Modi calls on AIIB to raise financing from $4 billion to $40 billion by 2020
26 June 2018
Prime Minister Narendra Modi has called upon the Asian Infrastructure Investment bank (AIIB) to expand from its current financing level of $4 billion to $40 billion by 2020 and $100 billion by 2025.
AIIB started its financing operations in January 2016. In less than three years, it has in its fold, 87 members, and a committed capital stock of $100 billion. It is poised to play a critical role in Asia, Modi said at the inaugural session of the bank’s annual meeting being held in Mumbai.
In a short period, AIIB has approved 25 projects in a dozen countries with a total financing of over 4 billion US Dollars. This is a good beginning, he noted.
“With committed capital of $100 billion and huge need for infrastructure in member countries, I take this opportunity to call upon AIIB to expand from financing $4 billion, to $40 billion by 2020 and $100 billion by 2025,” the prime minister said.
“In a gentle way, you can shake the world” – union minister Piyush Goyal recalled Mahatma Gandhi’s words, noting that AIIB is gently shaking the world.
Asia still faces wide ranging disparities in access to education, healthcare, financial services and formal employment opportunities. “Mobilizing Finance for Infrastructure: Innovation and Collaboration”. Investments by AIIB in sustainable infrastructure can impact the lives of billions of people, the prime minister stated.
This would require simpler processing, and faster approval. It would also need high quality projects and robust project proposals. Assets, having passed the stages of land acquisition and environment and forest clearances, are relatively de-risked. Hence, for such assets, institutional investment from pension, insurance and sovereign wealth funds are likely to be more forthcoming.
In India, we are applying novel Public Private Partnership models, Infrastructure Debt Funds, and Infrastructure Investment Trusts to fund infrastructure. India is trying to develop brownfield assets as a separate asset class for infrastructure investment.
With a size of $2.8 trillion - the seventh largest in the world and the third largest in terms of purchasing power parity – a GDP growth rate of 7.7 per cent. In 2018, India has emerged as a bright spot in the global economy which is driving global growth as well, Modi pointed out.
With a better credit rating, he said, the government is firmly committed to the path of fiscal consolidation.
With foreign exchange reserves of more than $400 billion, FDI flows of more than $222 billion in the last four years, India continues to be one of the top FDI destinations in the world, he said.
He said the government has taken a number of steps, including simplification of rules and regulations for businesses and an environment which is efficient, transparent, reliable and predictable.
In addition, the introduction of the Goods and Services Tax, one of the most significant systemic reforms that the country has undergone, has made the country one common market for the investor.
India also jumped 42 places in three years to enter the top hundred in the World Bank’s Ease of Doing Business Report 2018.
The size and growth of the Indian market hold much potential. India’s per capita income has doubled in the last ten years. It has over 300 million middle class consumers. This number is expected to double in the next ten years. The size and scale of requirement in India gives the added advantage of economies of scale for investors.
Modi cited the example of the housing programme in India that targets ten million houses in urban areas. This would be more than the total requirement of a lot of countries taken together. Therefore the use of new technology in house construction would have added advantage, if tried in India, he said.
Renewable energy programme in India, with a target of 175 GW by 2022, is another area that provides scale, he pointed out. The International Solar Alliance, a grouping of countries looking to increasingly use solar power, aims at a solar capacity of 1000 Giga Watt with an investment of $1 trillion by 2030.
India is also working on e-mobility. The challenge before us is of technology, particularly with respect to storage. We will be hosting a global mobility conference this year. I hope that this will help us in moving forward, he said.
Earlier, in his address, AIIB President, Jin Liqun said, “Between now and 2030, Asia investment in infrastructure must rise to $2 trillion a year, or roughly triple of what it has been in the past.”
“Asian developing countries now account for 60% of global growth, while roughly two-thirds of global trade is part of value-chains passing through Asia. Yet still today, 11% of Asia’s population remains in poverty. It is against this backdrop that AIIB was formed. Economic openness and investment in infrastructure drew Asia’s growth in previous stages. Now, much more needs to be done to ensure the future continues to brighten for all of Asia”, Liqun added.
“Solid global growth is crucial for our members to meet their objectives and an open trading system is a foundation of that global growth. I look forward to working with all of you towards this end,” he added.
Industries Department, Government of Maharashtra is the nodal Department, Maharashtra Industrial Development Corporation (MIDC), government of Maharashtra is the nodal agency, Confederation of Indian Industry (CII) is the Professional Conference Organiser (PCO), Research and Information Systems for Developing Countries (RIS) is the knowledge partner while the Federation of Indian Chambers of Commerce & Industry (FICCI) is the Exhibition partner for the third annual meeting of AIIB.
The previous AIIB annual meetings were held at Beijing, China in 2016 and Jeju, Republic of Korea in 2017.