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This was decided in a Cabinet meeting chaired by the Prime Minister Manmohan Singh.
“The Cabinet has approved purchase of $4.3 billion bonds of World Bank,” India’s Information and Broadcasting Minister Manish Tewari told reporters in New Delhi.
The Indian central bank would invest in the bonds floated by the International Bank for Reconstruction and Development (IBRD), a lending arm of the World Bank.
The bonds would be of various tenures and the Reserve Bank of India (RBI) would get return on investment.
India’s headroom for borrowing from the World Bank is reaching the limit and investing in these bonds will widen the scope for more loans, a Finance Ministry official had earlier said.
“Total lending by the World Bank is coming down. By subscribing to these bonds, India will be able the leverage this to get larger sums of money as loans for investment in infrastructure projects. So it provides for long-term infrastructure financing in the country,” said the official.
A new report by the United Nations said on Thursday that the Indian economy is likely to grow at 5.2 per cent in 2013 calendar year on the back of rising domestic demand.