New Delhi, Dec 16 (IANS): The Indian government and the New Development Bank (NDB) on Wednesday signed a loan agreement for lending $1 billion for supporting India's economic recovery from Covid-19.

The loan from the NDB will support expenditures on rural infrastructure related to natural resource management (NRM) and rural employment generation under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS).

An official statement said that the country-wide restriction on movement of people, coupled with additional stringent restrictions imposed by state governments and intermittent localised lockdowns to contain the spread of Covid-19, affected domestic supply and demand, resulting in slowed down economic activity. This resulted in loss of employment and income of workers especially those employed in the informal sector, including rural areas, it added.

The programme will support the government in mitigating the adverse economic impact of Covid-19 pandemic and enable economic recovery in the rural areas through, natural resource management works which will facilitate economic activity and employment generation to stimulate rural demand, to combat the decline in economic activity due to outbreak of Covid-19.

It proposes creation of durable rural infrastructure assets relating to NRM and generation of employment opportunities for rural poor, especially migrant workers who have returned from urban areas and have lost their livelihoods due to the pandemic.