By Judith Ugwumadu | 6 February 2015
The Asian Development Bank president has lauded India’s brighter growth prospects and praised government efforts to accelerate infrastructure investment and improve the business environment.
Takehiko Nakao was speaking at a meeting in Delhi with India’s prime minister Arun Jaitley to discuss ADB’s partnership with the country as its government aims to address its development challenges.
He commended plans to introduce a goods and services tax in a bid to unify internal markets and support economic growth by removing tax distortions.
Nakao also highlighted the importance of recent reforms such as the reduction of fuel subsidies, raising the foreign direct investment (FDI) ceiling in several sectors, and fast-tracking infrastructure projects by expediting clearances.
‘Prime Minister Modi and his government is aiming for a good balance between fiscal consolidation by rationalising expenditure and growth-oriented policies by expanding public investments. Better targeting of subsidy payments is essential to achieve higher and more inclusive economic growth,’ Nakao said.
ADB projected that growth in Indian economy would increase from the 5.5% expected in the current fiscal year to 6.3% in the year ending March 2016.
The bank’s latest economic forecast for India also noted that the fall in global oil prices should boost growth and reduce the country’s current account deficit.
Among India’s most pressing challenges are addressing its infrastructure shortfall, especially in power and transport, Nakao said.
ADB has pledged to continue financing new and improved roads and urban infrastructure, as well as renewable energy, including the development of solar parks and transmission lines.
In addition, ADB will support the development of industrial and economic corridors such as the manufacturing sector and assisting with the development of 10 to 20 smart cities that use digital technologies to enhance performance and wellbeing.
In social sectors, ADB is also supporting India’s national skills development programme, initially through projects in two states, Meghalaya and Kerala, to help match skills with jobs.
According to the development bank, India is its largest borrower. Since 1986, it has approved 189 sovereign loans for India totalling $31.3bn, as well as 50 non-sovereign loans, equity investments, and guarantees amounting to $3.6bn.
