The recent re-election of Jin Liqun as the President of the Asian Infrastructure Investment Bank (AIIB) for a second five-year term is making headlines. As an important player in global economics, AIIB’s decisions and strategies can have far-reaching impacts. Liqun has stated that AIIB will remain an “apolitical institution”, focusing solely on economic and financial factors when supporting projects in regions like India.
The Relationship between India and AIIB
India was one of the 57 founding members of the AIIB in 2016 and is its second-largest shareholder with 7.62% voting shares, lagging only behind China (26.06%). To date, India has received USD 4.35 billion from the bank which is the highest aid granted to any country. AIIB has thus far approved loans of USD 19.6 billion to back 87 projects in 24 countries with Turkey being the second largest recipient at USD 1.95 billion.
AIIB has put its weight behind numerous projects across diverse sectors in India. Some noteworthy projects include the Bangalore metro rail project (USD 335 million), the Gujarat rural roads project (USD 329 million), and Phase 3 of the Mumbai urban transport project (USD 500 million).
In a recent virtual meeting, it was indicated that India expects new financing instruments from AIIB. The focus would be on social infrastructure funding and incorporating the development of climate-resilient and sustainable energy access infrastructure into AIIB’s Covid-19 crisis recovery response. This goes on to demonstrate that India does not plan to change its engagement with the China-led AIIB despite recent measures to cut down trade and investment links with China.
The Chinese Influence in AIIB
In June 2020, AIIB provided substantial financial support in response to the Covid-19 pandemic approving USD 500 million for the Covid-19 Emergency Response Fund and Health Systems Preparedness Project. It also allocated another USD 750 million for the Covid-19 Active Response and Expenditure Support in co-financing arrangement with the Asian Development Bank (ADB). Interestingly, this funding was approved just two days following the Galwan Valley clash that occurred along the India-China border.
The AIIB has supported numerous projects as part of the Belt and Road Initiative (BRI) framework without being formally associated with it. However, this has raised concerns within India due to the China-Pakistan Economic Corridor, a part of the BRI.
About the Asian Infrastructure Investment Bank (AIIB)
AIIB is a multilateral development bank that aims to boost social and economic outcomes in Asia. With its headquarters based in Beijing, China, AIIB commenced its operations in January 2016. Since then, it has grown and now includes 103 approved members worldwide.
India’s Strategy: Engagement with AIIB
Moving forward, India should continue engaging with AIIB so that it can tap into resources for financing national and cross-border infrastructure projects. The significance of AIIB increases when considering the fact that the World Bank continues to be dominated by the USA while Japan wields influence over the Asian Development Bank (ADB).
Moreover, India must ensure that its association with AIIB guarantees that its interests are not sidelined. There should be explicit measures taken to prevent AIIB from becoming an instrument used to advance Chinese geopolitical ambitions.
Last Modified: February 8, 2024