Saakshar Bharat   - Environment building campaign New 

2010 Spring Meetings of the World Bank and IMF 

Project Readiness Checklist for Projects aided by Multi-lateral Financing 
Institutions (MFI) 

The Multilateral Institutions Division of Department of Economic Affairs has nine sections
( MI-1 to MI-9). The multilateral institutions dealt by this division are:

• World Bank Group (IBRD, IDA, IFC, MIGA, ICSID)
  

• International Monetary Fund (IMF)
  

• International Fund for Agricultural Development (IFAD)
  

• Asian Development Bank (ADB)
  

• Global Environment Facility (GEF)
  

• African Development Bank (AfDB)

The issues dealt by this division are:

1. Policy matters relating to International Monetary Fund (IMF), World Bank Group (WB), Asian Development Bank (ADB) and International Fund for Agricultural Development (IFAD);

2. Meetings of the Board of Governors of WB, IMF, IFAD and ADB;

3. Processing of all external assistance (loans and grants) accessed from the WB Group, IFAD, ADB and IMF;

4. Policy matters relating to and Processing of assistance from Global Environment Facility (GEF)

The officers posted in the division, up to the level of Under Secretary and their contact details are as under:

International Monetary Fund (IMF)
(http://www.imf.org/external/country/ind/index.htm)

Introduction

• India is a founder member of the International Monetary Fund (IMF). The Finance Minister of India is ex-officio Governor on the Board of Governors of the IMF. The Governor, RBI is India’s Alternate Governor at the IMF. India is represented at the IMF by an Executive Director, currently Dr. Arvind Virmani, who also represents three other countries, viz. Bangladesh, Sri Lanka and Bhutan.
  

• IMF was established along with International Bank for Reconstruction and Development (also known as World Bank) at the Conference of 44 nations held at Bretton Woods, New Hampshire, USA in July 1944. It was created to promote international monetary cooperation; to facilitate expansion and balanced growth of international trade; to promote exchange stability; to assist in establishment of a multilateral system of payments; to make its general resources temporarily available to its members experiencing balance of payments difficulties under adequate safeguards; and to shorten the duration and lessen the degree of disequilibria in the international balances of payments of members.
  
  

• The Articles of Agreement of IMF came into force on December 27, 1945. IMF is the principal international monetary institution established to promote a cooperative and stable global monetary framework. At present, 186 nations are members of the IMF. Since the IMF was established, its purposes have remained unchanged but its operations — which involve surveillance, financial assistance and technical assistance — have evolved to meet the changing needs of its member countries in an evolving world economy.  

Board of Governors

• The Board of Governors of the IMF and the Boards of Governors of the World Bank Group, consisting of one Governor and one Alternate Governor from each member country, usually meets once a year to discuss the work of the respective institutions at the Annual meetings, which generally held in September / October. The Annual Meetings have customarily been held in Washington D.C. USA, for two consecutive years and in another member country in the third year. Last Annual Meetings of the IMF and World Bank were held during 2 - 7 October, 2009 at Istanbul, Turkey.  

International Monetary and Financial Committee

• The International Monetary and Financial Committee (IMFC) of the Board of Governors is an advisory body made up of 24 IMF Governors, Ministers, or other officials of comparable rank, representing the same constituencies as in the IMF’s Executive Board.  

Executive Board

• The day-to-day management of the IMF is carried out by the Managing Director. The Board of Executive Directors, consisting of 24 Directors appointed / elected by member countries / group of countries, is the executive body of the IMF, of which the Managing Director is the Chairman. Mr. Dominique Strauss-Kahn, former Finance Minister of France, is the Managing Director of IMF for a five year term beginning 1^st November 2007. There are three more Deputy Managing Directors in place. Mr. Dominique Strauss-Kahn visited India during 10 -14 February 2008. 

