The Asian Infrastructure Investment Bank (AIIB) has approved a 750 million dollar (about Rs 5,688 crore) loan to India to assist the government to strengthen its response to the adverse impacts of the COVID-19 pandemic on millions of poor and vulnerable households.
Co-financed with the Asian Development Bank, the budgetary support will go toward bolstering economic aid for businesses, including for the informal sector, expanding social safety nets for the needy and strengthening the country's healthcare systems.
According to the World Bank, India is extremely vulnerable to the pandemic given that around 270 million people continue to live below the national poverty line and around 81 million live in densely populated informal settlements with limited access to health services.
The disruption in economic activities threatens to impact poor households disproportionately, especially women, many of whom are employed in the informal sector.
"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 for Investment Operations D J Pandian.
The International Monetary Fund has revised its 2021 GDP forecast for the country to 1.9 per cent, which is about 3.9 per cent lower than its January 2020 forecast.
"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," said Pandian in a statement released on Wednesday.
AIIB's total sovereign loans to India that have already been approved amount to 3.06 billion dollars, including a recent 500 million dollar COVID-19 emergency response.
The current loan will be the second for India under AIIB's COVID-19 Crisis Recovery Facility (CRF), which was created as part of the coordinated international response to counter the pandemic, to support AIIB members' urgent economic, financial and public health needs besides quick recovery from the crisis.
While AIIB does not have a regular instrument for policy-based financing, it is extending such financings on an exceptional basis under the CRF to support its members through projects co-financed with the World Bank or the Asian Development Bank.
The AIIB is a multilateral development bank with a mission to improve social and economic outcomes in Asia. Headquartered in Beijing, it began operations in January 2016 and have now grown to 102 approved members worldwide.
( With inputs from ANI )