Beijing-headquartered Asian Infrastructure Investment Bank (AIIB) has approved a USD 750 million (Rs 5,717.813 crore) loan to India. This is to assist the Indian government to strengthen its response to the adverse impacts of the COVID-19 pandemic on millions of poor and vulnerable households. This is the second loan borrowed by India under AIIB’s COVID-19 Crisis Recovery Facility (CRF).
This loan approved by AIIB is co-financed with the Asian Development Bank.
The budgetary support will go toward bolstering economic aid for businesses, including for the informal sector. While AIIB stated the Indian government is raising this fund to expand the social safety nets for the needy, and strengthening the country’s health care systems.
The bank has approved USD 3.06 billion, including a recent USD 500 million (Rs 3, 812.75 crore) COVID-19 emergency response, to India as sovereign loans.
CRF was created as part of the coordinated international response to counter the pandemic, to support AIIB members’ urgent economic, financial, and public health needs and quick recovery from the crisis.
“Many of the world’s low and middle-income countries are still in the early stages of the health crisis but are already feeling the impacts of the pandemic. This poses an enormous risk for millions across India who have only recently emerged from poverty,” said AIIB Vice President, Investment Operations, DJ Pandian. India is considered to be vulnerable as it has around 270 million people who continue to live below the national poverty line and around 81 million live in densely populated informal settlements with limited access to health services, according to the World Bank.
This whole pandemic has led the International Monetary Fund to revise its 2021 GDP forecast for the country to 1.9 percent, which is about 3.9 percent lower than its January 2020 forecast.
Pandian added, “Our support to India also aims to ensure economic resilience to prevent long-term damage to the productive capacity, including human capital, of India’s economy.”