India’s Quota and Rank

• India’s current quota in the IMF is SDR (Special Drawing Rights) 4,158.20 million in the total quota of SDR 213 billion, giving it a share holding of 1.91 %. Based on voting share, India (together with its constituency countries viz. Bangladesh, Bhutan and Sri Lanka) is ranked 21^st in the list of 24 constituencies. The break-up of SDR 4158.2 million quota of India (as on  31^st October   2009) is given below: 

• The IMF's Board of Governors on 28 April 2008 endorsed the reforms in quota and voting structure of IMF. This endorsement marks an important milestone in realigning the quota and voting structure of the IMF to reflect the relative economic weights of economies in the world. It marks the first step in a long and protracted struggle by developing countries for a greater say in organizations under the UN umbrella. India has been at the forefront of these initiatives since inception.
  
  

• The implementation of this decision will result in an increase in the voice and representation of Emerging Market Economies, Developing Countries and Low Income Countries. A total of 54 countries, out of a total membership of 186, will see their quota shares increase from pre-Singapore Annual Meeting (2006) levels, ranging from 12 to 106 percent. Dynamic emerging markets like Korea, Turkey, China, Brazil and India are the main beneficiaries.  India’s quota will register an increase of 40% in absolute terms and 28% increase in terms of share in global totals.
  
  

• Overall 135 countries will see an increase in voting shares, reflecting both the increase in quota shares as well as the tripling of basic votes from earlier levels. The aggregate shift in voting shares for these 135 countries is 5.4 percentage points, including substantial increases for low income countries.
  
  

• India’s actual quota share would increase from 1.91 percent to 2.44 percent, while its vote share would increase from 1.88 percent to 2.34 percent. In the process, India would improve its relative position in both quota and vote shares to the 11^th highest (from the present 13^th), amongst 185 strong entire membership. In the Indian constituency, Bhutan has received a 167 percent increase in voting share compared to pre-Singapore levels.
  
  

• The said quota increase would become effective when three-fifth of the members countries, having 85% of the total voting power, have accepted the proposed “Voice and Participation” Amendment of IMF’s Articles. India has already conveyed its acceptance on the proposed Voice and Participation Amendment.  

General and Special SDR Allocations by IMF in 2009

• The general allocation of Special Drawing Rights (SDRs) equivalent to about US$250 billion was made to IMF members that are participants in the Special Drawing Rights Department (currently all 186 members) in proportion to their existing quotas in the Fund, which are based broadly on their relative size in the global economy and became effective on August 28, 2009.  The allocation is designed to provide liquidity to the global economic system by supplementing the Fund’s member countries’ foreign exchange reserves. As a result, India has been allocated a total of SDR 3,082.5 million.
  
  

• Separately, the Fourth Amendment to the IMF Articles of Agreement providing for a special one-time allocation of SDRs entered into force on August 10, 2009. The special allocation was made to IMF members on September 9, 2009. The total of SDRs created under the special allocation was SDR 21.5 billion and as a result, India has been allocated a total of SDR 214.6 million.
  
  

• In view of above, India has been recently allocated a total of SDR 3,297.1 million (SDR 3082.5 million plus SDR 214.6 million). 
  
  

• Further, since attaining membership of IMF, Net Cumulative Allocation (NCA) of SDR by IMF to India now stands at SDR 3,978.26 million. Out of this NCA of SDR 3,978.26 million, India, as on 31^st October 2009, is currently holding SDR 3,397.23 million which is 82.88 % of its NCA.  

Article IV Consultations

• Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year, to review the economic status of the member countries. Article IV consultations are generally held in two phases. During this exercise the IMF mission holds discussions with the RBI and various line Ministries / Departments of Central Government. The Article IV Consultations are concluded with a meeting of IMF Executive Board at Washington DC which discusses the Article IV Report. The last round of annual Article IV Consultations with the IMF Staff were held during 7^th -17^th December 2009. The Article IV report on India, prepared by IMF Mission, was subsequently discussed at the IMF Executive Board on 25^th January 2010.  

Borrowings by India

• India borrowed SDR 3.9 billion during the period 1981-84. Again during 1991 to 1993, India borrowed an amount of SDR 3.56 billion (SDR 1351.98 million under the Compensatory and Contingency Financing Facility and SDR 2207.925 million under Standby Arrangement). Repayment of all the loans taken from International Monetary Fund has been completed on May 31, 2000. India is now a contributor to the IMF.

