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World Bank okays $ 750-million loans for India

The World Bank has finally sanctioned loans of over $ 750 million to India for the health and power sectors, rural development and tax reforms.

The World Bank said in a statement from Washington that the bank's board late on Tuesday gave its nod for three loans of $ 511 million as a part of the development package for Uttar Pradesh.

These funds will be utilised by Uttar Pradesh in ameliorating its health and power systems and for bettering its tax administration.

The other loans were sanctioned for Rajasthan, which will get $ 100 million for rural development. Besides this, the World Bank also sanctioned a $ 142.6-million loan towards immunisation to protect children against the scourge of polio.

The World Bank has, over a period of time, begun to focus on loans to individual states in India so as to ensure that its money is used in the best possible way.

It is lending both on regular terms and through its concessionary loan window, which charges nominal interest rates to poor countries.

The United States, enforcing sanctions imposed against India for its nuclear tests of 1998, voted against some of the new loans.

But this was not enough to derail the lending, which needs only a simple majority to go ahead. Washington has some 17 per cent of the votes at the World Bank, roughly reflecting its global economic might.

The World Bank said earlier this year that determined implementation of a second generation of economic reforms could lift India's growth rate to 7.5 per cent or more.

But growth could slip below 5.8 per cent if the reform plans stall.

A bank report on ways to accelerate sustainable economic development urged India to spend more on education and health care and to reduce subsidies and accelerate privatisation.

India is one of the World Bank's largest borrowers, winning some $ 2 billion in an average year in loans to improve infrastructure and dozens of other issues. But poverty levels, especially in rural areas, have fallen much less rapidly than in many other Asian countries.

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