NEW DELHI, Sept. 13 (UPI) — The Indian government approved its central bank buying $4.3 billion in special bonds of the World Bank to raise India’s borrowing limit to $21.8 billion.
A government announcement on its web site said the Cabinet gave its approval for “entering into Special Private Placement Bonds arrangement with International Bank for Reconstruction and Development (part of World Bank Group) for enabling India to have additional borrowing space of $4.3 billion above the Single Borrower Limit.” The current limit is $17.5 billion and the new investment would raise it to $21.8 billion.
The same concessional terms and conditions applicable to World Bank loans to all clients would apply for loans above the single borrower limit for India.
The additional borrowing space would enable the Indian government to commit to new projects with World Bank assistance, the government said.
“The proposal will enable leveraging World Bank’s knowledge base and global reach for transfer of knowledge, adoption of good practices, reforms of processes and systems and capacity building,” the government said.
The bonds as an investment would also produce yields in dollars that would boost India’s foreign exchange reserves, thereby helping reduce its current account deficits seen as the main reason for the sharp decline in the value of the Indian rupee.