Article:
The Indian Government recently declared a loan pact of 1 billion USD with the New Development Bank (NDB) targeting rural employment and infrastructure progression. This collaboration signifies a stride towards India’s economic recovery following the repercussions of Covid-19.
Loan Agreement: Purpose and Specifications
In order to aid India’s economic recovery from Covid-19, the government and the NDB sealed a loan agreement of 1 billion USD. This financial support will primarily be directed towards natural resource management-related rural infrastructure and rural employment generation under the umbrella of Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS).
The loan carries a tenor of 30 years, inclusive of a 5-year grace period. This loan will particularly benefit the migrant workers who have returned from urban areas and are now bereft of their livelihoods due to the pandemic aftermath. The aid will promote their reintegration into the economy, giving them another chance at employment generation.
NDB’s Policy on Fast-Track Emergency Response to Covid-19
The loan agreement comes under NDB’s Policy on fast-track emergency response to Covid-19. This initiative is designed to promptly address the prevailing economical crisis induced by the pandemic. The policy seeks to offer financial aid to those affected by the slowdown in economic activities, especially catering to the informal sector workers in rural areas who have been left unemployed and devoid of stable income post imposed lockdowns.
World Bank’s Projects for India
In addition, the World Bank has approved four projects summing up over 800 million USD aiming at strengthening India’s foundational social protection systems. The projects intend to encourage nutrition-supportive agriculture for tribal households in Chhattisgarh, enhance the quality of education in Nagaland and improve the safety standards and overall performance of existing dams across various states.
About the New Development Bank
Founded by the BRICS countries (Brazil, Russia, India, China and South Africa) at the 6th BRICS Summit in Fortaleza, Brazil in 2014, New Development Bank is a multilateral development bank. Its formation aimed to support infrastructure and sustainable development efforts in the BRICS nations and other underserved, emerging economies. The bank promotes faster development through innovative solutions and use of cutting-edge technology.
Its unique ownership structure ensures that BRICS countries have an equal share, with no country possessing veto power. NDB is headquartered in Shanghai, China and was granted observer status in the United Nations General Assembly in 2018, facilitating active and fruitful cooperation with the UN. Every member of the UN could potentially be a member of the Bank, ensuring, however, that the BRICS nations hold no less than 55% of voting power.
