 "ADB to increase lending to India")
The bank wanted to increase lending to India from up to $3 billion dollars a year on an average to $4 billion a year by 2018, he said, and expressed support to initiatives such as Make in India, Skill India, Clean India and smart cities.
The visiting ADB president told a press conference that while the government might face some difficulties in carrying out reforms such as those related to labour, there is tremendous people's support for these initiatives to spur growth.
He also made a case for further rate cuts by the Reserve Bank of India (RBI), saying 7.25 per cent repo rate is not that low.
"ADB aims at increasing its sovereign and non-sovereign lending from the present $7 billion-$9 billion in three years from 2015 to 2017 to $10 billion-$12 billion between 2016 and 2018 using ADB's expanded lending capacity," Nakao said.
India's track record in repayment of loans, Nakao said, was clean and ADB would be looking forward to increasing its exposure in infrastructure, skill development and urban services, among others. "So there are huge financing requirements. India has lot of potential," he said. "India is a good place to increase our lending."
He said ADB would assist the government in the smart cities project in Andhra Pradesh, Rajasthan, Madhya Pradesh, Karnataka, Tamil Nadu, Gujarat and Maharashtra.
Replying questions on whether competition would increase after setting up of BRICS Bank and the Asian Infrastructure Investment Bank (AIIB), he said ADB was working with AIIB to meet the funding requirement for the region.
"There are many areas of cooperation and we will be co-financing the projects in infrastructure," he said, adding that efforts were being made to speed up the process for approval of loans for projects.
In addition to making ADB more competitive, he said the multi-lateral agency also wanted to speed up reforms within the organisation. ADB has also decided to delegate authority to its India office to take decisions with regard to funding of projects.
He held a press conference after meeting Finance Minister Arun Jaitley and Urban Development Minister Venkaiah Naidu.
In discussions with Jaitley, Nakao expressed strong support for reforms in the labour market as well as the proposed Goods and Services Tax. "The government's proactive role in pushing key reforms will lead to an improved business climate... strong commitment in the Budget on raising public investment by 25 per cent in critical infrastructure sectors such as roads, railways, and urban development will further crowd in much-needed private investment," he added.
ADB had projected India to grow 7.8 per cent in the current financial year, higher than the 7.5 per cent predicted by other multilateral lenders such as the World Bank and the International Monetary Fund. Official projection stood at 8.1-8.5 per cent for 2015-16.
ADB would come out with revised projections in July, but Nakao refused to say if the revisions would be upwards or downwards.
Answering questions on the interest rate, Nakao said: "7.25 per cent (policy repo rate) is still not excessively low...if inflation rate is lower, of course, interest rate can come down." He, however, clarified that he did not want to "predict monetary policy of India."