There is news that India will get a loan of $160 million from World Bank for modernizing roads in Rajasthan. When the money is received by India, the equivalent amount of Rs.996 crores will be brought into circulation in India. It may come from the reserves and /or from printing currency notes. Roads can be modernized without importing any material from abroad or in other words there is no need for foreign exchange for the project. Only Indian Rupees is needed and this is available in India or can be printed. Inflation will be there whether loan is taken from World Bank or the Indian currency is released into circulation without taking loan in foreign currency from abroad. So in cases where imports are not required for projects loans should not be taken from abroad and the required amount should be loaned by Reserve Bank of India.
Indian Projects- no need for foreign loans