The Union Minister of Finance has recently participated in the 6th Annual Meeting of the Board of Governors of Asian Infrastructure Investment Bank (AIIB). Discussions revolved around India’s approach regarding the bank’s role amid the pandemic crisis, multilateral banking, and expectations for future investments. This interaction also provided insight into AIIB’s perspective concerning its future ventures and balanced infrastructure development in India.
India’s Stance on AIIB’s Role in Covid Crisis
India commended AIIB’s immediate response in supporting member countries financially, including India, in their battle against Covid-19. The pivotal role of multilateral banks was emphasized, highlighting their crucial contributions to augment countries’ efforts in handling not only the current pandemic crisis but also the impending climate change impacts.
Expectations from the Bank
India believes that AIIB should concentrate on exploring investment opportunities for asset creation and development within social infrastructure sectors. Also, there is a need for increased mobilization of private sector capital towards inclusive and green development. Additionally, India expects the establishment of a Resident Board and Regional Offices to enhance accountability, transparency, and the quality of operations and investments.
AIIB’s Perspective and Future Plans
AIIB suggests that India should strive to balance the development of physical infrastructure with social infrastructure such as healthcare systems. AIIB plans to finance both social and climate-resilient infrastructure in India in the future. Adhering to the goals of the Paris Agreement, it aims to align its operations to effectively combat climate change.
India’s Association with AIIB
India has been one of the 57 founding members of AIIB since 2016 and is its second-largest shareholder (with 7.62% voting shares) after China (26.06%). India has received USD 4.35 billion from the bank, the highest amount granted to any country, with the bank approving loans of USD 19.6 billion so far for 87 projects in 24 countries.
AIIB’s Contribution to Indian Projects
AIIB has supported numerous sectoral projects in India, including the Bangalore metro rail project, Gujarat rural roads project, and Phase 3 of the Mumbai urban transport project. With an increasing need to develop modern infrastructure, AIIB has collaborated with the government to prioritize projects which can effectively mitigate climate change.
Change in India’s Engagement with AIIB
Despite recent measures to decrease its trade and investment ties with China, India is unlikely to alter its engagement with the China-led AIIB. The expectation is that AIIB will introduce new financing instruments, provide financing for social infrastructure, and incorporate the development of climate resilient and sustainable energy access infrastructure into AIIB’s recovery response to the Covid-19 crisis.
About Asian Infrastructure Investment Bank
The AIIB is a multilateral development bank striving to enhance social and economic conditions in Asia. It achieves this by unlocking new capital and investing in green, technology-enabled infrastructure that promotes regional connectivity. Established by the AIIB Articles of Agreement since December 2015, it consists of 57 founding members and a current total membership of 102 countries. The bank is headquartered in Beijing and initiated its operations in January 2016.
