Loan Pact with NDB
- 18 Dec 2020
- 3 min read
Why in News
Government has recently announced a 1 billion USD loan pact with New Development Bank (NDB) to boost rural employment and infrastructure.
- The government and the New Development Bank (NDB) signed a loan agreement worth 1 billion USD to help India’s economic recovery from Covid-19 by supporting:
- Spending on rural infrastructure related to natural resource management (NRM) and
- Rural employment generation under MGNREGS (Mahatma Gandhi National Rural Employment Guarantee Scheme).
- The loan has a tenor of 30 years, including a 5-year grace period.
- The funding comes under NDB’s Policy on fast-track emergency response to Covid-19.
- The loan would specially help migrant workers who have returned from urban areas and have lost their livelihoods due to the pandemic.
- Economic activity slowed down post lockdowns to contain the spread of virus, resulting in loss of employment and income of workers especially those employed in the informal sector, including rural areas.
- The World Bank has also approved four projects worth over 800 million USD for strengthening India’s social protection architecture, promoting nutrition-supportive agriculture for tribal households in Chhattisgarh, enhancing quality education in Nagaland and improving safety and performance of existing dams across states.
New Development Bank
- It is a multilateral development bank jointly founded by the BRICS countries (Brazil, Russia, India, China and South Africa) at the 6th BRICS Summit in Fortaleza, Brazil in 2014.
- It was formed to support infrastructure and sustainable development efforts in BRICS and other underserved, emerging economies for faster development through innovation and cutting-edge technology.
- It’s ownership structure is unique, as the BRICS countries have an equal share and no country has any veto power.
- It is headquartered at Shanghai, China.
- In 2018, the NDB received observer status in the United Nations General Assembly, establishing a firm basis for active and fruitful cooperation with the United Nations.
- All members of the United Nations could be members of the Bank, however the share of the BRICS nations can never be less than 55% of voting power.