Following detailed discussions, the World Bank finally approved a loan of $250 million (Rs 1,725 crore) to Kerala to rebuild the state affected by the August 2018 floods. The amount was given as part of its first tranche of the Development Policy loan to Kerala for post-flood rebuilding of infrastructure in the state.
The loan was approved by the World Bank’s board of governors in Washington DC. A formal agreement will be signed in New Delhi with officials of the finance ministry and senior officials of the state finance department present during the signing of the agreement.
According to reports, the $250 million loan approved by the World Bank is Development policy loan or DPL1 and out of this, $160 million will be provided under the International Development Assistance, or IDA, where the interest rates are as low as 1 to 1.5 per cent. IDA are cheaper loans offered by the World Bank to developing countries.
The total loss incurred post Kerala floods has been estimated to be around Rs 39,000 crore. The state also expects another $250 million from the World Bank under DPL 2 after the end of the tranche.
The rebuilding initiative and the funds will be used to build resistance and better technology and design will be used to rebuild the infrastructure to develop infrastructure projects. During the discussion by World Bank leaders with senior officers of the Ministry of Finance and state department, the state department identified many areas such as agriculture, water resources for funds deployment.
The amount comes as a relief to the state government as it has been knocking on all doors to generate funds to build back Kerala. According to officers of Rebuild Kerala project, the loan from World Bank is as good as getting free money cause of the lower interest rates.