ADB to increase annual lending to India to $4 bn

Asian Development Bank (ADB) has decided to increase its lending to India as the Narendra Modi government takes up new initiatives that support the ADB's enhanced lending programme.

The Tokyo-based multilateral lender plans to raise its annual lending to India from an average $3 billion to $4 billion in the next few years, visiting ADB president Takehiko Nakao said.

He said the Indian government's new initiatives such as Make in India, Skill India, Clean India (Swatch Bharat Mission), Smart Cities and Atal Mission for Rejuvenation and Urban Transformation (AMRUT), all qualify for support under ADB's enhanced lending programme.

''In India, ADB aims at increasing its sovereign and non-sovereign lending from the present $7-9 billion in three years from 2015-17 to $10-12 billion between 2016 and 2018 using ADB's expanded lending capacity'', Nakao said at a press conference after meeting finance minister Arun Jaitley on Tuesday.

ADB's annual lending capacity is expected to increase to as much as $20 billion a year from the current level of $13 billion, based on the merger of its Asian Development Fund lending operations with its ordinary capital resources balance sheet.

When compared with other Asian countries, India is good place to increase lending using the ADB's increased capacity, Nakao said.

''India is a good borrower for us and they have never missed a repayment. If India follows the right policies, there are good opportunities for it to grow faster'', he said.

In March this year, ADB had forecast India GDP growth at 7.8 per cent in 2015-16. It had projected China's growth at 7.2 per cent this calendar year.

The India growth forecast will get updated in July when the ADB releases its new report, Nakao said, while declining to comment on whether the growth rate will be revised upwards or downwards.

''India is already looking at several major reforms like GST, labour market reforms, removing energy subsidies. If it continues to follow right policies, it has potential to grow faster than China'', Nakao said.

He also did not see international oil prices climbing up to $100 per barrel levels anytime this year.