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| India to subscribe to ADB shares worth $5.4 billion |
| John Samuel Raja D / New Delhi May 24, 2009, 00:23 IST |
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India is planning to subscribe to $5.4 billion (around Rs 25,600 crore) worth of shares issued by the Asian Development Bank (ADB), which is seeking to triple its capital base to $ 165 billion.
However, it will not impact government finances, as only 4 per cent of the additional shares have to be paid for immediately. The remaining, termed “callable shares”, need not be paid immediately. Thus, the Centre would need to pay $217 million to subscribe to the additional shares and that too over a period of five years. “It works out to Rs 218 crore per year,” said a government official.
The regional multilateral financing institution tripled its capital base to respond to the global economic crisis and to meet “the longer-term development needs” of the Asia-Pacific region.
Based on data provided by the ADB, India would approximately be subscribing around 6.3 per cent of the new shares that would be issued by the development financing agency. Japan and the United States are the largest shareholders with 15.6 per cent stake each. For India, even the 4 per cent shares need not be paid in cash. Only 40 per cent of the 4 per cent shares (17,291 shares) subscribed to need to be paid in cash and the rest can be in the form of promisory notes, says the official.
The value of one share (par value of $10,000) is tentatively estimated at $ 12,063.5 by the ADB. The value will be reworked later. Under the country strategy program (CSP) for 2009-11, the ADB plans to lend $ 7.8 billion to India, its largest borrower.
In March this year, China sought postponement of the country partnership strategy meeting for India, citing project funding to a disputed territory between the two countries — referring to the $60 million project in Arunachal Pradesh.
India reacted strongly to China’s objection saying that land disputes between two nations should not be mixed with the development funding provided by the ADB. The Manila-based organisation is yet to announce a new date for the CSP board meeting. India would take future course of action based on the ADB’s decision, said a senior government official.
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