The Asian Infrastructure Investment Bank (AIIB) approved a $750-million loan to India for COVID-19 response Wednesday, as the country faces risks of worsening economic contraction.
The loan was provided to “assist the government to strengthen its response to the adverse impacts of the COVID-19 pandemic on millions of poor and vulnerable households,” said the AIIB in a press release.
With the new loan, the AIIB’s approved sovereign loans to India total $3.06 billion, including a recent $500 million COVID-19 emergency response fund.
“The subject loan to India was among a number of projects approved by the AIIB board of directors under the bank’s COVID-19 Crisis Recovery Facility launched in April 2020,” the AIIB said in a statement it sent to the Global Times Thursday.
The Facility is part of a coordinated international response to support AIIB members’ urgent economic, financial and public health financing needs and quick recovery from COVID-19. It offers an initial $5-10 billion of financing to both public- and private-sector entities facing serious adverse impacts as a result of the pandemic.
So far, top borrowers from the project are India ($500 million and $750 million), Indonesia ($750 million), the Philippines ($750 million) and Pakistan ($500 million), according to information acquired by the Global Times.
The bank said it is reviewing additional projects from Turkey, Bangladesh, Serbia, Indonesia, Georgia, Kazakhstan, Maldives and Thailand.
Observers said the loan comes at a critical time for India, as the country, which has about 81 million people living in densely populated informal settlements with limited access to health services, is vulnerable to pandemic assault.
India had over 350,000 confirmed COVID-19 cases as of Thursday. US-based rating agency Fitch Ratings revised its outlook on India’s long-term foreign-currency issuer default rating to negative from stable, citing the economic damage from the pandemic. The International Monetary Fund has revised its 2021 GDP growth forecast for the country to 1.9 percent.
The AIIB began operations in January 2016. It is a multilateral development bank with a mission to improve social and economic projects. China is the initiator and also the largest shareholder in the bank. India is the top borrower.
Insiders noted that although the AIIB decision to approve the loan was an independent one made before the recent border clash, the loan showed that the two Asian countries’ economic relationship will not be hampered by the brawl.
“China apparently does not want the border tensions to extend to the economic field,” Long Xingchun, a senior research fellow with the Academy of Regional and Global Governance at Beijing Foreign Studies University, told the Global Times Thursday.
China has always held good intentions about India, and it has no intent to hamper India’s economic development. China wants to see a prosperous India, Long said.
Regarding the border clash Monday that caused casualties on both sides in the Galwan Valley, China urges India to carry out a thorough investigation into the incident, punish those who were responsible, discipline its frontline troops, and stop all provocative actions so as to ensure such incidents do not happen again, according to Chinese State Councilor and Foreign Minister Wang Yi.