Jaitley exhorts NDB to advance $2 billion for infrastructure projects
Finance Minister Arun Jaitley on Saturday called on the New Development Bank to lend $2 billion for Indian infrastructure projects, a request that the lender said could be met in two years.
Speaking at the second annual meeting of the New Development Bank (NDB), founded by the BRICS bloc, he asked the two-year old multilateral agency to be nimble footed in disbursing faster loans, saying it must be alive to the role envisioned for it by its founders.
India, he said, has a huge unmet need for infrastructure investment, estimated at about Rs 43 lakh crore (about $646 billion) over the next five years. "Seventy per cent of this will be required in power, roads and urban infrastructure sectors," Jaitley said here. "This offers an enormous opportunity to an institution like the NDB, whose core mandate is sustainable infrastructure development."
The first agreement for an NDB loan in India to finance major district roads in Madhya Pradesh was signed a couple of days ago, Jaitley said. "With this, the NDB will have its first footprint in India. We have proposed projects worth about $2 billion for NDB funding, which I hope will be taken up by the board expeditiously," he said.
Later speaking to reporters, NDB President K V Kamath said the Indian government has a very strong pipeline of projects and the NDB is working on the same.
"My own view is that the pipeline they have given to us is probably going to be done in next year or year and a half and we will also have to allow for the fact that all projects may not be ready for consideration. So clearly, there is scope for $2 billion and we expect that to be complete in over 2 years," Kamath said.
He pointed to the distinction that India was seeking funds for projects in the green power area initially and now for projects in water, rural areas and roads.
At the meeting, Jaitley made it clear that India will work with the NDB to develop a strong shelf of projects in specific areas such as smart cities, renewable energy, urban transport, including metro railways, clean coal technology, solid waste management and urban water supply.
"The uniqueness of NDB should lie in faster loan appraisal, a lean organisational structure resulting in lower cost of loans, a variety of financing instruments, including local currency financing, adoption of country system whenever possible and flexibility in responding to the needs of the clients," he said.
Being a lean organisation, "it is also expected that the NDB will not only offer loans at cheaper rate, but influence the more established MDBs (multilateral development banks) to revisit their high cost model", he said.
"Overall, it is our expectation that the Bank will bring in a whiff of freshness in project and loan appraisal as also will be nimble footed to meet the expectations of its clients," he said.
The group of five major emerging economies, known as BRICS, had in July 2015 launched a development bank aimed at financing infrastructure projects, mainly in member countries such as Brazil, Russia, India, China and South Africa.