The government today approved a proposal to invest $4.3 billion in World Bank bonds, which will help India to secure additional funding from the multilateral agency for infrastructure projects.

The Reserve Bank of India (RBI) would invest in the bonds floated by the International Bank for Reconstruction and Development (IBRD), a lending arm of the World Bank. The bonds would be of various tenures and the RBI would get return on investment.

According to some senior officials in the know the move would allow India to get an equal amount of loan from the World Bank, taking the country’s net borrowing limit to $21.8 billion, against $17.5 billion at present.

At the end of June 2011, the Bank’s outstanding exposure to the country had reached $11.4 billion. The limit is likely to be breached in 2014-15 as loan volume goes up. World Bank’s long-term loans come at a very low rate and any disruption in funding may affect some crucial projects.

India, the largest borrower of the Bank, needs an investment of $1 trillion in the infrastructure in the 12th five year plan (2012-13 to 2016-17). World Bank loans are available at concessional rates of as low as 0.75%. As of March 2012, total net commitments towards India stood at $23.4 billion across 75 projects in infrastructure, agriculture, education, health and environment.

In what would give an added boost to infrastructural projects, the government also approved a proposal to provide capital funds of Rs. 400 crore to the India Infrastructure Finance Company Ltd (IIFCL) during 2013-14. The infusion comes with a proviso that further release within the authorized capital may be made with the approval of Finance Minister subject to budgetary allocations being available. It will help IIFCL in funding viable infrastructure projects through long term debt, takeout finance and credit enhancement.

The Cabinet additionally approved the proposal to provide capital funds to Export-Import Bank of India (Exim Bank) during 2013-14 to the tune of Rs.700 crore to support the future growth of the Bank. The infusion of capital funds in Exim Bank will ensure compliance to the regulatory norms on capital adequacy, cater to the credit needs of productive sectors of economy.

The infusion would enable the Bank to raise higher amount of borrowings and thereby support Indian exporters to secure large overseas projects through on-lending.

Others

The government approved the proposal of the National Backward Classes Finance and Development Corporation (NBCFDC) for enhancement of authorised share capital from Rs. 700 crore to Rs 1,500 crore. The NBCFDC provides concessional loans to the people of Other Backward Classes (OBCs) living below double the poverty line through its various schemes.

The Cabinet today also approved the proposal for licensing of land to the concessionaires for four projects to be taken up in the Public Private Partnership (PPP) mode and one project on lease basis based on tender-cum-auction for setting up a cement bagging plant at Cochin Port. This decision is expected to help augment the capacity of ports and bring about efficiency in operations at major ports.

The government approved the setting up of the second vehicle assembly (SVAB) building at Satish Dhawan Space Centre, Sriharikota at an estimated cost of Rs 363.95 crore with a foreign exchange component of Rs. 7 crore. The move will provide enhanced launch frequency of PSLV and GSLV by facilitating parallel integration operations.

It will also provide redundancy to existing Vehicle Assembly Building (VAB) for integration of GSLV MK-III and also as a prime integration facility for third launch pad and future general launch vehicles. The SVAB is targeted for realization within 42 months.