ADB Loan to Boost Investment for Agribusiness Infrastructure in Bihar

Asian Development Bank (ADB) and the Government of India have signed a $67.6 million loan that will help improve physical and institutional links to support agriculture in the state of Bihar. The loan will help expand agricultural value chains and facilitate better linkages for small scale farmers with processors, agribusiness entrepreneurs, and service providers in Muzaffarpur and Patna-Nalanda regions of Bihar.

The loan is the first tranche of a $170 million multitranche financing facility under the Agribusiness Infrastructure Development Investment Program, which was approved by the ADB Board in September 2010 to boost private sector investment in agribusiness infrastructure in selected regions of Bihar and Maharashtra.

The programme will build physical and institutional links along horticulture integrated value chains (IVCs), which include farmers, processors, agribusiness entrepreneurs, and service providers, a central goal of the Indian government. This will help farmers, traders and other value chain stakeholders to improve their products and processes, become competitive and adapt to changes in end markets. Public-private partnerships (PPP) will be utilized to design, build, finance and operate the integrated value chains.

The signatories to the loan were Mr. Venu Rajamony, Joint Secretary (Multilateral Institutions), Department of Economic Affairs, Ministry of Finance, on behalf of the Government of India; and Mr. Hun Kim, Country Director for India, on behalf of ADB. The project agreement was signed by Dr. N. Vijaya Lakshmi, Secretary (Agriculture) on behalf of the State Government of Bihar.

This first tranche loan from the ordinary capital resources of ADB has a 25-year term, including a grace period of 5 years, commitment charges of 0.15% and interest rate in accordance with ADB’s LIBOR-based lending facility.

(PIB 10JUL12)

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