The World Bank is considering whether to make a huge loan to India in rupees rather than dollars. The Maharashtra state government is seeking a loan worth some $3.5bn but is concerned about the fluctuations in the value of the dollar.

If approved, it would be the first time the World Bank has agreed to a such a loan in rupees.

The bank says the money would be invested in health, water, energy and irrigation projects.

World Bank approval

The loan represents some 60% of total costs for the development project which come to nearly $6bn.



The money will partly be spent on better healthcare

The idea is that the loan would be sanctioned in dollars, but would be handed over in rupees.

All repayments would be in rupees too.

This would prevent any changes in the amount to be repaid caused by fluctuating exchange rates.

The loan still has to get the approval of the World Bank, India's central government and the Maharashtra state government.

The loan arrangement was discussed at a meeting between World Bank Country Director for India, Isabel Guerrero, and Maharashtra state government officials on Thursday.

In the last few months, the rupee has appreciated sharply against the dollar from 45 rupees to a dollar to 40 rupees to a dollar.

One of the projects Maharashtra wants help with is the Mumbai Metro project, projected to cost $2.5bn. It is hoping to receive loans of $1.5bn.

The project would connect south Mumbai (Bombay) to the suburbs.

Other projects include rural and urban water supplies, power transmission, technical support for a "vision Mumbai" plan and a possible Public Private Partnership (PPP) in irrigation.

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Ah... i have personally seen the plans and the architectural models for this plan, and its good, very good. I'm convined that this loan may be the thing the \city needs to finally kick start the modernistation process. The metro is pretty awesome from what it seems

Only worry is that someone may get their hands ojn it before it can be put to use

It may be right in one respect but not in all as if the fluctution stays with the rupee and the excahnge of the rupee become stable than after a bit time india has to pay the money in rupees which is more than the money that is taken right now .

Hi
the plans and the architectural models for this plan, and its good, very good. I'm convined that this loan may be the thing the \city needs to finally kick start the modernistation process. The metro is pretty awesome from what it seems

I am happy that the state is opting for world bank loan. I would like to know why only Maharashtra requires loan there are many other states like Orrisa . they requires financial help very badly.

This is really good news for India. However, there are some corrupt politicians who will try to grease their palm.

We should ensure that this money really goes to those who need it.