World Bank loan in Rupees
…likely for the Maharashtra government.
The BBC reports that the World Bank is considering the first ever proposal for a loan of $3.5 billion to be disbursed and repaid in rupees and not the US dollar. This is being done to ostensibly counter the fluctuating rupee- dollar rate. However, it needs no saying that a continually strengthening rupee and forecasts of a double-digit Indian economic growth make the proposal extremely lucrative for the World Bank.
The Maharashtra state government is seeking a loan worth some $3.5bn but is concerned about the fluctuations in the value of the dollar.
If approved, it would be the first time the World Bank has agreed to a such a loan in rupees.
The idea is that the loan would be sanctioned in dollars, but would be handed over in rupees.
All repayments would be in rupees too.
This would prevent any changes in the amount to be repaid caused by fluctuating exchange rates. [BBC]
Cross-posted at the Indian Economy Blog
Does it mean that it is the first step for the Indian rupee becoming a hard currency…
I know it is a long way to go… but a long way has its first step….so is it the one
It may be right in one respect but not in all as if the fluctution stays with the rupee and the excahnge of the rupee become stable than after a bit time india has to pay the money in rupees which is more than the money that is taken right now