World Bank President Paul Wolfowitz, visiting India, said the money would help sustain the growth needed to lift 250 million people out of poverty, the BBC reported Sunday.
"Though it is making rapid strides, India has an unfinished agenda," Wolfowitz said. "Infrastructure constraints are an impediment to growth."
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.
India's government has increased spending, with nearly $40 billion budgeted for rural development projects, including improving access to water, electricity, telephones and housing.
Last week the government introduced a landmark bill aimed at guaranteeing 100 days of employment each year to every rural household.
Senior government officials reportedly told Wolfowitz that India needs to invest $100 billion over the next seven years in infrastructure projects such as power, roads, airports, ports and railways.
In 2004 the World Bank provided India with $2.9 billion, and Wolfowitz said it was "committed to sustaining that level."