ADB mulls Rs 400 B assistance package for India

Thursday, 23 January 2003, 08:00 Hrs
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The Asian Development Bank (ADB) Wednesday announced plans for offering India assistance to the tune of 400 billion over a four-year period for infrastructure projects.

NEW DELHI: "The mission will recommend to the management of ADB an assistance programme totalling approximately 400 billion over a four-year period from 2003, or an average annual assistance level of about 100 billion," Yoshihiro Iwasaki, director general of the bank's South Asia Regional Department, said here Wednesday at a press conference.

The bulk of this assistance will be in the form of loans.

The assistance would also include a grant component of about 2.8 billion in technical assistance, co-financed by ADB's other development partners.

The ADB Board of Directors is scheduled to consider the country strategy and programmes for recipient nations towards the end of March.

As per the India programme of assistance worked out by ADB in consultation with the finance ministry, about 70 percent of the proposed assistance would be allocated for infrastructure projects in roads, railways, inland waterways, power systems and gas distribution systems to provide cleaner fuel for domestic and commercial use in several Indian cities.

Iwasaki indicated that another 14 percent of the assistance programme would be allocated to other urban infrastructure such as water supply, sanitation, sewerage and solid waste management.

The balance would be allocated for agriculture, rural development, and the financial sector.

Multilateral funding agency ADB has already provided 61 loans to India totalling 500 billion and technical assistance grants of over 4 billion.

The bulk of this past assistance has been for transport and communication (28 percent), energy projects (35 percent) and urban social infrastructure projects (13 percent).

Explaining ADB's strategic approach to designing the package, Deputy Country Director and chief economist for India Sudipto Mundle said the main thrust is to assist the government in reducing poverty through infrastructure- led growth.

Several of the new projects would be located in ADB's focal states like Chhattisgarh, Assam and Sikkim.

In the past state-level assistance has been extended to Gujarat, Madhya Pradesh and Kerala.

Besides addressing the needs of India's 260 million poor people particularly in the rural areas, ADB also has a significant pipeline of projects for reducing urban poverty through infrastructure projects.

ADB will also use its infrastructure projects to address social concerns such as road and rail safety, HIV/AIDS education for truck drivers, and containment of trafficking in women and children, the officials said.

Responding to queries, Iwasaki said the eight percent annual growth target set by India in the next five years is quite challenging.

"Sustaining a high growth rate, even if somewhat lower than this target, would be dependent critically on a successful effort at fiscal consolidation since the large fiscal deficit of about 10 percent (of both the federal and state governments) crowds out both public and private investment," he said.

Iwasaki underlined that policy priority for India should be to establish a suitable enabling environment for private investment, both domestic and foreign.
Source: IANS

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