The Manila-based Asian Development Bank came out with a five-year country partnership strategy with India, stepping up its lending to $10 billion in 2013-17 for infrastructure, job creation and reforms.
The bank, which has been lending at $1.5 billion annually in 2009-12 from $875 million per year during the previous five years, will now lend $2 billion a year in the 2013-17, coinciding with the 12th five year plan, an ADB statement said.
“The ADB and government of India have agreed to a new country partnership strategy for 2013-2017, which supports the country’s 12th five year plan. The strategy comes with a financial envelope of around $10 billion,” the statement said.
The present portfolio has 78 projects valued at $11 billion. Disbursement performance dipped slightly, mainly because of the insufficient project implementation capacity in the lagging states. This will be addressed in the new country partnership strategy.
India is ADB’s largest single country borrower and if third party financing and lending public and private enterprises were taken into account then the ADB lending could double.
“India is taking credible steps to stabilise the economy and its currency, modernise its infrastructure, and promote social programmes This strategy is a reflection of the government's desire to bring inclusive and sustainable growth, create jobs, and cut red tape,“ ADB's director general for south Asia, Juan Miranda said.
ADB said that even though India's growth has been inclusive since 1984, it needed to be more inclusive. To sustain high and inclusive growth, India needs to expand and consolidate structural reforms, remove its infrastructure deficit and improve the quality and coverage of basic social services.
Environmental sustainability is also a priority because population growth, rapid urbanisation, and economic expansion have placed unprecedented pressure on natural resources.
The strategy combines physical investments with knowledge products to target emerging issues such as urbanisation, water scarcity, climate change, internet connectivity, vocational training and development of capital markets, ADB added.
Under the strategy, ADB said, operations will centre on states with high poverty and gaps between rural and urban sectors. Overall lending to lagging states will be around 4050 per cent of the total ADB lending. ADB will renew past partnerships with selected national agencies, many of which have operations in lagging states.
Cost-sharing between ADB and India on projects, which is on an 80:20 basis during 2009-2012, is now proposed to be 75:25.
In its economic assessment and outlook, ADB said India's growth has slowed since 2011-12, as a result of tighter monetary policy to counter persistently high inflation, the adverse global economic situation, and the lack of consensus on some policy and regulatory issues.
In addition, although a large budget deficit boosted aggregate expenditures, public expenditure tilted towards subsidies rather than the promotion of investment, it said.
Return to a high growth trajectory is possible, but this will require persisting with reforms and resolving complex issues including those relating to land acquisition for industrial activity, environmental clearances, and allocation of licenses.
“Resolution of these issues would invigorate the private sector, which has been vital to economic growth, employment generation, and capital formation,“ ADB said.
The bank, which has been lending at $1.5 billion annually in 2009-12 from $875 million per year during the previous five years, will now lend $2 billion a year in the 2013-17, coinciding with the 12th five year plan, an ADB statement said.
“The ADB and government of India have agreed to a new country partnership strategy for 2013-2017, which supports the country’s 12th five year plan. The strategy comes with a financial envelope of around $10 billion,” the statement said.
The present portfolio has 78 projects valued at $11 billion. Disbursement performance dipped slightly, mainly because of the insufficient project implementation capacity in the lagging states. This will be addressed in the new country partnership strategy.
India is ADB’s largest single country borrower and if third party financing and lending public and private enterprises were taken into account then the ADB lending could double.
“India is taking credible steps to stabilise the economy and its currency, modernise its infrastructure, and promote social programmes This strategy is a reflection of the government's desire to bring inclusive and sustainable growth, create jobs, and cut red tape,“ ADB's director general for south Asia, Juan Miranda said.
ADB said that even though India's growth has been inclusive since 1984, it needed to be more inclusive. To sustain high and inclusive growth, India needs to expand and consolidate structural reforms, remove its infrastructure deficit and improve the quality and coverage of basic social services.
Environmental sustainability is also a priority because population growth, rapid urbanisation, and economic expansion have placed unprecedented pressure on natural resources.
The strategy combines physical investments with knowledge products to target emerging issues such as urbanisation, water scarcity, climate change, internet connectivity, vocational training and development of capital markets, ADB added.
Under the strategy, ADB said, operations will centre on states with high poverty and gaps between rural and urban sectors. Overall lending to lagging states will be around 4050 per cent of the total ADB lending. ADB will renew past partnerships with selected national agencies, many of which have operations in lagging states.
Cost-sharing between ADB and India on projects, which is on an 80:20 basis during 2009-2012, is now proposed to be 75:25.
In its economic assessment and outlook, ADB said India's growth has slowed since 2011-12, as a result of tighter monetary policy to counter persistently high inflation, the adverse global economic situation, and the lack of consensus on some policy and regulatory issues.
In addition, although a large budget deficit boosted aggregate expenditures, public expenditure tilted towards subsidies rather than the promotion of investment, it said.
Return to a high growth trajectory is possible, but this will require persisting with reforms and resolving complex issues including those relating to land acquisition for industrial activity, environmental clearances, and allocation of licenses.
“Resolution of these issues would invigorate the private sector, which has been vital to economic growth, employment generation, and capital formation,“ ADB said.
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