Kerala has received €100 million as ‘policy loan’ and another €2 million as ‘grant’ as the second tranche of financial aid being extended by Germany for the Rebuild Resilient Kerala Initiative (RKI) through the German Development Bank KfW.
The agreement for the policy loan and grant was signed in New Delhi on Tuesday by Additional Secretary, BC & FSDC, Union Ministry of Finance, C.S. Mohaptra and Office Director, KfW, New Delhi, Christoph Kessler.
Like the first tranche of the €170-million financial support extended by Germany, the aid will reach the State budget through KfW on the basis of the pact signed between India and Germany.
The €100-million ‘Climate Kerala Loan’ can be utilised by the State for RKI initiatives and even for coping with COVID-19.
Grace period
Speaking to The Hindu , Dr. Kessler said the policy loan had been provided for 12 years at a low interest of less than 1% and a grace period of three years.
The repayment would start only after three years , and this would give relief to the borrowing State.
Kerala would have to undertake the policy metrics spelled out and this was the main string attached for the policy loan provided by KfW.
The World Bank, which had also co-financed the RKI with ₹1,779.58 crore, and KfW would monitor the implementation of the RKI projects being executed to overcome natural disasters such as the 2018 floods that ravaged the State, Dr. Kessler added.
Of the €170 million provided earlier by Germany, €90 million was a reduced-interest loan to promote climate-resilient reconstruction of the transport infrastructure, including bridges and roads.
Special place
Dr. Kessler said India and Kerala had a special place in Indo-German cooperation, trade, and bilateral relations and this was reflected in the aid being provided.
The World Bank has also agreed to provide the second tranche of financial aid to the RKI. The agreement with the World Bank will be signed in April 2021. In the 2019-2027 period, projects totalling ₹36,500 crore are to be taken up under the RKI.
