In 2016, the government of India and the World Bank signed a $650 million agreement towards the third loan for the Eastern Dedicated Freight Corridor to help faster and more efficient movement of raw materials and finished goods between the north and eastern parts of India. In 2017, the government of India and the World Bank signed a $200 million loan agreement for the Assam Agribusiness and Rural Transformation Project.
In 2018, the government of India and the World Bank signed a $375 million loan agreement to support India develop its first modern inland water transport on the Ganga river between Varanasi and the seaport of Haldia.
A prolonged shadow-banking crisis and hurdles in bankruptcy rules are set to keep India atop the world’s worst bad-debt pile, even as Italy, which held the title previously, quickens the cleanup of its lenders. More than 2.4 per cent of total loans in India’s banking system may be under stress on top of the 9.6 per cent bad debt ratio as of June, the highest among major economies, Credit Suisse estimates shows. Italy, on the other hand, has nearly halved its ratio to 8.5 per cent in the last three years.
The failure to slash stressed assets is undermining India’s efforts to revive economic growth that has cooled to a six-year low. A cash crunch in the shadow-banking sector that started with the collapse of IL&FS Group last year and the delays in the bankruptcy process are adding to the challenges faced by banks as they seek to tidy up their balance sheets. India is the largest recipient of loans from the World Bank, amounting to $102.1 billion, between 1945 and 2015 (as on July 21, 2015), according to the Bank’s lending report.
While the International Bank for Reconstruction and Development (IBRD), a part of the World Bank group, has lent $52.7 billion, loans from IBRD are at market rate, but that rate is still concessional because it is lower than what India could borrow on its own. Plus the loans are for a long period, which is not possible for India on its own. The International Development Association (IDA), a multilateral concessional lender of World Bank, has loaned $49.4 billion to India over the last 70 years. Loans from IDA are essentially zero-interest loans for 40 years.
These days, most World Bank lending to India is from IBRD. India continues to borrow billions of dollars from the World Bank – and China also borrows from the World Bank – about $ 2 billion per year. Both India and China do not truly need this money – but with the loans they get free supervision from the World Bank, which is often helpful in improving the success of project implementation. Meaning that the World Bank sends its technical experts at no charge – they are unbiased, which helps sort out local issues. India does repay the loans to the World Bank as stated in the repayment schedule there is no issue – India has no problems in repaying the loans. India on December 28, 2017 signed a $ 40 Million Loan Agreement with the World Bank for ‘Uttar Pradesh (UP) Pro-Poor Tourism Development Project’. India on November 20, 2017 signed $100 million loan agreement with the World Bank for Shared Infrastructure for Solar Parks Project. India and World Bank on November 7, 2017 signed a financing agreement for loan of $119 million for the Odisha Higher Education Programme for Excellence & Equity (OHEPEE) Project. India and the World Bank on October 30, 2017 signed $200 million loan agreement for the Assam Agribusiness and Rural Transformation Project. The loan will have a 7 year grace period and a maturity of 16.5 years. The Cabinet Committee on Economic Affairs (CCEA) on October 11, 2017 approved two World Bank supported schemes Skills Acquisition and Knowledge Awareness for Livelihood Promotion (SANKALP) and Skill Strengthening for Industrial Value Enhancement (STRIVE) to boost Skill India Mission. SANKALP is Rs 4455 crore centrally sponsored scheme including Rs 3300 crore loan support from World Bank whereas STRIVE is a Rs 2200 crore central sector scheme with half of the scheme outlay as World bank loan assistance. The Cabinet Minister for Science and Technology, Earth Sciences, Environment, Forests and Climate Change, Harsh Vardhan, on June 30, 2017 launched a first ever Industry-Academia mission. Under the Mission, the government launched a programme named Innovate in India (i3) that will witness an investment of $250 million with $125 million as a loan from World Bank. India on June 27, 2017 signed a loan agreement of $35 million with the World Bank for Assam State Public Financial Institutional Reforms Project. India on June 5, 2017 signed a $ 39.2 million loan agreement with the World Bank for the Assam Citizen Centric Service Delivery project.
India on May 31, 2017 signed a loan agreement of $36 million with the World Bank for Himachal Pradesh Public Financial Management Capacity Building Programme. The World Bank Board on March 16, 2017 approved the $175 million National Hydrology Project to strengthen capacity of institutions to assess water situation in their regions.
India on October 21, 2016 signed a 650-million US dollar loan agreement with the World Bank for the Eastern Dedicated Freight Corridor-III (EDFC-III) Project. The project will benefit industries of Northern and Eastern India, which rely on railway network for transportation of material inputs and exports. Union and Karnataka government on May 24, 2016 signed 100 million US dollar loan and project agreement with World Bank to support ‘Karnataka Urban Water Supply Modernization project’. The World Bank Board on May 13, 2016 approved a 625 million US dollars loan to support the India’s program to generate electricity from widespread installation of rooftop solar photo-voltaic (PV).
India on March 17, 2016 signed loan agreement of 35 Million dollars with the World Bank for Madhya Pradesh Citizen Access to Responsive Services Project. The objective of the project is to improve access and quality of public services in the state. The World Bank on December 15, 2015 approved a 1.5 billion US dollar loan for the ambitious Clean India Campaign (Swachh Bharat Mission). The loan was granted to support the government in its efforts to ensure all citizens in rural areas has access to improved sanitation and ends the practice of open defecation by 2019. This government has taken endless loan due to which country may suffer in long run.
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