The World Bank plans to lend India $9bn (£5bn) over the next three years to help fund development projects such as road building and water improvement.
Clean drinking water and irrigation projects are being expanded
World Bank president Paul Wolfowitz is visiting India and said that the money would help sustain the growth needed to lift 250 million people out of poverty.
Although India is one of the world's fastest growing economies, millions of people live on less than $1 a day.
The World Bank money will be aimed at rural areas that are the hardest hit.
'Lot of work'
"Though it is making rapid strides, India has an unfinished agenda," Mr Wolfowitz said.
"It is still home to a quarter of the world's poor people, most of whom reside in the rural areas. Infrastructure constraints are an impediment to growth.
"A lot of work needs to be done to sustain growth," Mr Wolfowitz said.
India's government has increased spending as it tries to tackle the problem, with nearly $40bn earmarked for rural development projects including improving access to water, electricity, phones and housing.
The government of Prime Minister Manmohan Singh has said it will spend $6bn this year.
It also is taking initiatives to improve the life of the poor and last week introduced a landmark bill aimed at guaranteeing 100 days of employment each year to every rural household.
Access to cash is likely to prove key in keeping India's development ticking over, especially as the country is already saddled with hefty debt repayment costs and far from overflowing state coffers.
According to the Reuters news agency, senior government officials told Mr Wolfowitz that India needs to invest $100bn over the next seven years in infrastructure projects such as power, roads, airports, ports and railways.
Last year, the World Bank provided India with $2.9bn and Mr Wolfowitz said it was "committed to sustaining that level".