FM Nirmala Sitharaman asks AIIB to invest more in clean energy, social infra | The Financial Express

FM Nirmala Sitharaman asks AIIB to invest more in clean energy, social infra

Says Indian economy remains resilient due to well-targeted policy mix and structural reforms.

Nirmala Sitharaman
FM Nirmala Sitharaman (IE)

Finance minister Nirmala Sitharaman on Wednesday exhorted the Asian Infrastructure Investment Bank (AIIB) to scale up investments in clean energy and social infrastructure, with a special focus on education, health and digital infrastructure. Such a targeted approach, she said, would ensure resources are not scattered across multiple areas and impact remains meaningful.

Speaking at the 7th annual meeting of the Board of Governors of the AIIB through video conference, Sitharaman also asserted that India’s “well-targeted policy mix, accompanied by major structural reforms and sound external balance sheet”, have aided its growth to remain resilient, despite exogenous threats, according to a finance ministry statement.

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The economy, she asserted, has remained resilient and made remarkable progress through its digitalisation mission, harnessing the power of technology to facilitate social protection and boost financial inclusion.

The government has announced a raft of measures in the aftermath of the pandemic–including the launch of a dozen of production-linked incentive schemes, greater thrust on public capex and guaranteed loans to MSMEs and other businesses–to stimulate growth.

Despite a slowdown in its growth this fiscal, India will remain the world’s fastest-growing economy. The International Monetary Fund has forecast its FY23 growth for the country at 6.8%, more than double the expected global economic expansion rate for 2022.

The finance minister asked the AIIB to not only play a “catalytic role in mobilizing diverse private sector resources but also explore mechanisms to augment its own resources”, pointing out that public resources are insufficient to meet vast infrastructure needs of members. The AIIB could focus on early action on the recommendations of G20 Expert Panel’s Report on the capital adequacy framework of multilateral development banks.

Since its inception in 2016, the AIIB has approved a total financing of $36.44 billion. As many as 191 projects have been cleared by it since 2016, with 50 in 2021 and 33 so far this year. About 23% of the approved projects belong to the energy sector, followed by transport (16%).

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Highlighting India’s commitment to the environmental cause, Sitharaman stated that Prime Minister Narendra Modi himself is leading the country’s climate change response through various programmes, including ‘Lifestyle for Environment’, or LiFE.

Beyond its financial assistance, the AIIB should work towards expanding the scope of its mid-stream and upstream engagement activities, such as increased technical assistance to help clients translate strategies into investment plans, the finance minister said.

India, a founding member and the second-largest shareholder in AIIB, has the largest project portfolio within the so-called BRICS Bank. New Delhi holds a 7.65% vote share in the AIIB, while China, the largest shareholder, has 26.63% in it.

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First published on: 27-10-2022 at 02:15 IST