Infrastructure Investments Current Affairs

Union Cabinet approves policy guidelines to allow state entities to directly borrow bilateral loans

The Union Cabinet has approved the policy guidelines to permit financially sound State Government entities to borrow directly from bilateral ODA (Official development Assistance) partners for the purpose of implementing vital infrastructure projects. The approval is subject to fulfilment of certain conditions and all repayments of loans and interests to the funding agencies.

As a corollary to the new decision, the Mumbai Metropolitan Region Development Authority (MMRDA) has been permitted to borrow directly from Japan International Cooperation Agency (JICA) Official Development Assistance (ODA) loan for implementation of Mumbai Trans Harbour Link (MTHL) project.

Present guidelines

At present, external assistance from bilateral and multilateral sources is received by the union government for:

  • projects/programmes in the Central sector;
  • projects executed by Central Public Sector Undertakings;
  • on behalf of the State Governments for State sector projects/programmes implemented by the State Governments and/or local bodies and public sector undertakings.

The existing guidelines prohibit State Government from borrowing directly from external agencies. In addition, the amount borrowed by the state governments would become a part of their FRBM (Fiscal Responsibility and Budget Management).

Salient highlights of new guidelines

  • The State government which gets the loan will furnish guarantee for the loan and the Government of India will provide counter guarantee for the loan.
  • The state entities can directly approach bilateral agencies and the funding would not fall under state FRBM target.
  • The eligibility criteria for state entities would be a revenue of over Rs 1,000 crore.
  • In case of infrastructure projects, the cost criteria will be Rs 5,000 crore.


Major infrastructure projects of several State entities have huge funding requirements, and borrowing of the State Governments for implementing such projects exhausts their respective borrowing limits. Therefore, it was considered necessary to facilitate direct borrowing by the State Government entities from bilateral external agencies. As per the new guidelines, State entities can directly borrow and repay the loan without burdening the State exchequer.


India, UAE ink 9 bilateral agreements for cooperation in various sectors 

India and United Arab Emirates (UAE) have signed 9 bilateral agreements covering cooperation in the various sectors.

These agreements were signed during the second day of Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi official visit to India.

Some Agreements are

  • MoU on Technical Cooperation in Cyber Space and Combating Cyber Crime: Provides common platforms for both countries for technical cooperation in Cyber Space and in the area of Combating Cyber Crime.
  • MoU for Participation institutional investors in Infrastructure Investments: It will help to establish a framework to facilitate participation of UAE institutional investors in Infrastructure Investments in India.
  • General Framework Agreement on Renewable Energy Cooperation: Provides for bilateral cooperation through investments, extensive projects, cooperation in R & D in renewable, knowledge sharing platforms and clean energy.
  • MoU in the Exploration and use of Outer Space for Peaceful Purposes: Framework for cooperation in space technology, science and applications including satellite communication, remote sensing and satellite based navigation.
  • MoU on Bilateral Currency Swap Arrangement: Promotes currency swap arrangement between the RBI & Central Bank of UAE for bilateral financial relations.
  • MoU on Trade: Facilitates both parties to exchange information on trade and business opportunities. It further facilitates procurement of Indian goods and services by UAE.
  • MoU for bilateral cooperation in Insurance sector: Aims at promoting cooperation between in the field of insurance supervision and increasing mutual understanding through regulatory and relevant supervisory information exchange.
  • Executive Programme for Cultural Cooperation (EPCC): Provides range of cultural exchange activities under the new EPCC from 2016 to 2018.
  • Letter of Intent for skill development and recognition of qualifications: Provides collaboration on mutual recognition of qualifications and skill developments.