ADB chief allays crude fears

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New Delhi, Aug 31: Asian Development Bank president Haruhiko Kuroda has said spiralling crude oil prices in the international market will not have adverse impact on economic growth rates in India or China.

“Crude prices will start go down at some point of time,” he said in the Capital on Wednesday.

Mr Kuroda said that spurt in crude prices would not have major implications for economic growth in Asia as it had been mainly propelled by growth in India and China. Both the countries are expected to record robust growth rates during the current year.

As far as India is concerned, the ADB chief said the country was likely to record 7% gross domestic product (GDP) growth during the current year and two succeeding years. However, he added, economic reforms would need to be deepened to take the country to a higher growth trajectory. The ADB had pegged the Asian economic growth rate at 6.5% down from 7.3% recorded during 2004. The oil prices have hardened further since the initial forecast.

The ADB staff, he said, was in the process of revising the forecast. The bank will definitely take into account the impact of spiralling crude oil prices while revising the growth forecast, he added.

As far as lending to India is concerned, Mr Kurado said the bank had proposed to lend as much as $1.3 billion in the current year. The bank, he added, was willing to step up sanctions to $2 to $2.5 billion in the coming years.

It proposes to lend about $6.5 to $7 billion during the three-year period beginning 2006.

These issues were discussed by the ADB chief in his meetings with the President APJ Abdul Kalam, Prime Minister Manmohan Singh and finance minister P Chidambaram.

The issues concerning development of infrastructure and stepping up poverty alleviation programmes were discussed with the Indian leaders, said ADB president, adding, “We are prepared to support public private partnership (PPP) projects and other programmes through innovative funding mechanism.” The ADB also expressed its keenness to support projects in sectors like roads, railways, water supplies, urban transport etc.

When asked whether the ABD loans were expensive, Mr Kurado said, “Our financial products are as competitive as that of the World Bank or any other bilateral donor.”