Financial Transactions Plan (FTP)

• India agreed to participate in the Financial Transaction Plan of the IMF in late 2002. Forty-three countries, including India, now participate in FTP. By participation in FTP, India is allowing IMF to encash its’ rupee holdings as part of our quota contribution, for hard currency which is then lent to other member countries who are debtors to the IMF.  While the participation in FTP allows India to earn additional interest on its’ enhanced credit tranche position with IMF, the encashment of interest free rupee securities lead to perhaps higher borrowing cost as well as deterioration of fiscal position. To address this problem, it has been decided to replace special securities issued to the IMF by non-interest bearing non-marketable securities to be issued to the RBI.  From 2002 (when India agreed to participate in the FTP) to 15^th May 2009, India has made eighteen purchase transactions of SDRs 1244.16 Million and twenty-four repurchase transactions of SDRs 794.16 Million.

India’s contribution to lending resources of IMF

• At an April 2, 2009 summit in London of the Group of Twenty (G-20) major industrialized and emerging market economies, world leaders decided to dramatically increase the IMF’s lending capacity to support its ability to combat financial contagion, providing significant new financing and a broad mandate for action. As a result, the resources available with IMF to support its members will be tripled to $750 billion. 
  
  

• In pursuance of decision at the London Summit of the Group of Twenty (G-20) and to increase the lending capacity of IMF,  the Finance Minister of India in BRIC Finance Minister’s Meeting held at London on 4^th September 2009 announced India’s decision to invest up to $US 10 billion of its reserves in notes issued by the IMF.

India’s contribution to Iraq

• In November 2003, India agreed to contribute US $ 0.35 Million for the Multi-donor Technical Sub Account for Iraq initiated by the IMF. It has contributed US $ 0.10 million (equivalent to Rs. 46,00,000) as first instalment in March 2004, the second instalment of US $ 0.10 million (equivalent to Rs. 45,00,000)  in March 2006 and the third and final instalment of US $ 0.15 million (equivalent to Rs 64,41,750) was paid in March 2007.

Regional Training Centre

• In July 2004, the Government of India approved IMF’s proposal for setting up a joint training program at the National Institute of Bank Management, Pune. The Training Program will provide policy oriented training in economics and related operational fields to Indian officials and officials of countries in South Asia and East Africa. The first training program was held during July 2006.   RBI is the nodal body to co-ordinate the training program with the IMF. The Institute would cater to the participants from the regional countries, especially in the SAARC region. Australia is providing financial assistance for the Institute.

Poverty Reduction Growth Facility

• Enhanced Structural Adjustment Facility (ESAF) was established in 1987 with an amount of SDR 6 billion to help the low income countries with heavy debt burdens in difficult external environment to implement comprehensive macro-economic and structural policy programs aiming at strengthening their balance of payments position and fostering growth. ESAF Trust operations are conducted through accounts in the Trust with separate functions designed to administer the capital funding needed for Trust loans (Loans Account); to subsidize the rate of interest paid by borrowers on loans from the Trust (Subsidy Account) and to provide security for lender’s claim on the Loan account (reserve account). The funds available under this scheme were exhausted and IMF Board approved to continue this facility and requested members to contribute generously. Since the year 1999 the name of the trust has been changed to PRGF Subsidy Account. India preferred to contribute as donations to Subsidy Account and made a commitment to provide grant contributions to the extent of US $ 1 million per year over 15 year for a total of US $ 15 million. India has paid fifteenth / last annual instalment to the Fund PRGF Trust Subsidy Account amounting to US $ 1 million (equivalent to Rs. 4,25,60,000) during July, 2008.  

Emergency Natural Disaster Assistance (ENDA)

