Addressing the board of governors at the 33rd annual meeting of the Asian Development Bank at Chiang Mai, Thailand, the finance minister said inadequate access to capital had adversely affected the capacity of developing countries in financing their own fight against poverty.
Sinha said increasing the loan spreads beyond prudential levels limited access to cheap funds and added that they should not be raised beyond the minimum necessary level. Pointing to the recent increase in loan spreads by ADB he said, "This was the reason for our earlier concern that the loan spread must not be raised beyond the minimum necessary level as it would increase the cost of borrowing."
Sinha also emphasised the need for drawing a distinction between structural and cyclical poverty so that countries like India could be assisted in evolving a strategy for dealing with poverty.
"The social challenge goes beyond economic deprivation. It entails attacking other aspects of human deprivation such as illiteracy, morbidity, malnutrition, poor availability of drinking water, lack of sanitation and unsafe environment," Sinha emphasised
Calling for a distinction between structural and cyclical concepts of poverty Sinha said the challenge of handling the former set of issues was dimensionally different from the latter. The case of access to ADB fund in respect of countries like India had to be viewed in this light, Sinha said. "It is now an accepted view that economic growth and poverty reduction are mutually reinforcing," he said.
Sinha also expressed concern at the increasing surveillance by some of the donor countries when resources made available to the developing countries for social and economic development are becoming lesser and dearer. He hoped that a balance would soon be achieved between sermon and resources so that the developing countries could effectively carry forward their battle against poverty.
"The main area where the donors can, and need to, manifest their concern and extend direct help in poverty reduction in this region will be through the strengthening of the ADF, added the finance minister.