New Delhi: The cabinet on Thursday approved a proposal to invest $4.3 billion in the bonds of the World Bank group to secure additional cheaper funding from the multilateral agency for infrastructure projects.
“The cabinet has approved purchase of $4.3 billion bonds of World Bank,” information and broadcasting minister Manish Tewari told reporters after a meeting of the cabinet chaired by Prime Minister Manmohan Singh.
The Reserve Bank of India (RBI) would invest in the bonds floated by the International Bank for Reconstruction and Development (IBRD), a lending arm of the World Bank. The bonds would be of various tenures and the RBI would get a return on the investment.
This was done as India’s head room for borrowing from the World Bank was reaching its limit, a finance ministry official said. “By investing in these bonds, India will be able to leverage this to get larger sums of infrastructure financing in the country,” he said, requesting anonymity.
The cabinet also gave an in-principle approval to the proposal to set up two semiconductor manufacturing facilities to check over-dependence on import of electronic products, especially chipsets. Citing telecom minister Kapil Sibal, PTI said these semiconductor fabrication plants would assist in checking imports of electronic product requirement, including chips.
The investment envisaged for the two units is around Rs.25,000 crore and the level of government support for these units will be decided through negotiation with chip makers.
Continuing its focus on the deprived classes ahead of the general elections, the cabinet also approved a proposal of the National Backward Classes Finance and Development Corp. for enhancement of its authorized share capital from Rs.700 crore to Rs.1,500 crore. This will strengthen its equity base and will help more people belonging to backward classes to get loans and financial support.
The cabinet committee on economic affairs (CCEA) approved additional allocation of 5 million tonne of foodgrains for the below the poverty line families in the current financial year. This additional allocation will remain valid for lifting up to 31 March, or till the National Food Security Ordinance is implemented in the states.
The cabinet also approved a proposal to provide capital funds of Rs.400 crore to the India Infrastructure Finance Co. Ltd during 2013-14. It will help the financier in funding viable infrastructure projects through long-term debt, takeout finance and credit enhancement. The cabinet also cleared the licensing of land to the concessionaires for four projects to be taken up in the public-private partnership mode and one project on lease basis, based on tender-cum-auction for setting up a cement bagging plant at Cochin Port.
This decision will help in improving the capacity of ports and will also bring about efficiency in operations at major ports, which will benefit trade and economy as a whole, a cabinet statement said.
PTI contributed to this story.