• The Executive Board of the IMF, on 21.1.2005, has approved opening of a sub-account by expanding the scope of their administered account for Emergency Post Conflict Assistance (EPCA) to subsidize the rate of charge on emergency purchases in cases of Emergency Natural Disaster Assistance (ENDA) to PRGF eligible member countries. IMF has targeted resource mobilization through grant contributions by members to be in the range of SDR 45 to 60 million. These grant contribution will be used by IMF to subsidize the rate of charge to 0.5% per annum on emergency natural disaster assistance, at the same rate as is being charged by IMF for loans under PGRF – lending facility for low income countries.
• India had originally agreed (in March 15, 2005), to contribute up to SDR’s 1.5 million over the next five years to support the Fund’s efforts to Emergency Natural Disaster Assistance (ENDA) for the PRGF eligible member countries.  Accordingly, India paid an amount of Rs. 1,86,07,305 (i.e. equivalent to SDR 300000) towards India’s first annual contribution to ENDA facility of IMF in January 2008. Subsequently, on receipt of request from the IMF, the matter has been reconsidered and accordingly India will be making the payment of remaining committed amount of SDR 1.2 million in two instalments of SDR 600,000 each by December 2009. In view of this, India paid an amount of Rs. 4,42,08,665 (i.e. equivalent to SDR 600000 at the rate of Re 1=SDR 0.013752) towards India’s second contribution to Emergency Natural Disaster Assistance Facility of IMF in February 2009.

Heavily Indebted Poor Countries (HIPC) Initiative / Multilateral Debt Relief Initiative (MDRI)

• The Multilateral Debt Relief Initiative (MDRI) provides for 100 percent relief on eligible debt from three multilateral institutions, viz.  the IMF, the International Development Association (IDA) of the World Bank, and the African Development Fund (AfDF) - to a group of low-income countries. In June 2005, the Group of 8 (G-8) major industrial countries proposed that three multilateral institutions—the IMF, the International Development Association (IDA) of the World Bank, and the African Development Fund (AfDF) - cancel 100 percent of their debt claims on countries that have reached, or will eventually reach, the completion point under the IMF-World Bank Heavily Indebted Poor Countries (HIPC) Initiative. The HIPC Initiative entailed coordinated action by multilateral organizations and governments to reduce to sustainable levels the external debt burdens of the most heavily indebted poor countries. The initiative is intended to help them advance toward the United Nations' Millennium Development Goals (MDGs), which are focused on halving poverty by 2015.  At the IMF, it was agreed that all countries with per-capita income of US $ 380 a year or less (HIPCs and non-HIPCs) will receive MDRI debt relief financed by the IMF’s own resources. HIPCs with per capita income above that threshold will receive MDRI relief from bilateral contributions administered by the IMF. India endorsed Multilateral Debt Relief Initiative (MDRI) in September 2005. Under the HIPC initiative, India has given debt relief to the tune of Rs. 120.08 crores to seven HIPCs (viz. Guyana, Mozambique, Nicaragua, Tanzania, Uganda, Zambia and Ghana).   

• For comments/ clarifications/ feedback  on this section, please contact 
  Mr. Anuj Arora, Director at Email mr[dot]aroraanuj[at]gmail[dot]com

   

  
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The World Bank Group (www.worldbank.org)  

The World Bank is among the world’s leading development institutions with a mission to fight poverty and improve living standards for people in the developing world by promoting sustainable development through loans, guarantees, risk management products, and (non-lending) analytic and advisory services.  The World Bank is one of the United Nations’ specialized agencies. The member countries are jointly responsible for how the institution is financed and how its money is spent. The World Bank concentrates its efforts on reaching the Millennium Development Goals aimed at sustainable poverty reduction.   

The World Bank Group consists of:

1.      The International Bank of Reconstruction and Development  (IBRD)
     http://www.worldbank.org/ibrd

2.      The International Development Association (IDA)
     http://www.worldbank.org/ida

3.      International Finance Corporation (IFC) 
    http://www.ifc.org/

4.      Multilateral Investment Guarantee Agency (MIGA) 
    http://www.miga.org/

5.      International Centre for Settlement of Investment Disputes (ICSID)
    http://icsid.worldbank.org/ICSID/Index.jsp

The International Bank for Reconstruction and Development (IBRD) was established in 1945 and has 186 members at present. IBRD aims to reduce poverty in middle-income countries and creditworthy poorer countries by promoting sustainable development, through loans, guarantees, and non-lending services, which include analytical and advisory services. The IBRD is owned by the member countries whose voting power is linked to its capital subscription based on the country’s relative economic strength.  

The International Development Association (IDA) was established in 1960 and currently has 169 members. IDA is the concessional arm of the World Bank and plays a key role in supporting the Bank’s poverty reduction mission. IDA assistance is focused on the world’s 79 poorest countries, to which it provides interest-free loans (known as ‘credits’) and other non-lending services.  

