USD 2bn World Bank loan will lower NHAI's borrowing needs by 20 pc

The USD 2 billion World Bank loan the government is seeking for road development will reduce the total borrowing needs of the National Highway Authority of India by 20 per cent to Rs 1,53,421 crore over the next 21 years.

The USD 2 billion World Bank loan the government is seeking for road development will reduce the total borrowing needs of the National Highway Authority of India by 20 per cent to Rs 1,53,421 crore over the next 21 years.

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"If we get the USD 2-billion loan from World Bank, the total money that National Highways Authority of India (NHAI) will have to borrow until 2030-31 will come down to only Rs 1,53,421 crore," a Transport Ministry official said.

The Ministry is seeking the loan at a lower interest rate of 6.5 per cent with a longer repayment tenure of 25 years, he said.

Road Transport and Highways Minister Kamal Nath had said earlier this month after a meeting of an Empowered Group of Ministers that the government wanted to borrow USD 2 billion.

The official said the longer tenure would prevent the government from borrowing every few years to repay this loan and the lower interest rate will also result in lesser fund outgo towards repayment, cutting down the overall borrowing needs of the Authority.

The World Bank lends to the government at prevailing market rates, which currently stands at 9-9.5 per cent, with a usual repayment tenure of around 10-12 years.

A report by the B K Chaturvedi Committee, constituted in August this year to address issues plaguing road development, has pegged the total borrowing requirement of the NHAI till 2030-31 at a cumulative Rs 1,91,948 crore.