India wants ADB to strengthen equity base to expand lending

New Delhi: The Asian Development Bank (ADB) should strengthen its equity base through a general capital increase to expand its lending outreach, India said on Thursday.

"Review of ADB's Capital Adequacy Framework (CAF), including net income transfers to prudently optimise the balance sheet, is also key to augment lending operations for developing member countries (DMCs)," said Ajay Seth, secretary in the Department of Economic Affairs. He was speaking at the 55th annual meeting of the ADB.

Seth, who is the alternate governor for the meeting, said rising commodity prices were endangering food security. "We are meeting in the backdrop of tightening monetary policies, slowdown of the global economy, supply-chain disruptions, unprecedented inflation and rise in commodities prices, endangering food security and livelihoods, and the developmental gains made so far," he said. The fiscal space has considerably reduced and a surge in public debt has limited the space for additional borrowing and worsened debt vulnerabilities, he added.


The need of the hour is to increase private sector operations to leverage the limited capital of ADB, Seth said. Developing more affordable and innovative financing solutions will have a multiplier effect, he pointed out. It will also generate employment in DMCs and ADB will need to mobilise resources to continue focusing on poverty reduction, he said.

Transfer of low-cost climate technologies from developed to developing countries has also assumed critical significance. As the Manila-headquartered multilateral lender has an elevated climate ambition, Seth said climate change components need to be embedded into each project to enhance the climate resilience and sustainability of DMCs.

India's economy, he said, has been on a path to recovery, supported by key structural reforms, and its response has emphasised supply-side reforms rather than relying totally on demand management.