COVID-19 Emergency Program Loan for Supporting India’s Economic Recovery from Covid-19

To contain domestic spread of COVID-19, Government of India (GoI) implemented a lockdown of the country in late March 2020. The countrywide restriction on movement of people affected domestic supply and demand, resulting in slowed down economic activity. This resulted in loss of employment and income for migrant workers and they returned to rural areas. Workers, especially those employed in the informal sector of the economy, faced significant loss in wages and buying power. This loss of employment and wages had also severely hampered consumption demand, including in the rural areas. The Program was designed to support the government’s initiative to generate employment and enhance natural resources management in rural areas. The initiative helped preserve rural income and sustain rural expenditure, resulting in increased demand that aids economic recovery.

The Program supported GoI in its efforts to contain the economic fallout of the COVID-19 pandemic and start economic recovery. The Program was undertaken through GoI’s Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS). Loan proceeds of the Program were allocated by Department of Economic Affairs, Ministry of Finance to Ministry of Rural Development, which is the nodal agency for MGNREGS implementation.

The Program supported India’s economic recovery through natural resource management works to facilitate economic activity and rural employment generation to stimulate rural demand, thereby spurring economic growth in a sustainable manner.

The Program was to be implemented over 18 months. Department of Economic Affairs, Ministry of Finance, Government of India was the implementing agency. Procurement was conducted in compliance with the national law and regulations and met the core principles of NDB’s Procurement Policy.

The Program was categorized as Category B in line with the NDB’s Environmental and Social Framework. The Program aimed for positive economic developments through natural resource management and rural employment. The environmental, health, and safety risks associated with the construction works of the Program were low due to the nature of works and activities. Adherence with the country systems, including the Annual Master Circular and operational guidelines of MGNREGS, mitigated adverse E&S impacts.

Source of Fund	Amount (USD billion)
NDB	1.0

NDB

Borrower and Project Entity

Public Sector Department

Deepanshu Sapra

Department of Economic Affairs, Ministry of Finance, Government of India

Prasanna V. Salian

pv.salian@nic.in