Asian Development Bank to provide $20 billion loan to India over five years

As part of ADB’s Country Partnership Strategy 2018-22, annual sovereign funding will increase from $2 billion to $3 billion while private sector funding would be doubled to $1 billion.

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The agency said it has identified an investment shortfall of $230 billion a year in infrastructure sector.

Asian Development Bank (ADB) on Monday said it will raise annual funding to India to up to $4 billion from existing $2.7 billion, from next year. ADB Country Director in India Kenichi Yokoyama said the multilateral funding agency has decided to provide loans up to $4 billion on annual basis including non-sovereign or private debt during 2018-22.

As part of ADB’s Country Partnership Strategy 2018-22, annual sovereign funding will increase from $2 billion to $3 billion while private sector funding would be doubled to $1 billion, he said. “The other priority pillars include increasing annual funding to low income states and climate change,” he said in an interaction with media.

The India programme will focus on boosting economic competitiveness to create more and well paid jobs, improved access to infrastructure and services, and addressing climate change and improving climate resilience over these five years. ADB said infrastructure continues to be a major bottleneck. The agency said it has identified an investment shortfall of $230 billion a year in infrastructure sector.

On Gross Domestic Product (GDP) growth, he said, India is expected to grow at 7 per cent in the current fiscal and will accelerate to 7.4 per cent next fiscal. Although the first quarter growth was muted, it is expected to pick up in the remaining quarters and average growth would be 7 per cent, he said. Indian economy expanded by 5.7 per cent in the first quarter of the current fiscal, the lowest in the three years.

The data for the second quarter is scheduled to be released on November 30. On job creation, Yokoyama said, it is a challenge for India. “Looking at past performance, India’s poverty reduction record has been quite substantial. We saw rural wages growing faster than economic growth rate. It has led to reduction of agriculture labour,” he said. Skill development is an area that would help in employability, he said.

Apart from, the Japan International Cooperation Agency, KfW, and the World Bank are India’s other development partners. The Asian Infrastructure Investment Bank and the New Development Bank have also joined as new multilateral funding agencies.