India is said to be in talks with multilateral lenders to secure about $2.5 billion in funding from existing credit lines as New Delhi tees up fresh sources of money after the Middle East conflict crimped its ability to step up spending.
The World Bank and Asian Development Bank are in discussions to disburse loans worth $1.5 billion and $1 billion respectively, with announcements likely within the next two months, according to people familiar with the matter. The funding is largely to boost urban infrastructure and create jobs, they added, asking not to be identified discussing private matters.
India and the World Bank Group announced an agreement earmarking $8 billion to $10 billion in annual financing over five years. The latest funding would be part of that commitment, the people said.
In a statement, the World Bank said it’s in talks with the government for “possible support” to structural reforms aimed at increasing private sector jobs and bolstering growth. The bank didn’t disclose the loan commitment. The ADB and India’s finance ministry didn’t respond to emails seeking comment.
India is facing a wider-than-expected budget gap at the start of the financial year after it had to spend more on subsidies to shield citizens from higher oil prices triggered by the Iran conflict. India imports more than 80% of its crude, and higher energy prices have boosted the government’s fuel and fertilizer subsidy bills, hurting New Delhi’s ability to spend on large projects.
