'India preparing projects worth USD 2-3bn for funding by AIIB'

India is preparing a basket of projects worth USD 2-3 billion for funding by the Asian Infrastructure Investment Bank (AIIB) in several areas including urban development and energy and offered to set up an office of the China-backed bank in New Delhi.
On the third day of his visit here, Finance Minister Arun Jaitley made the offer while addressing the Board of Governors Session of the Annual General Meeting (AGM) of the bank headquartered here.
"India has a huge unmet demand for investment in infrastructure and is preparing basket of projects worth USD 2-3 billion for AIIB funding in the areas of urban development (including smart cities), energy, urban transport, railways, inland waterways and water supply," said an Indian Embassy statement providing details of Jaitley's address.

"(The) finance minister offered India's support in establishment of a regional office of AIIB in New Delhi to effectively cater to this potentially large portfolio and speed up the process of project development, monitoring and implementation," the statement said.
In his address, Jaitley said the AIIB has come up amidst huge expectations in a difficult time for the global economy.
"The overall recovery of the global economy remains very modest and global growth rate projections have been revised downwards, even though the Asia-Pacific region remains the growth engine for the world," he said.

Notwithstanding the global headwinds, however, India continues to maintain a high growth rate at 7.6 per cent in 2015-16 compared to 7.2 per cent in the previous year.

"AIIB presents a much-needed additional financing window dedicated to infrastructure projects and meeting the financing gap that may be beyond the capacity of the individual countries and the existing MDBs (Multilateral Development Banks)," Jaitley said of AIIB's role.
AIIB was officially established last year with an authorised capital of USD 100 billion in which India and 56 other countries joined as founding members. China is the largest shareholder with 26.06 per cent voting shares.
Jaitley asserted that the government has taken a number of
steps to reduce blackmoney -- revised tax treaties, IDS, taxing benami properties and the like.
About demonetisation, he said the effort is being made to reduce usage of cash in the economy by replacing it with digital currency.

"Common people are getting to understand (benefits of digital currency), but there are certain sections who take time to understand and some of our political friends also take time to understand this," he said.
It is in the interest of every country that it becomes less-cash economy and a lot has been written about this, Jaitley added.
Digital economy has picked up in the last one and a half months, he said, adding that out of 75 crore debit and credit cards, 45 crore are actively used.
Making a pitch that the less-cash economy will help strengthen government finances, the finance minister explained that the higher tax buoyancy leads to lower deficit so that allocation towards rural infrastructure and defence can be increased.

One of the evils of the cash economy is the low revenue realisation of the government and higher deficit, he pointed out.
The current Budget size is Rs 20 lakh crore and the government's revenue from both direct and indirect taxes is Rs 16 lakh crore, leaving a gap of about Rs 4 lakh crore.
If revenue realisation is higher, the government has more opportunity to spend on development and future generation is also not unduly burdened with debt, Jaitley reasoned.
Talking about various steps taken by the government to promote digital economy, Jaitley said taxes on PoS machines have been removed, charges by merchant have been done away with till December 31.

Post December 31, the charges have been brought down to 0.25 per cent for transaction up to Rs 1,000 and 0.5 per cent for one up to Rs 2,000 so that payment remains cheap even after that.
To promote digital transaction, the government today announced the first set of winners under the Lucky Grahak Yojana and Digi Dhan Vyapaar Yojana.
"It is a big step and such moves will help encourage people shift to digital payment system. Digital transaction will help make the economy better and cleaner," he said.
Speaking on the occasion, IT and Law Minister Ravi Shankar Prasad pointed to a 300-350 per cent jump in digital transactions.