representatives of the central government, India Infrastructure Finance Co (IIFC), PowerGrid Corp and the World Bank.

Under the agreement, the bank will provide $2 billion for state-run banks, with IIFC receiving $1.195 billion to fund infrastructure projects, and PowerGrid Corp getting $1 billion to upgrade India's power transmission system.

"Today’s support will help maintain credit growth and continued infrastructure investments in the country," said Roberto Zagha, World Bank Country Director for India.

"Supporting infrastructure is particularly important during the current crisis, not just to sustain the domestic economy at a time of reduced global demand, but even more to lay the foundations for stronger future growth,” Zagha said.

Added IIFC chairman and managing director S.S. Kohli: “This loan will help IIFC increase the availability of long-term finance for infrastructure projects across a range of sectors including roads, power, airports, and ports.
“India's infrastructure needs have been estimated at between $100-150 billion per year, with realizations well short of this target," he said.

The funding to IIFCL has two components -- IBRD loan of USD 1.195 billion long-term finance to infrastructure projects and a grant of USD 5 million for capacity building of IIFCL, which finances infrastructure projects.

"This loan ... (will make) long-term financing available to infrastructure projects being done through public private partnerships... in a range of sectors, including roads, power, airports, and ports," the statement said.
The total cost of the Fifth Power System Development Project, aimed at strengthening of the transmission system, is USD 1.562 billion.
The loan will be utilised for strengthening transmission systems for Sasan, Mundra and Krishnapatnam Ultra Mega Power Projects and South-West interconnection. This would further result in the strengthening of the National Grid, it said.

"This is a crucial time," World Bank Country Director for India, Roberto Zagha, said in a statement.
"Today’s support will help maintain credit growth and continued infrastructure investments in the country. Supporting infrastructure is particularly important during the current crisis, not just to sustain the domestic economy at a time of reduced global demand, but even more to lay the foundations for stronger future growth," he said.