ADB hikes India lending by 50% to aid Modi initiatives

Committed to supporting the Prime Minister Narendra Modi government’s new initiatives including Make in India, Skill India and Swachh Bharat, the Asian Development Bank (ADB) on Tuesday increased lending to India from about $9 billion to $12 billion in the next three years.

“We are now targeting higher numbers. We will increase the numbers by about 50 per cent or little bit less, but roughly we will try to increase lending to India by about 50 per cent,” ADB President Takehiko Nakao said on Tuesday.

He said that ADB will focus on supporting the government’s new initiatives, including Make in India, Skill India, Clean India (Swachh Bharat Mission), Smart Cities, and Atal Mission for Rejuvenation and Urban Transformation (AMRUT). “In India, ADB aims at increasing its sovereign and non-sovereign lending from the present $7 billion to $9 billion in three years from 2015 to 2017, and to $10 billion-$12 billion between 2016 and 2018, using ADB’s expanded lending capacity,” Nakao said.

Compared with other Asian countries, India was a good destination to increase lending using ADB’s increased capacity, Nakao said, adding that India was a good borrower as it never missed a repayment.

“If India follows the right policies, there are good opportunities for it to grow faster,” Nakao said. He said that India was already looking at several good reforms like GST, labour market reforms, and removing energy subsidies.

ADB’s latest economic outlook for India published in March, projected GDP growth of 7.8 per cent in financial year 2015-16, rising to 8.2 per cent in the 2016-17. ADB is expected to revise its growth projections for the current fiscal in July.

Nakao said that India’s growth rate was expected to exceed that of China this year. “The strong growth outlook is backed by good macroeconomic indicators such as a decline in inflation and the current account deficit, and reforms to further open up certain sectors for foreign direct investment and reduce fuel subsidies.”

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