India has asked the World Bank (WB) and other Multilateral Development Banks (MDBs) to create special windows for ensuring finance for infrastructure development, which should include provision to help projects that face a sudden scarcity of funds due to volatile capital flows.
"Special windows need to be created in WB and other MDBs for ensuring finance in support of infrastructure development, including provision of finance for ongoing projects that face a sudden scarcity of funds owing to volatile capital flows," Finance Minister P Chidambaram said during his intervention at the G-20 meeting of finance ministers in Washington on Friday.
"Access to this window should be beyond the normal country limits, which otherwise introduce inflexibility," Chidambaram said. The aim of such a provision should be to create mechanisms that can increase the flow of infrastructure financing at times when other investments were slowing down, he said.
"We should also have a greater involvement of IFC in infrastructure financing to help catalyse private sector flows into the sector," Chidambaram said. Underscoring the critical role that investment, particularly in infrastructure, can play in sustaining the global recovery and re-balancing, he said larger investments in infrastructure in emerging markets would increase the potential of these countries to grow more rapidly in the medium run and would also contribute to a much needed global demand in the short run. Welcoming the proposal to set up a new and dedicated financing facility called the Global Infrastructure Facility at the World Bank to serve the financing needs for infrastructure, particularly in emerging and developing economies, he said India would like to see the detailed proposal for its establishment with specific timelines by the December Deputies meeting.
Chidambaram said the G-20 was well placed to coordinate various stakeholders, including governments, especially the ones that have large surpluses, the private sector and multilateral development banks for investment in developing countries through innovative ways to recycle global savings and development of viable strategies that overcome the presumed hurdle of 'lack of enabling environment' for infrastructure investment.
