World Bank approves $1-bn loan to India amid coronavirus outbreak

The World Bank on Friday announced $1 billion in social sector funding for India. The money will go towards mitigating the economic and humanitarian crisis being faced by unorganised workers and migrant labourers impacted by the Covid-19 pandemic.

This takes the total commitment from the World Bank towards emergency Covid-19 response in India to $2 billion.

A $1-billion support was announced last month to support India’s health sector.

The new support will be funded in two phases — an immediate allocation of $750 million for the financial year 2021 (FY21) and a $250-million second tranche that will be made available for FY22, the multilateral agency said.

The first phase of the operation will be implemented through the Pradhan Mantri Garib Kalyan Yojana. It is expected to immediately help scale up cash transfers and food benefits using a core set of pre-existing national platforms and programmes such as the public distribution system and direct benefit transfer.

In the second phase, the programme will deepen the social protection package, in which additional cash and in-kind benefits based on local needs will be extended through states and portable social protection delivery systems.

“The response to the Covid-19 pandemic has required governments to introduce social distancing and lockdowns in unprecedented ways — especially in the informal sector. India has not been an exception to this trend,” said Junaid Ahmad, World Bank Country Director in India, in a webinar.

Of the $1-billion commitment, $550 million will be financed by a credit from the International Development Association (IDA) — the World Bank’s concessionary lending arm and $200 million 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, and would be on standard IBRD terms. The programme will be implemented by the finance ministry.