ADB to retain $2bn sanction limit for Indian projects

KOLKATA: Multilateral funding agency Asian Development Bank said it will keep its annual sanction limit at $2 billion for financing Indian projects in 2011 unchanged from what it targeted in 2010, as its resources remain limited. “We have limited resources and so will keep the annual sanction limit more or less unchanged,” ADB managing director Rajat Nag said at a seminar of the Indian Chamber of Commerce.

ADB remains bullish on India’s growth prospects despite all the series of scandals that rocked the union government. The funding agency has, however, committed to the Centre to lend $7.4 billion in 2011-13 for supporting inclusive and environmentally-sustainable economic growth. In 2010, ADB approved $2.2 billion loans surpassing its $2-billion limit.

It disbursed a record $1.7 billion last year. He said ADB would look into the corruption issues intensely and accordingly prepare its project financing plans. “We follow the same process everywhere ,” he said. About 80% of the ADB projects are to build roads, ports and other infrastructural developments , which Mr Nag said was still a major concern for the country despite the recent surge in road and power sector development. It will continue to focus on projects in the transport, energy and urban sectors in states like Assam, Bihar, Chhattisgarh, Himachal Pradesh , Madhya Pradesh, and Rajasthan .

It also provides support to major road development projects in the eastern and northeastern states, which Mr Nag said would be key for India’s Look East policy. The Look East Policy will help India’s integration to the rest of Asia, especially south-east Asia and China. “The effectiveness of the policy would depend how India develops the North-East ,” he added. Mr Nag said Asia is expected to contribute 60% of the world’s GDP by 2050 and India and China together will control half of the Asia’s contribution.