Govt to raise $4.3 bn special loan from World Bank

The Union cabinet on Thursday will consider the finance ministry’s proposal to seek $4.3 billion from International Bank for Reconstruction and Development (IBRD) as special private placement bond. This will enable India to have additional borrowing space over and above the single borrower limit.

Updated on: Sep 11, 2013, 01:55:43 IST

Hindustan Times | By Chetan Chauhan, New Delhi

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The Union cabinet on Thursday will consider the finance ministry’s proposal to seek $4.3 billion from International Bank for Reconstruction and Development (IBRD) as special private placement bond. This will enable India to have additional borrowing space over and above the single borrower limit.

The cabinet will also take a call on capital funds to India Infrastructure Finance Corporation Ltd (IIFCL) for more financing of infrastructure projects in the current financial year. A similar additional capital funds are to be provided to Export Import Bank of India.

The cabinet will also take a call on setting of semi-conductor wafer fabrication manufacturing facilities in the country.

In a bid to provide additional funds for core sector projects, World Bank will issue $4.3 billion special private placement bonds to enable India mop up resources over three years.

The special bonds will help in injecting more liquidity. World Bank’s private placement bonds are special instruments that allow countries to dig deep into the pool of global savings to fund long-gestation projects and also bolster foreign exchange inflow.

State-owned IIFCL is finalising the broad contours of a multi-billion dollar bonds through which it will borrow money from foreign investors for India’s cash-starved infrastructure sector.

The resultant inflow of dollars will also help prop up the rupee, which has slid 20% since April and stoked inflation by increasing prices of most imported goods, including crude oil and gadgets. Last month, the government allowed public sector companies Indian Railway Finance Corporation Ltd IRFC, Power Finance Corp (PFC) and IIFCL to collectively raise $4 billion (about R26,000 crore) through quasi-sovereign bonds for the infrastructure sector. Such proxy sovereign bonds will allow the government to dig into the pockets of foreign pension and institutional funds to stem the rupee’s slide.

ABOUT THE AUTHOR
Chetan Chauhan
Chetan Chauhan is the National Affairs Editor looking into all aspects of news and features from across India. A Chevening scholar with over three decades of experience in reporting and news management, Chetan has extensively covered all important aspects of the social sector, political economy, environment and climate change nationally and internationally. He did a journalism course at the Reuters Institute of Journalism in Oxford and Digital Media training at Nanyang Technological University in Singapore. He started as a reporter with The Statesman in 1996 and joined the Hindustan Times in 2000 in the metro bureau covering environment, crime and Delhi politics. He covered hot local news, from the Jessica Lal murder case to the rebellion of Delhi Congress MLAs against then Chief Minister Sheila Dikshit, to the replacement of toxic vehicle fuel with cleaner compressed natural gas (CNG) in the national capital. Some of his stories on air pollution became part of the Supreme Court’s landmark MC Mehta versus Government of India case in the National Capital Region (NCR), forcing the government to take corrective measures. As part of the national political bureau since 2004, he covered important central sectors such as environment, education, social justice, labour, rural development, water resources, renewable energy, agriculture, broadcasting and the Planning Commission for more than a decade producing several exclusive and investigative breaking stories. His specialisation is the environment, having covered at least a dozen United Nations global conferences on climate change, biodiversity and wildlife including climate summits in Paris, Copenhagen and Bali. He also covered India’s two five-year plans ---11th and 12th and reported on drafting and execution of right based laws such as Right to Education, Right to Information and rural job guarantee law, MG-NREGA, now being introduced in new format as VG-RAM-G Act. He has in-depth knowledge of social sector issues. He was one of the first to report on tigers vanishing from Sariska and Panna wildlife reserves in 2004 and 2008, respectively, leading to the setting up of the National Tiger Conservation Authority (NTCA) and the introduction of stringent penal provisions for poaching. He has written extensively on the rising human-animal conflict in India and the degradation of India’s biodiversity hotspots because of mining and other activities. Since 2004, Chetan has covered Parliament comprehensively and participated in training on the nuanced coverage of Parliament proceedings. He has travelled extensively across India to cover national and provincial elections since 1998, especially in the Hindi heartland states, considered India’s road to power. He writes a regular column for Hindustan Times, Ecostani, on important national politics, economy, Himalayan ecology and environmental issues. His other responsibilities include providing inputs for edits and edit page articles for the publication, apart from managing news flow from across India.Read More

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