Asian Development Bank president Haruhiko Kuroda on Thursday said that India was on the right track and that he was confident that the public and private sectors, working in partnership and in collaboration with development agencies, will be able to bring about significant improvements in India's infrastructure, which will also help the overall process of growth.
In his keynote speech on 'Investing in infrastructure: key to economic growth' at the Administrative Staff College of India on Thursday evening, the ADB chief said that the "thriving city" of Hyderabad will also be the host to the bank's 39th annual meeting just two months from now.
He assured that as a regional institution focussed on poverty reduction, the ADB is committed to supporting the government's efforts to promote sustainable, inclusive economic growth.
India is one of ADB's founding member countries, and the third largest shareholder among its regional members.
"In line with the government's priorities, we have recently strengthened our operations in agriculture and rural development, and shifted focus to poorer (Indian) states and less developed regions to help reduce disparities and achieve the Millennium Development Goals," he added.
Kuroda said that the bulk of ADB's ongoing operations in India, as well as the proposed programme for 2006-08, remained focussed on the three core areas of transport, urban and energy infrastructure.
"Growth is the best antidote to poverty, and we are pleased to be a partner in this worthy endeavour," he pointed out.
Over the last year, the ADB has been improving its financial products to better meet its client countries' development needs, such as flexible financing solutions to support public-private partnerships.
"Apart from traditional lending modalities (LIBOR plus a spread), we will offer now -recourse lending to public agencies provided certain basic financial conditions are met," he added.
He said that with the launch of ADB's rupee-denominated bond issue in February 2004, India became the first developing member country to access ADB local currency lending operations.
"Several borrowers in India's infrastructure and financial sectors have indicated a desire to borrow long-term rupees from ADB, and we will explore the scope of expanding local currency lending in consultation with the government," he explained.
"Given the complexities inherent in large infrastructure investments, the participation of the private sector will naturally be a learning process and will take time. There is no single blue-print or approach.
"However, involvement of external agencies such as ADB can reinforce the initiatives being taken by the government, and help to leverage additional private investment," he observed.
Giving an overview of the Bank's ongoing operations in transport, urban and energy infrastructure sectors, he said that the ADB would also assist the government in implementing the National Urban Renewal Mission.
In the transport sector, the ADB provided a series of loans to assist with the first two phases of the National Highway Development Programme.
"We are now working with the National Highway Authority of India to see how best we can help with the subsequent phases while attracting private participation and investment on a build-operate-transfer basis," he said.
The bank is assisting with a rural road project covering Chhattisgarh and Madhya Pradesh and will soon move forward on a second such project for Assam, Orissa and West Bengal.
The bank is also assisting Madhya Pradesh and Chhattisgarh in upgrading their weak road networks and similar projects are planned for Uttaranchal, Northeastern states, Jammu & Kashmir and Jharkhand.
Similarly in the energy sector, the bank is working with PowerGrid Corporation to strengthen the national transmission grid, and with central power utilities to help increase hydropower capacity.
"Our state power sector loans focus on upgrading transmission, distribution, rural electrification, and capacity building of power sector institutions," he noted.
A specific aim of this work is reducing system losses and improving collection of bills as required by the Electricity Act 2003. ADB's programmed assistance for the Northeastern region, Madhya Pradesh and West Bengal will complement that already underway in Assam, Gujarat and Madhya Pradesh.
"Our ongoing urban sector operations in Gujarat, Karnataka, Madhya Pradesh, Rajasthan and West Bengal combine infrastructure development (primarily water, sanitation and waste management) with targeted poverty reduction components and a strong focus on municipal reforms and capacity building.
"The 2006-08 programme will continue with similar projects to help upgrade the infrastructure of selected cities in the states of the Northeast, Jammu & Kashmir, Rajasthan and Uttaranchal," he added.
In addition to supporting governments in such efforts, ADB extends help for private sector projects that have a clear development impact. With operations in both sectors, ADB is uniquely positioned to leverage private funds for large investment needs, and to promote partnerships between private and public entities.
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