The FINANCIAL — Asian Development Bank (ADB) President Takehiko Nakao on June 16 met with India’s Finance Minister Arun Jaitley to discuss ADB’s partnership with India. Mr Nakao also met with Minister of Urban Development, M. Venkaiah Naidu and discussed ADB’s support to the government’s new urban initiatives. He stressed that ADB is committed to strengthening its support to India’s new initiatives that target increased economic growth and reduced poverty.
“In India, ADB aims at increasing its sovereign and nonsovereign lending from the present $7 billion-$9 billion in three years from 2015 to 2017 to $10 billion-$12 billion between 2016 and 2018 using ADB’s expanded lending capacity,” said Mr. Nakao. ADB’s annual lending capacity is expected to increase to as much as $20 billion a year from the current level of $13 billion, based on the merger of its Asian Development Fund lending operations with its Ordinary Capital Resources balance sheet.
ADB’s latest economic outlook for India, published in March, projects GDP growth of 7.8% in fiscal year (FY) 2015 (starting 1 April this year), rising to 8.2% in FY 2016. The strong growth outlook is backed by good macroeconomic indicators such as a decline in inflation and the current account deficit, and reforms to further open up certain sectors for foreign direct investment and reduce fuel subsidies. Efforts to expedite clearances for key infrastructure projects will also sustain growth momentum, according to ADB.
In discussions with the Finance Minister, Mr. Nakao expressed strong support for reforms in the labor market as well as the proposed new goods and services tax. “The government’s proactive role in pushing key reforms will lead to an improved business climate,” he said. “Moreover, strong commitment in the budget on raising public investment by 25% in critical infrastructure sectors such as roads, railways, and urban development will further crowd in much-needed private investment.”
ADB will focus on supporting the government’s new initiatives including Make in India, Skill India, Clean India (Swachh Bharat Mission), Smart Cities, and Atal Mission for Rejuvenation and Urban Transformation (AMRUT).
To support the Make in India initiative, two industrial and economic corridor projects are being developed. One is to support the East Coast Economic Corridor with the State Government of Andhra Pradesh and the other is a national project with the Ministry of Commerce and Industry.
ADB is working with three state governments to enhance the skills base of their citizens and is in discussion with the Ministry of Skills Development and Entrepreneurship to help establish skills institutes across the country and scale up private sector participation in the skills sector.
Regarding Smart Cities, ADB will target cities in seven states, where ADB already has operations in the urban sector.
ADB will also support improvement of Indian Railways through investment projects in areas such as railway electrification, factories to produce locomotives and coaches, and modernizing workshops. ADB is willing to support the Ministry of Railways on any reform measures.
During the visit—his second to India this year—Mr. Nakao will travel to the western state of Rajasthan to visit ADB-assisted projects and meet with its Chief Minister Smt. Vasundhara Raje Scindia. Recent ADB projects in Rajasthan include a $500 million loan to support urban development, a $176 million loan to expand metro rail in Jaipur, and a $300 million multitranche financing facility for solar energy transmission.
India is ADB’s largest borrower. Since 1986 when ADB started lending operations in India, ADB has approved 189 sovereign loans totaling $31.3 billion. ADB has also approved 50 non-sovereign loans, equity investments, and guarantees totaling $3.6 billion.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members – 48 from the region. In 2014, ADB assistance totaled $22.9 billion, including cofinancing of $9.2 billion.