Appreciating the assistance extended by the Asian Development Bank (ADB) in fight against COVID-19, Finance Minister Nirmala Sitharaman on Friday urged the multilateral lending agency to increase the quantum of lending and private sector operations with a view to ameliorate poverty and promote employment generation. Addressing the 53rd annual meeting of the Board of Governors of the ADB through video conference, the minister invited the institution to set up a South Asia Sub-regional Economic Cooperation (SASEC) Secretariat in India and a Private Sector Operations Branch Office in Mumbai for more committed operational activities in the private sector.
Keeping in view the need for a ‘Global Development’ approach and the long-term perspective of addressing remaining poverty, she said, “ADB should expand its quantum and size of lending. The need of the hour is to also increase private sector operations with a view to leverage the limited ADB funds, thereby stimulating a development multiplier, including employment generation." India has the absorptive capacity to receive about USD 4 billion a year from sovereign operations and about USD 1.5 billion annually from the private sector financing window, Sitharaman said. Observing that as ADB’s India operations are increasing, she suggested that the level of representation of Indian nationals at mid and senior management and staff levels should be commensurate to help convey the perspective of Indian challenges adequately.
ADB needs to work on strengthening its capital base to expand its lending outreach, both sovereign and non-sovereign, to target the ‘Strategy 2030’ goals in a scenario of increasing global challenges, the minister suggested. In this context, Sitharam said, India would like to add a cautionary note regarding the large amount of transfers out of Ordinary Capital Resources (OCR) net income to various special funds.
With a view to strengthen the capital base of its general pool, the management may rather encourage the developed member countries and other potential donors to contribute to the cause that the special funds seek to achieve, she said. “We would do well to keep in mind that the OCR pool also finances the Concessional Loans (COL), and so, lowering the risk bearing capacity of OCR will hurt the interests of some Group A countries and all Group B countries which access COL resources," the finance minister added.
ADB may also consider more innovative ways towards increasing its net income, she said, adding that it may like to consider initiating discussion on the next general capital increase to better deal with the current challenges. Commending the multilateral lending agency for the timely and valuable support to India for the COVID-19 fight, the finance minister said the loan helped extend budget support to the Government of India for the increased public spending in boosting health infrastructure and contributing to the social support measures.
ADB provided USD 1.5 billion counter-cyclical facility and a USD 3 million from the Asia Pacific Disaster Relief Fund, besides the Regional Technical Assistance for health sector. Observing that one of ADB’s core strengths has been its political neutrality a factor that appeals to both donors and borrowers, the finance minister said the multilateral funding agency has a proven record of consensus decision-making and a history of effective project implementation and successful development outcomes.
Talking about various effort taken by India in combating COVID-19 pandemic, Sitharaman said the government allocated USD 2 billion for health infrastructure, protection and containment measures, medical supplies, testing and quarantine facilities, and capacity building to strengthen the healthcare system of India in responding to the pandemic in its early stages. Preventive measures including a nationwide lockdown were complied with by the people willingly, she said, adding that as a natural consequence, economic activity was adversely affected.
This brought in hardships to many people, especially the poor, vulnerable and the disadvantaged; and to alleviate their distress, the government announced a further scheme of social support measures worth USD 23 billion, the minister explained. The measures included free health insurance to health workers; cash transfers, free food and gas distribution; and social security measures for affected workers, she added.
To help firms cope with the sudden loss of economic opportunity, she said, India provided relief in statutory and regulatory compliance matters pertaining to income tax, GST, customs, financial services and corporate affairs.