Monday, 18 February 2013

INDIA on DEBT since 1949

 Everyone in our country says INDIA is always on Debts. Let’s have some information on it. ..

                    India has been borrowing from the World Bank (through IBRD and IDA) for various development projects in areas of poverty alleviation, infrastructure, rural development, human resource development, etc. IDA funds are one of the most concessional external loans for GOI and are used largely in social sector projects that contribute to the achievement of MDGs. IBRD funds are semi - concessional and of a longer maturity and therefore, cheaper than commercial external borrowings. GOI utilizes IBRD loans primarily for infrastructure projects.

Since 1949 when India took the first assistance from World Bank, the Bank's cumulative commitment to India stands at US$ 91.91 billion {US$ 48.28 billion under IBRD and US$43.63 billion under IDA (up to 9th July, 2012)}. The commitments for the past 5 years (FY of GOI) have been as follows:
US $ Million
US $ Million
US $ Million


Repayment of principal amount with interest, based on the terms of the loan/credit agreement between the Government of India and the World Bank, is made by the Government six-monthly as per the amortization schedule of the loan/credit by keeping necessary provisions in the budget each year.

Current Terms and Conditions of World Bank Lending to India

IBRD Loans (Flexible Loan)- with Variable Spread option
IBRD IFL allows borrowers to customize the repayment terms (i.e. grace period, repayment period and amortization profile)
  • Repayment period: Maximum final maturity - 30 years including initial grace period of 5 years (maximum). Maximum average maturity - 18 years
  • Interest: LIBOR (6 month) + variable spread (Variable Spread over LIBOR is recalculated every January 1 and July 1 and also depends on the average maturity of the loan).
  • Commitment charges on undisbursed amount: 0% p.a.
  • Front End fee: 0.25%
IDA Credits (from 1 July 2011 onwards)
  • Repayment period: 25 years including a grace period of 5 years
  • Interest: 1.25%
  • Commitment charges on undisbursed amount: 0% p.a. for FY 12 (July 2011-June 2012)
  • Service Charges: 0.75% p.a.

IFC in India

  • Over the past few years, in line with a strong strategic focus on India, IFC has augmented its program and portfolio in India by investing in high impact projects.
    • India represents IFC's single-largest country exposure. As of May 31, 2012, IFC's portfolio of committed investments in India was approximately US$4 billion ($4.3 billion including syndicated loans).
    • IFC's annual commitments for India were US$1,044 million in IFC's Fiscal Year 2008 (i.e. 1st July 2007 to 30th June 2008), US$934 million in IFC's Fiscal Year 2009, US$1,802 million in IFC's Fiscal Year 2010 and US$754 million in IFC's Fiscal Year 2011. In IFC's Fiscal Year 2012, total commitments in India reached US$960 million in 45 projects, distributed across infrastructure, manufacturing, financial markets, agribusiness and renewable energy. The above figures include commitments for IFC's own account and mobilized financing.
  • IFC is scaling up its presence and activities in the Low Income States and NE States (LIS) in India. A new office in Kolkata was set up to focus on the LIS; approximately US$400-500 million has been invested in the LIS over the past three fiscal years. Further, IFC Advisory Services is working in the LIS in the following areas by promoting:
                                i.            investment climate for private sector development and inclusive growth;
                              ii.            financial inclusion by working on financial services and initiatives related to the sustainability of the MFI sector including micro-credit bureau, risk mitigation initiatives, code of conduct setting etc;
                            iii.            renewable energy (solar and biomass) and cleaner production as well as key subsectors like agribusiness; and
                            iv.            developing PPP transactions with focus on social services (health and education) and climate change impact projects.
  • Infrastructure has been stepped up to 30-40% of IFC's portfolio in India in the last few years and currently accounts for about US$1.3 billion of current committed portfolio.

Overall Indian population is 1.22billions and each have  Rs.33000 on head as debt.
According to finance ministry data, the per capita debt in India was estimated at nearly Rs 33,000 at the end of March 2012, compared to a little over Rs 26,600 a year ago, led primarily by internal as well as external loans.
Still INDIA suffer from water, power, money, fuel, natural resources problems. The culture we adopted from last 61 years is poor becoming poorer & Rich becomes the Richer..

                                                                                      -- Bharat Sigireddy's


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