India has submitted project proposals worth $2 billion for funding by the New Development Bank (NDB), finance minister Arun Jaitley said on Saturday, as the government steps up efforts to boost infrastructure for which the country needs investments worth an estimated `43 lakh crore (about $646 billion) over the next five years. The agreement for the first NDB loan in India (of $350 million) was signed a couple of days ago to finance major district roads in Madhya Pradesh, Jaitley said, addressing the second annual meeting of the NDB in New Delhi.
Describing India as a “bright spot” in terms of growth, Jaitley drew attention to challenges before the global economy – “a possible shift towards inward-looking policy platforms and protectionism, a sharper than expected tightening in global financial conditions that could interact with balance sheet weaknesses in parts of the euro area and increased geopolitical tensions, including unpredictable economic policy of the US”.
The finance minister said as much as 70% of the country’s required investments in infrastructure will be in power, roads and urban infrastructure. This presents enormous opportunities to an institution like the New Development Bank (NDB) whose core mandate is sustainable infrastructure development. “We shall work with the NDB to develop a strong shelf of projects in specific areas such as smart cities, renewable energy, urban transport, including Metro railways, clean coal technology, solid waste management and urban water supply,” he said.
Jaitley said after a sluggish performance in 2015 and 2016,global growth appears to be recovering, and is projected at 3.4% in 2017 and 3.6 % in 2018. Still, the growth story of advanced economies is still uneven. However, the Indian economy has put up an impressive show, with the International Monetary Fund projecting a 6.6% growth rate for the country for 2016-17. The rate of expansion, however, is projected to rise to 7.2% and 7.7% in 2017-18 and 2018-19, respectively, as per IMF forecasts, Jaitley said.
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As the India governor of the NDB, Jaitley said the NDB will on Saturday deliberate on its strategy for the next five years, including issues such as its capital, loan portfolio and expansion of membership. “The uniqueness of NDB should lie in faster loan appraisal, a lean organisational structure resulting in lower cost of loans, a variety of financing instruments, including local currency financing, adoption of country system whenever possible and flexibility in responding to the needs of the clients,” he said.
KV Kamath, the president of NDB, said the bank plans to lend $2.5-3 billion for a total of 15 projects in 2015. NDB also plans to raise $300-500 million through rupee-denominated Masala Bonds and step up its exposure to infrastructure projects in India to around $600-700 million this year.