South Asia

The country is one of the fastest-growing economies in the world. The approach paper to the 11th Five-Year Plan (2007–2011) reinforces the need for a broad-based and inclusive growth strategy to further reduce poverty. The need for good social and economic infrastructure to facilitate and sustain high and inclusive growth is critical.

Since 2003, ADB’s India program has supported the Government’s efforts to combat poverty through infrastructure-led growth. The strategy’s continued relevance is borne out by the high priority given by the Government to infrastructure programs to improve power supply, build highways, and promote urban development. ADB’s assistance program for 2007–2009 continues to focus on infrastructure.

In 2006, ADB approved six loans amounting to $1.5 billion. In addition, three multitranche financing facilities amounting to $1.1 billion were approved during the year. Sovereign assistance includes loans for the Rural Cooperative Credit Restructuring and Development Program ($1.0 billion), Kolkata Environmental Improvement Project (supplementary financing) ($80.0 million), and Rural Roads Sector II Investment Program (first periodic financing request) ($180.0 million), as well as multitranche financing facility operations for the Uttaranchal Power Sector Investment Program ($300.0 million), the Uttaranchal State Roads Project ($550.0 million), and the North Karnataka Urban Sector Investment Program ($270.0 million). ADB also approved 12 technical assistance grants to India totaling $30.6 million.

The Rural Cooperative Credit Restructuring and Development Program will address the problems faced by farmers by undertaking a comprehensive reform of the cooperative credit structure, which is impaired on the governance, managerial, and financial fronts. The Uttaranchal Power Project will harness the capacity of one of India’s poorest states, which has undeveloped hydropower potential estimated at 20,000 megawatts, to meet the state’s needs for clean and efficient energy and enable it to export power to surrounding states. The Uttaranchal State Roads Project will help improve the living standards of the rural population of Uttaranchal through road upgrading. The North Karnataka Urban Sector Program will rehabilitate existing, and construct new, urban infrastructure in the north of the state.

The private sector accounts for three fourths of both gross domestic product and investment in India. Development of the sector is therefore critical for growth. ADB’s strategy under its private sector window is to support infrastructure and financial sector projects by providing long-term financial assistance. Approved loans included two nonsovereign private sector loans amounting to $200.0 million, one with $75.0 million reinsurance. In addition to these loans, $72.6 million was provided for equity investments. Nonsovereign operations also included a $75.0 million loan to National Thermal Power Corporation, a state-owned enterprise, with $225.0 million in complementary financing under ADB’s B-loan program to finance its power generation capacity expansion program and reduce the country’s power shortfall.

ADB’s India program has supported the Government’s efforts to combat poverty through infrastructure-led growth