The Government of India has taken a $1.5 billion loan from the Asian Development Bank (ADB) to fund its immediate response to the coronavirus (COVID-19) pandemic, both in terms of the health and socio-economic impacts. The bank is also in talks with the government to fund further economic stimulus measures, including support for Micro, Small & Medium Enterprises (MSMEs) and for extending health services through public-private partnerships.
The money, translating to more than ₹11,000 crore, will be spent to implement the containment plan and rapidly ramp up test-track-treatment capacity. It will also be used to provide social protection for 80 crore poor people over the next three months, according to Finance Ministry additional secretary Sameer Kumar Khare, who signed the loan agreement.
The loan, approved by the ADB under its COVID-19 Active Response and Expenditure Support (CARES) Programme, is the bank’s largest ever to India. The Centre will also take the ADB’s technical support to strengthen its implementation framework and capacities to deliver the Rs. 1.7 lakh crore welfare package announced last month.
The bank was also in talks to provide “further possible support for stimulating the economy, support strong growth recovery, and to build resilience to future shocks”, an official statement said.
During an April 9 telephone meeting, ADB President Masatsugu Asakawa told Finance Minister Nirmala Sitharaman that apart from emergency needs, the bank was also willing to support “short- to medium-term measures to restore the dynamic economic growth of the country by exploring all available financing options”, it added.
This would include support for the MSMEs by facilitating access to finance through credit guarantee schemes, integration into global and national value chains through enterprise development centres, and a credit enhancement facility for infrastructure projects. Another major agenda would be supporting the extension of comprehensive primary health services in urban areas, and of secondary and tertiary health care systems through the public-private partnership mode, said the statement.