India and The World Bank(www.worldbank.org.in)  

India is a member of all the institutions of the World Bank Group except ICSID. India is one of the founder members of IBRD, IDA and IFC. World Bank assistance in India started from 1948 when a funding for Agricultural Machinery Project was approved. World Bank resident mission was established in India in 1957. In August 1958, the first meeting of the Aid India Consortium was held at Washington DC under the aegis of the World Bank. First investment of IFC in India took place in 1959 with US$ 1.5 million. India became a member of MIGA in January 1994.  

India has an Executive Director, in the Board of Directors of IBRD/ IFC/ IDA/ MIGA. The executive Director from India represents a constituency comprising of four countries: India, Bangladesh, Bhutan and Sri Lanka. Mr.  Pulok Chatterji represents India in the Board of Director w.e.f. 1^st February 2009. Mr. Kazi M. Aminul Islam from Bangladesh is currently the alternate Executive Director for this constituency.

India ’s Shareholding  

IBRD: India holds 44,795 shares amounting to US$ 5,403.8 million out of the total IBRD subscription of 1,573,349 shares amounting to US$ 189,801 million. The voting power of India is 45045 votes comprising 2.78% of the total voting power as a country. However, as a constituency (comprising of four countries – India, Bangladesh, Sri Lanka and Bhutan), India has 54,345 votes comprising 3.40% of the total.  

IDA: India has 573,783 votes comprising 3.16%. However, as a constituency (comprising of four countries – India, Bangladesh, Sri Lanka and Bhutan), India has 802,820 votes comprising 4.44% of the total.

MIGA: India has 5,371 shares with a voting power of 2.56%. As a constituency India has 7207 comprising 3.30% of total voting power. Bhutan is not a member of MIGA and as such in MIGA the constituency comprises of other three countries.

IFC: India is currently holding 81,342 shares of IFC with a voting power of 3.38%. As a constituency India has 99,234 votes comprising 4.12% of total voting power. 

World Bank Lending to India (IBRD and IDA) 

India has been borrowing from the World Bank (through IBRD and IDA) for various development projects in areas of poverty alleviation, infrastructure, rural development, human resource development, etc. IDA funds are one of the most concessional external loans for GOI and are used largely in social sector projects that contribute to the achievement of MDGs. IBRD funds are semi – concessional and of a longer maturity and therefore, cheaper than commercial external borrowings. GOI utilizes IBRD loans primarily for infrastructure projects.  

India has been committed around US$ 73.93 billion by the World Bank so far (upto June 2009).  The commitments for the past 5 years (FY of GOI) have been as follows: 
 

Terms and Conditions of World Bank Lending to India  

Current Terms and Conditions of World Bank Lending to India  

IBRD Loans (Variable Spread Loans)  

IBRD Loans (Flexible Loan)  

From February 12, 2008, the IBRD has consolidated its loan offerings, the Fixed Spread Loan (FSL) and Variable Spread Loans (VSL), into one product line - the IBRD Flexible Loan or IFL. FSLs and VSLs are no longer available for new loan commitments.  

IDA Credits

Repayment of principal amount with interest, based on the terms of the loan/credit agreement between the Government of India and the World Bank, is made by the Government six-monthly as per the amortization schedule of the loan/credit by keeping necessary provisions in the budget each year.  

Country Assistance Strategy (CAS):

Country Assistance Strategy (CAS): The World Bank assistance programmes are guided by a Country Assistance Strategy (CAS), which sets out how the World Bank Group proposes to build a growing partnership with the Government of India (GOI). The CAS period consists of four years. The CAS for the Bank FY 2009-12 provides a framework to deal with the challenges of achieving rapid, inclusive growth, ensuring sustainable development, and improving service delivery, with a cross-cutting focus on improving the effectiveness of public spending and achieving monitorable results.

The focus of the CAS is on:

• Achieving rapid, inclusive growth

• Ensuring sustainable development

• Increasing the effectiveness of service delivery

The country assistance strategy for India can be accessed at  http://go.worldbank.org/1AE120SI10

Current Portfolio

Details of the World Bank funding in India since the start are available on the World Bank website, at the URL address – http://go.worldbank.org/63DY8HX2R0  The current commitment portfolio of World Bank funded projects in India consists of 62 projects (as on 30^th June 2009) with total committed amount of US$14.86 billion.

