India wins second massive Financial loan from World Bank for COVID-19 response strategy
The World Bank has agreed to pump in another $1billion into India’s efforts to give the economy a fresh growth impetus after the lockdown period has been decided to be extended by the Centre. Last month, the World Bank had already given India a loan of $1 billion to support the health sector.
India seems to have won respect for its impeccable standards financial borrowings. Social media channels have been buzzing about how India has been able to win a huge loan from the World Bank, for the first time since 1948. Indeed, this financial backing will help the nation to give impetus primarily to the civilian population.
The new package will be looking into social protection plans, urban unorganised sector workers and economic package for MSME credit enhancement. The decision to roll out this additional amount was taken in April itself, when World Bank released the first $1billion for health care support itself.
Under what is calls ‘Accelerating India’s Covid-19 Social Protection Response Program’, World Bank is supporting the biggest social distancing exercise taken by the world’s second largest economy where there is a sizably population of poor people. Many of them are below the poverty line and have been finding it difficult to make ends meet, due to sudden shutting of sources of income and daily ration.
Of the $1 billion commitment, $550 million, it is confirmed will be financed by a credit from the International Development Association (IDA) the World Bank’s concessionary lending arm. Another $200 million from the kitty will be a loan from the International Bank for Reconstruction and Development (IBRD), with a final maturity of 18.5 years including a grace period of five years.
The remaining $250 million will be made available after June 30, 2020.
According to the United Nation’s Committee Report on Contributions, as of October 2020, India had repaid all its outstanding debt, to the tune of $23,396,496million becoming only the fourth country to have paid its regular budget assessments in full by February 1, 2020. This is an achievement which was applauded by the UN. India adhered to the 30 day due period specified in the Financial Regulation as well. It is confirmed that the World Bank Group is rolling out a $14 billion fast-track package to strengthen the COVID-19 response in developing countries and shorten the time to recovery.
The World Bank is an international financial institution that provides loans and grants to the governments of poorer countries for the purpose of pursuing capital projects. It is a component of the World Bank Group. The World Bank Group is part of the United Nations system and has a formal relationship agreement with the UN, but retains its independence.