June 15: Chinese troops kill 20 Indian soldiers in the Galwan Valley.

June 19: India signs a loan agreement with the Asian Infrastructure Investment Bank (AIIB) for $750 million (Rs 5,521 crore) to support measures undertaken under the Pradhan Mantri Garib Kalyan Yojana (PMGKY). China is the largest shareholder in the Beijing-based multilateral development bank.

July 29: India bans 59 Chinese apps, a precursor to subsequent action that covered more apps and which prompted an Indian television anchor to marvel at “the sheer suddenness of the move, the unexpected nature of the move, the unpredictability of the move”.

The Narendra Modi government has formally confirmed that India took two loans totalling $1,350 million (Rs 9,202 crore) from the China-controlled bank in the thick of the border standoff.

There is nothing wrong in taking loans from the AIIB, especially because India is the second largest shareholder in the bank after China. Neither can the objective be faulted: the assistance was accessed for accelerating India’s Covid social protection response programme.

But the action of delinking the government’s financial transactions from bilateral tensions goes against the Centre’s policy of cracking down on Chinese business relationships in India. Besides, the Indian external affairs ministry has been asserting that it cannot be business as usual in the face of Chinese attempts to unilaterally change the facts on the ground along the border.

The loans also make the Modi government’s spin of “strong economic counter-measures against China” appear a bit rich, not to mention the pain they pile on the Aatmanirbhar Bharat campaign.

On June 19, four days after the Galwan massacre in which China also suffered unspecified casualties, India signed the $750-million loan agreement with the AIIB to tide over the coronavirus crisis. It was also the day Prime Minister Modi had made the “no-intrusion” claim.

The loan was taken as budgetary support to the Pradhan Mantri Garib Kalyan Yojana, a scheme launched by the Modi government in 2016 under which coronavirus-linked relief packages are being offered.

On May 8, at a time when the first reports of Chinese incursions at multiple points in eastern Ladakh had begun coming in and were largely ignored by the Indian government, another loan of $500 million had been taken from the AIIB to fight the pandemic back home.

The loan details were confirmed in a written answer in Parliament on Monday by junior finance minister Anurag Thakur.

In his written reply to questions asked by BJP MPs Sunil Kumar Singh and P.P. Chaudhary in the Lok Sabha, Thakur said: “The government of India has signed two loan agreements with the Asian Infrastructure Investment Bank under Covid-19 Crisis Recovery Facility. First loan of USD 500 million was signed on May 8, 2020, to partly support ‘India Covid-19 Emergency Response and Health Systems Preparedness Project’ to respond to the threat posed by pandemic and strengthen the national health system for preparedness.”

The benefits, he said, had flowed to states and Union Territories. “As on date, against the first loan of USD 500 million, USD 251.25 million has been disbursed from AIIB,” Thakur said in the written response.

“The second loan of USD 750 million was signed on June 19, 2020, as budgetary support to government of India for accelerating India’s Covid-19 Social Protection Response Programme in order to support measures undertaken under Pradhan Mantri Garib Kalyan Yojana (PMGKY), the benefits of which have also flown to states/UTs,” Thakur wrote.

“All beneficiaries covered under PMGKY are benefitted from this loan. As on date, the signed loan amount (USD 750 million) has been fully disbursed under the programme,” he added.

The two BJP parliamentarians had asked about the agreement signed with the AIIB for financial aid to fight Covid-19 and the details of the funds received. They had also sought details of the purposes for which the funds had been allocated and whether the money had been given to the states.

The AIIB is a multilateral development bank to improve social and economic outcomes in Asia and beyond. It started operations in January 2016 and now has 103 approved members from around the world.

India is among the founding members of the AIIB. China is the largest shareholder with 26.61 per cent voting shares, followed by India with 7.6 per cent.

The development bank was first proposed in 2013 by Chinese President Xi Jinping with the objective of offering financing for infrastructure projects in underdeveloped countries across Asia and reduce the dependence on the World Bank and the IMF.