AIIB approves $750 million dollar loan to India to fight COVID-19
AIIB's Vice President for Investment Operations informed that the support to India aims to ensure economic resilience to prevent long term damage to the productive capacity of India’s economy.
The Asian Infrastructure Investment Bank (AIIB) has approved the loan of $750 million dollars (about Rs. 5,688 crore) to India. The loan has been sanctioned to assist the Indian government to strengthen its response to the impacts of COVID-19 pandemic on millions of people.
As per the World Bank, India has been vulnerable to the pandemic given that around 270 million people live below the national poverty line and around 81 million has been living in the densely populated informal settlements who have limited access to health services.
While AIIB does not consist of a regular instrument for policy-based financing, it has been extending such financing on an exceptional basis to support its members through projects which are co-financed with the Asian Development Bank or the World Bank.
Significance of the budgetary support:
The budgetary support which is co-financed with the Asian Development Bank will go toward supporting the economic capacity of the informal sector, businesses. It will also help in expanding the social safety nets for the needy as well as will strengthen the country’s healthcare systems.
Economic support of AIIB to India:
The disruption in the economic activities has impacted the poor households disproportionately, especially women, who are mostly employed in the informal sector.
DJ Pandian, AIIB Vice President for Investment Operations, stated that many of the world’s middle and low-income countries are in the initial stages of the health crisis but have already been feeling the impacts of the COVID-19 pandemic. This poses an enormous risk for millions of people across India who have recently emerged from poverty.
Pandian further added that our support to India aims to ensure economic resilience to prevent long term damage to the productive capacity of India’s economy.
The total AIIB’s sovereign loans to India that have already been approved amounts to 3.06 billion dollars. It includes a recent 500 million- dollar COVID-19 emergency response.
The current sanctioned loan will be second for India under AIIB’s COVID-19 Crisis Recovery Facility (CRF). The facility was created as a part of the coordinated international response to combat the pandemic and to support AIIB’s members' urgent financial, economic, and public health needs apart from quick recovery from the crisis.
It is a multilateral development bank that has a mission to improve economic and social outcomes in Asia. It began its operations in January 2016 and has now grown to 102 approved members worldwide. The bank is headquartered in Beijing, China.