India is reportedly in talks with multilateral lenders to secure about $2.5 billion through existing credit lines.
The move comes as New Delhi seeks new sources of capital after the Middle East conflict hampered the government’s ability to increase spending.
The World Bank and the Asian Development Bank (ADB) are discussing loans worth $1.5 billion and $1 billion, respectively, which are expected to be announced within the next two months.
according to people familiar with the matter, as cited by Bloomberg. He said that the objective of this fund is mainly to support urban infrastructure and employment generation. India and the World Bank Group had announced an agreement outlining $8 billion to $10 billion in annual financing over the first five years.
The latest proposed funding is expected to fall within that broader commitment.
In a statement, the World Bank said it was in talks with the government for “potential support” for structural reforms aimed at boosting private sector employment and strengthening growth.
The development comes as India faced a larger-than-expected budget gap at the start of the fiscal year after increasing spending on subsidies to provide relief to citizens from high oil prices due to the Iran conflict.
India imports more than 80% of its crude oil, and rising energy costs have increased government spending on fuel and fertiliser subsidies, limiting the financial space for large-scale projects.
The proposed funding is expected to support existing government programmes, as Prime Minister Narendra Modi’s administration continues its efforts to upgrade India’s infrastructure and pursue urban renewal plans that aim to transform the country into a developed economy by 2047.
The Philippines-based Asian Development Bank has pledged 683 public sector loans, grants and technical assistance packages to India worth a total of $63.8 billion by the end of December.
India is also the World Bank Group’s largest client, with commitments of about $37 billion from the International Bank for Reconstruction and Development and the International Finance Corporation, according to the Washington-based institution’s website.