The sector-wise and state-wise current portfolio distribution (in US $ million) is as follows:-

State –wise ongoing portfolio distribution: (as on 30.6.2009)

(in US$ million)

Sector –wise ongoing portfolio distribution:

Utilization of World Bank Funds

The details of disbursement under the World Bank projects are available at www.aaad.gov.in  

India and International Finance Corporation (IFC) (www.ifc.org)  

India is one of the founder members of the IFC, an affiliate of the World Bank established in 1956 to promote growth in private sector & joint enterprises mostly in manufacturing and infrastructure sectors. IFC provides, without government guarantee, both equity and loan capital to the private/joint sector enterprises in which it participates. The maturity period for loans ranges from 7 to 12 years and interest rates vary from loan to loan depending upon maturity and currency components of loan and risk perception. IFC investments in India are subject to country clearance from Government of India/Reserve Bank of India as the case may be (unless it is covered by the Automatic Approval Scheme). Total commitment of IFC in India (in the form of loan and equity) during the last three Financial Years was to the tune of US $ 782 million, US $ 2200 million and US $ 866 million respectively during FY 2006-07, 2007-08 and 2008-09.  

For comments/ clarifications/ feedback on this section, please contact 
Mr. D. K. Singh, Director at Email dk[dot]singh[at]nic[dot]in

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Asian Development Bank (ADB) (http://www.adb.org/)

 India’s Membership of ADB and its Status  

India became a member of the Asian Development Bank (ADB) as a founding member in 1966. The Bank is engaged in promoting economic and social progress of its developing member countries (DMCs) in the Asia Pacific Region.  The main instruments that it uses to do this are making loans and equity investments, providing technical assistance for the preparation and execution of development projects and programs and other advisory services, guarantees, grants and policy dialogues.  ADB has 67 member countries (including 48 regional and 19 non-regional members), with its headquarters at Manila, Philippines.  

India borrows from the ADB within the overall external debt management policy pursued by the Government which focuses on raising funds on concessional terms from less expansive sources with longer maturities. We started borrowing from ADB (Ordinary Capital only) in 1986.  Although India is eligible to draw partly from the Asian Development Fund (ADF) which provides concessional funding, India has consciously opted out of this facility to allow the Least Developed Countries (LDCs) to avail of this facility.

The ADB follows the calendar year for all its programs and projects.  ADB’s authorized and subscribed capital stock is approximately $ 56 billion of which India’s current subscription is $ 3.18 billion, spread over   a total number of 224, 010 number of shares (6.317% of the total share).  India’s paid in capital is $ 222 million and callable capital is 2.96 billion approximately as on 31^st December, 2009. 

TERMS AND CONDITIONS OF ADB LOANS  

Ordinary Capital Resources (OCR) Charges  

Rate of Interest

India has been accessing ADB’s OCR which is LIBOR-based loan (LBL) product since its introduction on 1^st July 2001. Prior to that from 1986, India had accessed Pool based Multicurrency loans.  Until June 30, 2001 interest on the earlier loans was 6.70% (US $ loan), but, under the LBL, the interest rate is floating and current applicable rate is LIBOR + 20 bps for loans negotiated on or after 1^st October 2007.

Commitment charges  

For project loans negotiated prior to December 31, 2006 commitment charges are levied @ 0.75% on: (i) 15% of undisbursed loan balances for the first years; (ii) 45% of undisbursed loan balances for the second year; (iii) 85% of undisbursed loan balances for the third year; and (iv) 100% of undisbursed loan balances from the fourth year onwards.  

India has been consistently raising the issue of lowering the cost of ADB financing.  Keeping in view the overall reduction in the cost of international development finance, ADB has also changed its terms of lending to reduce the cost of lending. For project loans negotiated on or after 1^st January 2007, the commitment charges are levied on a flat rate of 0.35% on the un-disbursed loan balances. This has been further reduced to 0.15% for both Program and Project Loans for loans negotiated on or after 1^st October 2007.

