Under the plan approved yesterday by its board of directors, the World Bank arm that lends to countries can issue special bonds that India will purchase, the Washington-based institution said in a statement posted on its website. That will offset additional lending to India and keep the unit’s exposure within a ceiling of $17.5 billion, the bank said.
“Without taking this action, it would have been difficult for the bank to assist India meaningfully as it tackles the remaining large challenges of lifting some 300 million out of poverty,” World Bank Vice President for South Asia Isabel Guerrero said in today’s statement.
While India has been among the rapidly growing economies that helped pull the world out of a 2009 recession, costlier credit and the impact of Europe’s debt crisis on exports have slowed its expansion. Gross domestic product rose 6.1 percent last quarter from a year earlier, the weakest pace in more than two years.
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