Manila: India on Saturday urged the Asian Development Bank (ADB) to invest in fintech firms and start-ups, and resisted a US proposal for differentiated pricing of multilateral lending based on national income of the agency’s clients.
Economic affairs secretary Subhash Garg told the ADB’s annual board of governors meeting that ADB should facilitate ushering in a new digital Asia, which is set to shape the future of nations.
“ADB should invest in innovation and in start ups to help countries produce goods and services using technologies in digital age," Garg told ADB board members. He also said that the agency should invest in FinTech, HealthTech and other technology-driven sectors through which public services can be delivered to people to improve their quality of life.
New Delhi’s resistance to a differentiated lending policy came soon after the US suggested that wealthier nations contribute more progressively to the agency.
“We consider it essential that wealthier countries with market access that continue to borrow from ADB contribute more progressively to ADB’s capital resources. Hence we welcome the management’s recent discussions to implement differentiated pricing and highlight ongoing conversations at the World Bank to implement such pricing measures there," said Geoffrey Okamoto, deputy assistant secretary of the Treasury.
The US, which is the largest shareholder in ADB along with Japan, is keen that the World Bank and ADB adopt differentiated pricing of loans that will encourage wealthier countries graduate to market borrowing from multilateral lending.
“With countries that have market access making that graduation, ADB will be able to focus its limited resources on those countries that truly lack market access and have the highest needs," a US government official, who spoke on condition of anonymity, told reporters.
India, however, is not ready for such a shift in ADB’s lending policy. “We do not believe differential pricing will either add to ADB’s capital or lead to any significant revenue. Therefore, probably, pursuing this idea may not be very advisable," said Garg, who is India’s alternate governor on ADB’s board of governors.
Garg also suggested that ADB should substantially expand its private sector operations, especially, equity financing and investment in new instruments of financing such as infrastructure investment trusts. “ADB has generally been supportive about our desire for stepping up annual lending," Garg told Mint in an interview prior to his address to the board of governors.
The call for stepping up ADB’s lending to India—the annual commitment at present is about $3 billion for sovereign and private lending together—comes at a time the multilateral agency is resetting its priority for the period up to 2030 amid concerns of increasing inequality as technological changes in the economy make pay gaps wider.
The draft 2030 strategy being discussed at ADB’s annual meeting, which is expected to be adopted later in the year, calls for focusing more resources and effort on poverty reduction and social sector projects. Garg also urged ADB to process loan proposals faster.
Addressing delegates earlier in the day at the opening session of the board of governors meet, ADB president Takehiko Nakao urged member nations to adopt wealth redistribution measures to protect those affected by technology-induced job losses and to protect privacy and personal data while using big data for welfare programmes such as making healthcare available to all.
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“Our task ahead is to reinvent the ADB to transform the Asia and the Pacific," said the president, adding that the agency will strive to make the region more prosperous, inclusive, resilient and sustainable.
Nakao said the 2030 strategy included reducing poverty and inequality, creating quality jobs, promoting education, healthcare and social protection schemes, combating climate change and supporting multimodal mass public transport systems in cities.