India preparing projects worth $2-3 billion for funding by AIIB: Arun Jaitley

NEW DELHI(PTI): India is preparing a basket of projects worth US$ 2-3 billion for funding by Asian Infrastructure Investment Bank (AIIB) in several areas including urban development and energy and offered to set up an office of the China-backed bank in New Delhi.

On the third day of his visit here, Finance Minister Arun Jaitley made the offer while addressing the Board of Governors Session of the Annual General Meeting (AGM) of the bank headquartered in Beijing. “India has a huge unmet demand for investment in infrastructure and is preparing basket of projects worth US $ 2-3 billion for AIIB funding in the areas of urban development (including smart cities), energy, urban transport, railways, inland waterways and water supply,” said an Indian Embassy statement providing details of Jaitley’s address.

“(The) finance minister offered India’s support in establishment of a regional office of AIIB in New Delhi to effectively cater to this potentially large portfolio and speed up the process of project development, monitoring and implementation,” the statement said. In his address, Jaitley said the AIIB has come up amidst huge expectations in a difficult time for the global economy.

“The overall recovery of the global economy remains very modest and global growth rate projections have been revised downwards, even though the Asia-Pacific region remains the growth engine for the world,” he said.

Notwithstanding the global headwinds, however, India continues to maintain a high growth rate at 7.6 % in 2015-16 compared to 7.2 % in the previous year. “AIIB presents a much-needed additional financing window dedicated to infrastructure projects and meeting the financing gap that may be beyond the capacity of the individual countries and the existing MDBs (Multilateral Development Banks),” Jaitley said of AIIB’s role.

AIIB was officially established last year with an authorised capital of US $ 100 billion in which India and 56 other countries joined as founding members. China is the largest shareholder with 26.06 % voting shares.

India is the second-largest shareholder with 7.5 % followed by Russia 5.93 % and Germany with 4.5 %. China also houses the New Development Bank headquarters of BRICS countries – Brazil, India, China and South Africa – in Shanghai. It is headed by eminent Indian banker K V Kamath.

The AIIB yesterday released its first set of loans totalling to US $ 509 million for infrastructure projects in Pakistan, Bangladesh, Indonesia and Tajikistan. Outlining India’s development paradigm, Jaitley said India has undertaken reforms in FDI and initiated large investments in rural infrastructure, national highway, inland waterways, shipping, power sector and smart cities, the statement said.

Jaitley also met China’s Finance Minister Lou Jiwei and held talks on bilateral economic cooperation, upcoming G20 Summit in Hangzhou, and the BRICS Summit in India. Both sides shared views on the global macroeconomic situation and agreed on the need to further coordinate in order to enhance economic growth. On the sidelines of AGM, the Indian finance minister also held a bilateral meeting with AIIB President Jin Liqun.

Earlier speaking to China’s state-run CCTV, Jaitley said the momentum of growth of the Indian economy is “sustainable for the reason that India has lot of distance in terms of economic growth to cover.” In view of this, a lot of potential exists for investments in infrastructure, urbanisation, housing, power, water and social sector, he said.

“For us today sky is the limit. That is the kind of investments we require. Therefore a lot of economic activity has to go into it. Currently, public finances are taking the lead in doing so. I am sure in due course as the economy is picking up, private sector will also boost this,” he said. “Secondly we grew in the last two years despite the fact that we had less than normal monsoon. Monsoon plays very important role in India’s economic growth. This year hopefully the monsoon seems to be all right,” he said.

Jaitley said if the country has a good monsoon, that itself will help boost rural economy, rural purchasing power and would add to the economy. “We grew by 7.6 % last year. We will certainly maintain that and with good monsoon hopefully improve upon that,” Jaitley said. On the global infrastructure and economic growth, a subject on which he is scheduled to speak at a seminar here tomorrow, Jaitley spoke about his concerns over the global economic slowdown.

“In large populated economies like India job growth is extremely important,” he said. “How long will this (global slowdown) continue and how world will pull itself out of this situation and how does growth return to the world… I think it is inevitable irrespective of the theme of the conference this issue will dominate all economic discussions.”