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The Asian Development Bank (ADB) on Wednesday said it would lend up to $9 billion to India over the next three years to aid in infrastructure development, manufacturing, skill development and expanding trade. On its part, India asked for additional assistance for regional connectivity projects.
“ADB’s operations for India will maintain high level of lending, amounting to a total of $7 billion - $ 9 billion over the next three years,” ADB president Takehiko Nakao told a press conference.
The multilateral funding agency will also provide around $30 million for technical assistance grants, especially for building institutions and capacity at the state as well as the local levels.
India is ADB’s largest borrower. During his two-day visit, Nakao met Prime Minister Narendra Modi and Finance Minister Arun Jaitley and discussed the macroeconomic situation and ADB’s funding.
The prime minister remarked that he has had a good experience with the ADB in Gujarat during the earthquake reconstruction and asked the institution to “think differently so that it could make an impact”.
Nakao said ADB was making efforts to reform itself by streamlining its procurement procedures.
Modi wanted ADB to give priority to regional connectivity projects which would help the whole region. He also said that this assistance should be additional to current levels of assistance.
“The prime minister wanted ADB to pick up large demonstration projects and demonstrate breakthroughs which can then be rapidly copied,” the Prime Minister’s Office said in a statement.
Committing ADB’s support to reigniting growth in India and reducing poverty, Nakao projected the Indian economy to grow at 5.5 per cent in 2013-14 and expand further to 6.3 per cent in 2014-15. He added India had the potential to grow at 10 per cent by implementing investment-friendly reforms.
Applauding the government for fiscal consolidation, he said, “It is essential to increase capital expenditure as a ratio to GDP, enhance tax revenue through tax reforms such as the introduction of the Goods & Services Tax and stronger tax collections, and streamline subsidies by better targeting.”
He added easing the regulatory burden on industry by eliminating red tape and promoting inter-agency coordination, enabling single window clearance mechanisms, and reviewing land acquisition procedures should be part of the national strategy to attract local and foreign investors.
“The prime minister asked the ADB president to come back next year and that he would certainly see an improvement in the doing business indicators. The prime minister said that FDI is a focus area which he is committed to,” the PMO said. He said 'Make in India' is not a slogan for improvement but a firm commitment and the country will demonstrate the commitment through actions.
ADB told Indian lenders that infrastructure development would remain the main focus of its operations in India, including transport, energy, water supply and sanitation. It will also participate in developing smart cities. The institution will be a partner in the development of East Coast Economic Corridor that will run from Kolkata to Tuticorin in Tamil Nadu.
According to the PMO statement, Nakao was particularly touched by Modi’s emphasis on change, removing silos within government, improving co-ordination and focusing on results. He said that he was trying to do the same in ADB although it is a much smaller organization.
