ADB to increase India lending to $12 bn by 2018

Asian Development Bank president Takehiko Nakao on Tuesday said the bank is looking to increase exposure in India, especially in infrastructure, skill development and urban services, and proposes to increase lending to the country by almost half to $12 billion by 2018.

"ADB aims at increasing its sovereign and non-sovereign 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," Nakao told reporters here after a meeting with Finance Minister Arun Jaitley and Urban Development Minister Venkaiah Naidu.

"We are now targeting higher numbers. We will increase the numbers by about 50 percent or little bit less but roughly we will try to increase lending to India by about 50 percent," he said.

Noting ADB's latest economic outlook for India published in March projects GDP growth of 7.8 percent in 2015-16, rising to 8.2 percent in 2016-17, he said: "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."

Describin India's track record in repayment of loans as very clean, Nakao said ADB would be looking forward to increasing its exposure in infrastructure, skill development and urban services among others.

"So there are huge financing requirements. India has lot of potential, a good place to increase our lending," he said.

ADB's annual lending capacity is expected to increase to around $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, Nakao added.

India is ADB's largest borrower, with 189 sovereign loans totalling $31.3 billion approved till date. ADB has also made 50 non-sovereign loans, equity investments, and guarantees totalling $3.6 billion.

Nakao will also travel to Rajasthan to visit ADB-assisted projects in the state and meet Chief Minister Vasundhara Raje.