Patna, Jan. 12: The World Bank today inked a deal with the Bihar government for a $220 million (about Rs 1,000 crore) soft loan to help the Kosi flood victims and said the amount was part of its proposed offer of $1 billion (about Rs 4,500 crore) for the state.

The loan of $220 million would be used to support flood recovery efforts, reduce risk from flooding and also bolster emergency responses in the event of future disasters.

“With a large proportion of people vulnerable to flooding each year, this project marks the start of a new phase of our relations with Bihar to help meet the state’s longer term need for comprehensive disaster management,” World Bank president Robert B. Zoellick told reporters.

The agreement was inked at the chief minister’s secretariat by the World Bank’s India director, Robert Zagha, the joint secretary in the union ministry of economic affairs and planning, Venu Rajamony, and Bihar’s principal secretary, planning, Vijay Prakash.

Zoellick described the current agreement as the “initial part” of a proposed offer of $1 billion (about Rs 4,500 crore) as soft loan to the state. The announcement would have come as music to the ears of chief minister Nitish Kumar who is struggling to marshal resources for managing the recurring spells of disasters and aiding infrastructure development.

Nitish thanked Zoellick for his “growing interest” in Bihar and invited the World Bank boss to re-visit the state. Zoellick, who flew in yesterday evening, failed to fly to Bodh Gaya today owing to inclement weather conditions.

“I am extremely happy at Zoellick announcing the current agreement as the beginning of the World Bank’s initiatives in the state. I have discussed our initiatives to build roads, improve the infrastructure for agriculture, education and health sectors with Zoellick. I am glad at his inquisitiveness with our goal to make Bihar a developed state by 2015,” the chief minister said.

The agreement worth Rs 1,000 crore aims at building one lakh homes for families rendered homeless in the 2008 floods caused by the breach in the river Kosi at Kusaha (Nepal) besides construction of 290km of roads, small bridges and culverts in the ravaged districts of Saharsa, Supaul, Madhepura, Purnea and Araria.

The World Bank’s larger proposal worth Rs 4,500 crore aims at future projects with focus on agriculture, roads as well as flood management and disaster preparedness.

The World Bank’s offer of the soft loan for a long term, which has to be repaid in instalments with a nominal interest between 2020 and 2035 has, according to political sources, added to the political muscle of the chief minister. The Centre, these sources pointed out, has so far paid no heed to the chief minister’s demand for assistance of Rs 14,000 crore for rehabilitation work in the Kosi region. The Bank’s offer will now give the chief minister some financial muscle to strengthen his political constituency in the flood-ravaged zone.

Zoellick complimented the chief minister by referring to Nitish’s “extraordinary leadership and sincerity in carrying out relief work in the inundated Kosi region”. “The floods exacted a terrible toll on the people of Bihar and two years on, despite vigorous relief efforts, many people remain in temporary shelters, unable to earn a living, isolated by the destruction of roads and bridges,” the Bank chief said.