Front-end Fee

The ADB Board in their meeting on 7^th December 2007 has announced the elimination of the front-end-fee for all loans negotiated on or after 1^st October 2007.  Earlier, it was one-time payment of 0.5% of total loan amount.

Normal Repayment period

The normal repayment period for a Project Loan is 20 years plus a grace period of 5 years and for the Program Loan it is 15 years plus a grace period of 3 years.  

Graduation Policy

Under the Graduation Policy approved by ADB in December 1998, developing countries are classified on the basis of (i) per capita GNP and (ii) Debt repayment capacity. Modification to this policy has been recently approved by the Board in April, 2008.  DMCs are categorized in to three groups:

Group A       _        DMCs with access to only Asia Development Fund (ADF)

Group B       _        Access to a blend of ADF and OCR

Group C        –        Access to OCR only  

India is placed in Category B, i.e., we have to contribute more than 20% of the total cost of the Loans drawn (usually in the form of counterpart Staff and Infrastructure costs). As stated earlier, although India is eligible for ADF, it does not access the facility in order to avoid crowding out other eligible countries.

COUNTRY COVERAGE  

Loans from the ADB have been accessed for projects in all regions of the country.  Prior to 2003, loans were concentrated on projects in the states such as Madhya Pradesh, Kerala, Rajasthan, Karnataka, Chhattisgarh, Assam and Gujarat.  In keeping with the general policy of the Government to promote balanced growth across the country, loans are now being extended for projects in Uttarakhand, Jammu & Kashmir, Jharkhand, Bihar and the North Eastern States apart from central sector projects such as the NHDP and PMGSY.

STATUS OF PROJECTS      

ADB’s loan approvals to India during   2006, 2007 and 2008 have been US $ 1260 million, US $ 1232.1 million and US $ 1777.8 million.  

During 2009, till 31.12.2009, the following projects have been approved/signed:  

As on 31.12.2009, for the calendar year 2009, against a target of $ 1.442 billion for contract awards, the achievement has been $ 1.673 billion (116%) and the disbursement achieved is US $ 1.351 billion against a target of US $ 1.413 billion (96%) including loans and Tsunami grant.

SECTORWISE OPERATIONS  

ADB has been supporting Government’s efforts to combat poverty through infrastructure-led growth.  The approach paper of the 11^th Five year Plan also focuses on infrastructure investment, social development, and agriculture and rural development to make growth more inclusive.  The need to generate productive employment opportunities, improve public service delivery, and balance the environment-growth trade-off is also emphasized.  Support for infrastructure development – transport, energy, and urban – remained the core focus of our assistance from ADB.

A Sector wise breakup of ADB’s assistance to India is as under:  

(As on 31.12.2009) 

PRIVATE SECTOR OPERATIONS  

a)       ADB’s non-sovereign operations in the country are coordinated by its Private Sector Operations Division.  With India’s increased pace towards infrastructure development through the PPP mode, ADB’s non-sovereign operations need to be stepped up through financing private infrastructure projects without in anyway diminishing its engagement with the public sector.  We have emphasized that while we support increase in non-sovereign lending, it cannot be at the cost of Public sector projects.  Both must grow apace, with non-sovereign lending taking a major share of additional resources that are mobilized.

b)       Local Currency Lending – In order to widen the funding of resources for infrastructure projects, ADB has been seeking Government of India’s (GoI) approval for raising resources through the local currency loan (LCL) route. In 2004, ADB made their first representation for LCL by raising Rupee Bonds in the India market on terms and conditions prescribed by RBI.  GoI approved issuance of Rupee Bonds for an amount of Rs. 5 billion with a maturity of at least 10 years subject to stipulated conditions.  In 2005, GoI again approved raising of Rupee Bonds for an amount not exceeding Rs. 15 billion for a minimum maturity of 05 years for lending to infrastructure projects.  IN 2007, GoI has accorded approval for Rupee financing of Rs.29.75 billion to ADB to fund domestic infrastructure through the currency swap route for a maturity of more than 10 years subject to some conditions.  RBI has also allowed 25% of the funds raised to be used for lending through select intermediary FIs involved in financing infrastructure projects.

