Countries and Regions

	Table of Contents
p. 17 of 20 BACK | NEXT I. Country Performance Assessment II. Country Operational Strategy III. Sector Strategies IV. Regional Cooperation V. Donor Activities and Aid Coordination VI. Cofinancing and Catalyzing External Resources VII. ADB’s Operational Program VIII. Economic and Sector Work Program IX. Local Cost Financing

Country Assistance Plans - India

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VI. Cofinancing and Catalyzing External Resources

88. India has been a major recipient of cofinancing among ADB's DMCs, receiving about $3.6 billion from multilateral and bilateral sources, export credit, and commercial cofinancing since the inception in 1986 of ADB's lending program for India, thereby mobilizing additional resources of about $0.5 for each dollar from ADB. Reflecting the importance of official cofinancing in the past, the country has received about 9 percent of all ADB official loan cofinancing, and about 8 percent of commercial cofinancing. However, catalyzing external resources to India, particularly from G-7 countries, was severely hampered in the past two years in the wake of nuclear tests. More recently, there are indications of a resumption of larger scale bilateral and commercial resource flows to the country.

89. Efforts are being strengthened to raise the level of commercial cofinancing, including from export credit agencies. ADB is also putting greater emphasis on cofinancing and credit enhancement through its guarantee facility, and there appears to be scope particularly for partial credit guarantees in view of the still limited availability of long-term financing in the Indian financial and capital markets. The Government has expressed interest and willingness to source more commercial cofinancing through ADB, provided the terms and conditions of such cofinancing are attractive, and the cofinancing mobilizes additionality to IPF resources. In these events, the Government would be willing to provide counter-guarantees for public sector projects supported by an ADB Guarantee.

90. ADB's lending pipeline offers considerable opportunity for cofinancing. The Railways Improvement (Sector) Project, scheduled for 2001, has attracted interest from a large number of cofinanciers, including commercial sources. There is also considerable interest among PSUs, especially those at the national level in the energy sector, in making use of ADB's Guarantee Facility. The Power Transmission Improvement (Sector) Project (approved in October 2000) included a partial credit guarantee for $120 million of commercial cofinancing. Another potential cofinancing opportunity is the proposed support for the Government's National Highways Development Program (NHDP), which is being implemented by the National Highways Authority of India (NHAI). ADB's proposed public sector lending for the NHDP in the years 2001-2003 could be complemented by means of ADB partial credit guarantees. To strengthen NHAI's capacity for financial management, a TA on Institutional Strengthening of National Highways Authority is included in 2001 to cover inter alia aspects of project finance, foreign exchange risk management, and guarantee operations. However, despite the significant potential that use of the Guarantee Facility will provide for further leveraging ADB assistance to India, issues still being addressed include the need for government counterguarantee and the pricing of such counterguarantees. Moreover, efforts to mobilize cofinancing are also constrained by the economic sanctions. These affect both the availability of commercial cofinancing as well as official cofinancing for non-basic human need loans.

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