ADB's Annual Lending to India to Exceed $2.5 Billion by 2008

NEW DELHI, INDIA - ADB plans to increase its lending to India to $2.65 billion in 2008, according to a new Country Strategy and Program Update. The level was $1.12 billion in 2005.

"The program reflects the continuing priority of upgrading infrastructure, which accounts for more than three quarters of the three year pipeline, and gives emphasis to agriculture and rural development to create jobs and make the country's growth more broad based," says Tadashi Kondo, ADB Country Director in India.

Transport projects account for the bulk (36%) of ADB's infrastructure lending pipeline, followed by urban sector operations (21%), and energy sector projects (20%).

Loans for developing the agribusiness sector, improving water resource management, strengthening commodity markets, and boosting coastal resources management account for around 11% of the program. The remaining pipeline comprises loans to assist with public resource management in Assam and West Bengal, strengthen rural finance institutions, and promote private sector participation in infrastructure.

ADB will continue to focus its development efforts on relatively weak states such as Chhattisgarh, Jammu and Kashmir, Uttaranchal, and those in the Northeast. Infrastructure operations (including urban projects and transport projects) for Uttaranchal and the northeastern states have been included in the three-year program.

ADB will also work closely with the Government in facilitating public-private partnerships on critical infrastructure such as in the transport and urban sectors. Workshops and roadshows will be organized to encourage private sector participation, both domestic and foreign.

India's high growth, which reached almost 7% in 2004, is expected to be maintained over the next two years. But achieving the Government's target of 8% growth depends critically on upgrading infrastructure as well improving agricultural growth. The Government is thus giving high priority to programs such as Bharat Nirman, National Highway Development Program, Pradhan Mantri Gram Sadak Yojana (or the Rural Roads Development program), Power for all by 2012, and the National Urban Renewal Mission.

CSPU 2005 takes concrete steps to increase the relevance, responsiveness, and results-orientation of ADB's India program by focusing on improving project readiness, project implementation, and capacity building.

A grant technical assistance facility ($15 million each in 2006 and 2007) is being created to undertake detailed project design and engineering studies so that projects are fully prepared and ready to award contracts by the time they become effective. Regular sector portfolio reviews being organized by ADB and the Department of Economic Affairs, Ministry of Finance, will help in removing implementation bottlenecks, promote cross-learning and transfer of best practices across states and executing agencies.

Workshops will be organized to strengthen relatively weak capacity executing agencies in ADB's partner states and to familiarize their staff with ADB's policies and procedures. A workshop focusing on the Northeastern states was recently organized by ADB and DEA in Guwahati.

ADB's recently approved Innovation and Efficiency Initiative (IEI) allow multi-tranche lending, increase flexibility in cost sharing arrangements, expand the list of expenses eligible for ADB financing, and allow subsovereign and nonsovereign public sector financing. Procurement processes and safeguard requirements are also being streamlined under the IEI program. The IEI reforms are already being incorporated into the India program. The recently negotiated Rural Roads Sector II project ($750 million) will offer multi-tranche financing.

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