The World Bank entered the advanced stage of sanctioning $2.6 billion under a special loan scheme to India.

Out of $2.6 billion, Small Industries Development Bank of India (SIDBI) will get a $400-million loan, India Infrastructure Finance Company (IIFCL) $1 billion and Power Grid Corporation a $1.2-billion loan.

The inside information of the package were revealed on Friday at a media conference by Giovanna Prennushi, World Bank’s economic advisor and World Bank’s chief economist Justin Yifu Lin, who was in Mumbai to deliver Exim Bank’s commencement day’s annual talk.

Ms Prennushi said, “We are internally at an advanced stage of approving the request made by the Indian government.”

The SIDBI package would be utilized to fund SMEs that have been poorly hit by the worldwide financial crisis.

Mr. Lin, a senior vice-president at World Bank, was supporting the cooperative attempts by governments across the world to supply fiscal stimuli to initiate economic activity.

“It is essential to give a stimulus to the real sector to help the financial sector revive,” he said. “For India, it was necessary to provide an impetus to infrastructure too, Mr Lin added.

“The attempt to help financial institutions and prevent them from going bankrupt is important. However, we need to stimulate the real economy. Only then will the move to save financial institutions become effective. The key issue is to address excess capacity. It is not tantamount to nationalisation as government support is temporary,” Mr Lin explained.