Maharashtra government received a pleasant surprise when World Bank unconditionally agreed on extending its loan in rupees instead of dollars for various state projects worth $5.8 billion.
Maharashtra government received a pleasant surprise on Thursday when World Bank unconditionally agreed on extending its loan in rupees instead of dollars for various state projects worth $5.8 billion. The WB has also agreed to offer this loan as per London Inter Bank Offer Rate (LIBOR) which is presently 4.75 per cent.
Isabelle Guerrero, country head of the bank for India, who led the delegation met with state secretaries at Mantralaya through the day. She said World Bank responded positively to state government’s request of offering loan in rupees to avoid disadvantages in case of falling value of dollar in the international market.
“The Bank is putting in efforts to curb the foreign exchange risk on loans to make it financially attractive for countries like India,” she added, pointing out that the only precondition is that the projects should get finished within the stipulated timeframe. According to Guerrero, the rate of interest for poverty alleviation projects is just 0.75 per cent over 35 years, but for infrastructure loans, interest is as per LIBOR.”
We have formally launched the process of loaning. Now it is the state cabinet and Department of Economic Affairs, New Delhi, who have to endorse it. Our president Robert Zoellick is happy with the pace of projects and the recent decision to repeal Ulcra,” Isabelle told media.
During the talks, which were led by chief secretary Johny Joseph and secretary for special projects Sanjay Ubale on behalf of the state government, the Bank officials have primarily worked out a loan component of nearly 60 per cent to most of the projects mainly in sectors like irrigation, health, water supply and urban infrastructure.
Ubale told the media that due to increasingly expensive loan process and frequent fluctuation in foreign exchange, the state had specifically urged World Bank to extend loan in rupees. Ubale revealed that the state had put forth the demand of $5.8 billion with the Bank. However, he said the consent of DEA and Ministry of Finance, New Delhi, is being sought on finalising the borrowing capacity of the state.
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