New Delhi: The Asian Development Bank (ADB) on Wednesday said it is planning to raise its annual lending to India from an average $2.65 billion per year at present to $4 billion to help propel Asia’s third largest economy towards upper middle-income status.
In 2016, ADB assistance to all its 67 member countries totalled $31.7 billion, including $14 billion in co-financing.
In a new ADB Country Partnership Strategy (CPS) for the next five years (2018-22) and endorsed on Wednesday, the multilateral lender said during the period, it will focus on three pillars of activities: boosting economic competitiveness to create more and well-paid jobs; improved access to infrastructure and services; and addressing climate change and improving climate resilience.
On Tuesday, ADB pared its economic growth projection for India to 7% in 2017-18 from 7.4% projected earlier, blaming short-term disruptions like demonetization and the rollout of goods and services tax (GST). About 85% of its lending will be focused on transport, energy, and urban infrastructure and services. Other finance will be aimed at public sector management, agriculture, natural resources and rural development, as well as skills development and urban health.
ADB will also complement its lending by technical assistance to help undertake strategic studies, build capacities, and prepare projects. ADB will also explore co-financing opportunities, including climate funds for relevant projects.
“ADB’s new five-year partnership with India supports the government’s goal of inclusive and sustainable growth grounded by economic structural transformation and job creation, with an increased focus on low-income states," said Kenichi Yokoyama, ADB country director in India. “We aim to assist transformative investments, deliver holistic solutions removing sectoral boundaries, and demonstrate high value addition of our assistance in terms of innovation, timeliness, efficiency, and quality," he added.
To accelerate India’s economic growth and good track record in poverty reduction, ADB said the country needs to create more high-quality jobs since half of India’s workforce is based around agriculture, which is still marked by low productivity and incomes. Infrastructure continues to be a major bottleneck, in which ADB has identified an investment shortfall of $230 billion a year. Other critical challenges include how to close the persistent gap between advanced and lagging regions where most of the poor are concentrated, environmental degradation exacerbated by the impacts of climate change, and building capacity within the country’s institutions.