$1 billion WB credit for infrastructure growth

The government is negotiating the terms for a $1-billion annual line of credit from the World Bank for infrastructure development. The money would be used for the country's focussed drive on infrastructure development using public-private partnerships.

The Bank is also willing to provide inputs for technical upgrade and capacity building in the field of public private partnerships. A line of credit is a loan from the Bank.

However, unlike a regular loan for a fixed amount, the Bank does not provide the full amount of the loan at once. Instead, it establishes a credit limit as the maximum amount that can be borrowed.

As money is withdrawn, the available credit reduces and as it is repaid, the amount available for withdrawal increases.

"The World Bank provides long-term funding which makes it an attractive source of funds for the infrastructure sector. The Bank provides loans for up to 18 years, whereas, markets usually offer loans for a maximum of 12 years," said a senior government official involved in the negotiations.

Prime Minister Manmohan Singh had said the country would require $150 billion in foreign direct investment in infrastructure over the next 10 years.

Of this, $55 billion would be required for airports and railways over the next 10 years, $75 billion in the power sector and $25 billion in the telecom sector.

The World Bank is, however, only one of the sources of funds that the government was looking at.

"Once viable projects are identified, there will be no dearth of funds for them," the official said, adding that there was a lot of money in the domestic markets and private sector which could be tapped for infrastructure development.

Other lending agencies like the Asian Development Bank were also being looked at as possible sources of funds.