Arunachal projects kept out of ADB lending

Seeks 40% lower funding from Asian Development Bank.

In a low-profile diplomatic move, India has dropped projects located in Arunachal Pradesh from its list of projects to be funded by the Asian Development Bank (ADB) in 2010.

Consequently, India seeks about 40 per cent lower funding than originally planned from the lending agency. These projects in Arunachal Pradesh will now be funded directly by the central government. According to diplomats familiar with the issue, the Indian move may have been part of an orchestrated effort to defuse tension between the two Asian neighbours created by the stand taken by China and several other ADB board members on the issue.

Besides the Arunachal controversy, the delayed release of funds by ADB during 2009 had added to India’s displeasure, a senior government official said. “We will now seek about a $1.6-billion (about Rs 7,450 crore) loan instead of $2.7 billion (about Rs 12,580 crore)planned earlier. There is no point seeking a higher loan if the funds are not released on time,” he said.
 

SHRUNK DEBT

* The projects in Arunachal Pradesh will now be funded directly by the central government

* The move is seen as an effort to diffuse tension created by the stand taken by China and other ADB board members on the issue

* The delayed release of funds by ADB during 2009 had added to India’s displeasure

* The loan sought from ADB now stands at $1.6 billion, instead of $2.7 billion planned earlier

* ADB had approved about $2 billion loan for 2009

* China, a major shareholder of ADB, had last year objected to a $60-million funding by ADB for a watershed development project in Arunachal Pradesh

* China was able to force a postponement of the board meeting on the issue though the ADB board later overruled China’s objection and approved the loan

ADB had approved a loan of about $2 billion (about Rs 9,320 crore)for 2009.

Country Operations Business Plan for India, 2008-10, posted on ADB’s website, gives indicative lending as $2.9 billion (about Rs 13,500 crore)in 2008, $3.1 billion (about Rs 14,450 crore)in 2009, and $3.2 billion (about Rs 14,900 crore)in 2010, or an average of $3 billion (about Rs 14,000 crore)over the three years.

When contacted on what was the size of ADB lending for 2010 and which projects were being covered under it, ADB officials did not respond to an email. Repeated calls to the official spokesperson at ADB India office went unanswered.

A government official said India wanted to convey its displeasure to ADB on the Arunachal controversy and had, therefore, sought lower funding. However, another official said that by keeping the projects in the state out of the list, India wanted to avoid controversy.

China, a major shareholder of ADB, had last year objected to a $60-million (about Rs 280 crore)funding by ADB for a watershed development project in Arunachal Pradesh, parts of which China claims as its territory. It was able to force a postponement of the board meeting on the issue though the ADB board later overruled China’s objection and approved the loan. India has now decided to keep the project outside the lending portfolio.