COUNTRY STRATEGY PROGRAM OF ADB IN INDIA  

Country Strategy Program (CSP) has been finalized for calendar year 2010 only and the following projects are proposed:  

ADB’s TECHNICAL ASSISTANCE PROGRAM  

ADB provides two types of Technical Assistance (TA) – (i) Direct TA for Project Preparation and Capacity Building which is designed, financed and implemented based on country and sub-regional strategies that ADB and its developing member countries agree upon; and (ii) Indirect assistance which is part of ADB’s wider role in advancing and disseminating knowledge on development issues in the Asia Pacific Region.  Total 60 Technical Assistances (TAs) for $ 67 million are are going on in different sectors in the country.

NEW AREAS UNDER ADB COVERAGE  

New Initiatives  

        i.            Inclusive Tourism Infrastructure Development Program for loan assistance of US $ 250 million is to be negotiated shortly.  

      ii.            Khadi Reforms and Development Project for loan assistance of US $ 150 million has been signed on 22^nd December, 2009.  

    iii.            India has contributed US $ 1 million to the creation of an India Trust Fund (later called India-ADB Co-Financing Fund), in the ADB with the corpus of US$ 1 million dedicated to supporting ICT and renewable energy related projects in the 14  Developing Members Countries (DMCs) in the Pacific region  

    iv.             A Technical Assistance on Provision of Urban Amenities in Rural Areas (PURA) was recently got approved by ADB. The scheme is proposed to be implemented at about 10 clusters in PPP mode with core funding from the scheme of PURA and finances from the private developers along with participation of the user community.  

      v.            DEA is implementing a Technical Assistance programme on India’s Municipal Finance Study. The long term goal of TA is to assist Government in formulating a possible direction for the fiscal reform programme by assessing the fiscal de-centralisation and budget and revenue systems at the Municipal Levels.  The immediate purpose is to identify key reform measures of Municipal Finance in India’s rapidly changing urban context.  

    vi.            The State Govt of Himachal Pradesh  is working with ADB for registration of Himachal Pradesh Clean Energy Development Investment Program (HPCEDIP) as a Clean Development Mechanism (CDM) project under the United Nations Framework Convention on Climate Change (UNFCCC). This is linked to the ADB loan of $800 million for clean energy development in the State and with this the State Corporation would be amongst the first in the field to develop such a regime in the sovereign sector.  

  vii.            ADB has approved a Technical Assistance on Integrated Water Resource Management (IWRM). It aims at contributing to livelihood enhancement of water scarce and rain-fed areas of the State through a productive and sustainable water resources management  on a river basin approach.

MONITORING OF THE PROJECTS

A.      Tripartite Review  Meetings (TPRM)

In order to streamline issues and closely monitor the disbursements as also provide advice and for troubleshooting difficult and ticklish problems, a system of Tripartite Portfolio Review Meetings had been initiated at the level of Joint Secretary in which the executing agencies and the ADB participate.  These Tripartite Portfolio Review Meetings are held thrice a year.  Nodal officers have been appointed in each of the States who cater to all ADB Projects and are in regular correspondence with DEA.  The ADB have lauded the efforts of the Government of India and have included this in the list of International Best Practices.    

B.       Project Readiness Checklist :

DEA and ADB have now formalised a ‘Project Readiness Checklist’ (at Annexure-A) which is being adhered to.  This ensures adequate preparedness of projects before implementation.       

C.         Visit to Project sites by DEA officers:    

DEA officers would be visiting the project sites for monitoring and evaluation of the progress of the implementation of the projects. Parameters for appraisal of Project Implementation Progress (Annexure-B) have been devised to get the status of the projects.

D.         Regular Wrap-up meetings of project review missions, in which line
          Ministries are invited and in some cases Executing Agencies are also
          called. This is done at the level of Director.  During these meetings
          detailed review of procurement related issues, issues related to
            relief & resettlement, project monitoring units, audit & accounting
            and other miscellaneous factors impacting the project are done. 
          Follow up with EAs is done through confirmation of Aide Memoire (AM)
            submitted of the mission.   

ANNEXURE –A

                                      Project readiness checklist  

SN	Milestones	Action points	Responsible agency
1	Before loan fact-finding mission of ADB	PPTA, if any, is substantially completed	ADB/EA
		1.2 Feasibility study report and preliminary design completed	EA
2