Mumbai: World Bank, which has decided to step up its exposure to India to $14 billion in the next three years, will soon clear a $2.6 billion special loan package.
Under the package, India Infrastructure Finance Company is expected to get $1.2 billion, Sidbi $400 million and Power Grid Corporation $1 billion.
The Bank is in advanced stages of approving this special package, World Bank’s economic adviser (India) Giovanna Prennushi told reporters.
World Bank is also working on a $3 billion loan for recapitalisation of public sector banks.
In December last, the World Bank had decided to step up its exposure to India beginning 2009 to $14 billion from about $8.1 billion during the previous three years.
Till February this year, World Bank has approved five projects in India with a total commitment of $1.34 billion.
World Bank had sanctioned a $400 million loan earlier this year to Power Grid Corporation, the third largest transmission utility in the world.
World Bank’s increasing exposure to the Indian infrastructure sector is in line with its thinking that such investments would help developing nations to tide over the global recession.
“The only mantra now is to remove infrastructure bottlenecks so that the economy is ready for a high growth path when global revival takes place,” World Bank’s chief economist Justin Yifu Lin had said recently.
“Investment in infrastructure could revitalise manufacturing in India, which accounts for only 16% of the country’s total output and contribute significantly to job creation,” he said.
The potential impact on productivity and growth could be a strong contribution to India’s development, he said, adding that India could both kick-start demand in the face of current crisis as well as pave way for longer-term growth.
Lin proposed that developed countries invest a share of their stimulus plans into infrastructure projects in developing countries.
World Bank’s Group President Robert B Zoellick has proposed an umbrella ‘Vulnerability Fund’ to which developed countries could dedicate 0.7% cent of their planned economic stimulus.