ADB to Increase Lending to Support India’s New Initiatives
Wednesday, June 17, 2015
Asian Development Bank (ADB) President Takehiko Nakao today 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.
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.