India Should Not Be Denied Access To Adb Soft Loans: Chidambaram

India should not be denied access to Asian Development Banks (ADB) soft loans, finance minister Palaniappan Chidambaram said yesterday, pointing out that Indias infrastructure development in the next five years would require $100 billion.

The crucial challenge facing all the developing member-countries is how to finance the huge investment in various infrastructure sectors, Chidambaram said at the annual meeting of the Asian Development Bank here, referring to ADBs estimate of $1 trillion for the purpose in the remaining years of the century.

This certainly calls for an expanded lending programme by multilateral institutions such as ADB. We hope the Bank will programme its future operations keeping these in mind.

 

The finance minister appreciated that the ADB has increasingly focused its activities towards poverty issues, environmental concerns and the social sectors.

He said: It has also played an important role in useful policy dialogues with developing member countries on their reform. In India, the ADB has engaged in policy dialogue with a number of states leading to loans associated with policy reforms. We welcome these activities.

Chidambaram congratulated the Bank on its successful fourth Asian Development Fund replenishment.

There is a need to adopt objective norms for ADF allocations, specially in view of the fact that part of the ADF resources are also allocated from the income and surplus of ordinary capital resources operations, he said.

Chidambaram noted that total lending from ordinary capital resources (OCR) was lower in 1996 than in 1995 and more could be done to enhance lending.

ADB, he added, required to have a sizeable level of lending.

Commenting on the theme paper on Asian mega-cities in this years ADB annual report, Chidambaram said the financing requirements of these mega-cities were enormous.

These problems, he said, were of particular relevance to India as six Indian cities have been listed among the existing and future Asian mega-cities by 2025.

Asias biggest countries India and China are not given the virtually interest-free loans provided by the Asian Development Fund (ADF) on the grounds that their needs are so big they could consume the entire fund.

India satisfies the present objective criteria of the Bank in getting access to ADF resources and, as such, should have been given access, Chidambaram said.

The ADF has helped Asias poorest nations in building basic infrastructure, but now the funds future is in doubt as donor nations are cutting back on aid contributions.

In January this year, ADB members agreed after much haggling to replenish the fund to $6.3 billion.

The money will last up to 2000, but many rich nations have said they do not want to continue their contributions to the fund.

I would have been happier with a larger size of the replenishment which would have enabled the bank to play a greater role in the development process of this region, Chidambaram said in his speech.

ADB officials said they had recommended that India and China be given limited access to ADF loans but many of the Banks 56 member countries were opposed to this.