Multilateral lending agency Asian Development Bank (ADB) will provide a $400-million loan to Madhya Pradesh for promoting rural development through creation of business and employment opportunities in the state.
The loan will also help provide 24-hour electricity to rural households and create better educational opportunities for the state's poor.
"The current distribution system leaves households without a 24-hour supply, which is hurting business and constraining inclusive growth and development in rural areas," Herath Gunatilake, Principal Energy Economist in ADB's South Asia Department said.
"The investment programme will help ensure a constant, reliable supply of electricity which will bring broad benefits to over 2.6 million households, as well as providing new power connections to 1.3 million homes," Gunatilake added.
The ADB board approved the multitranche financing facility which will support the second phase of the state's ongoing $1.1 billion energy efficiency investment programme to improve power distribution infrastructure in 32 districts.
Under the first tranche, ADB will provide $200 million.
Besides, ADB will provide linked technical assistance of $1 million to train poor women in target districts as entrepreneurs, so that they can leverage the new economic opportunities that will emerge with the advent of uninterrupted power to their rural communities.
ADB's first tranche loan has a 25-year term, with a grace period of five years.
