President Nakao was on the last day of a 3-day visit to India. He met with Finance Minister Arun Jaitley, Minister of Commerce and Industry Nirmala Sitharaman, and other senior officials.
Mr. Nakao applauded the government for its effective macroeconomic management, and appreciated the reforms introduced to improve the investment climate and incentivize economic activities over the last 3 years. In particular, he commended the government for its efforts to implement the uniform Goods and Services Tax, effective 1 July, that would create a single national market and spur economic growth by removing tax distortions.
ADB expects India to grow by 7.4% in the current financial year (FY) ending 31 March 2018, and 7.6% in FY2018.
Several reform measures introduced by the government for rationalizing tax structure, boosting competitiveness, and easing foreign direct investment norms in crucial sectors like infrastructure will contribute to its objective of achieving high and inclusive economic growth, Mr. Nakao said. Further reforms both at central and state levels for improving efficiency in the land and labor markets and strengthening the banking sector will boost growth.
Mr. Nakao told the Indian leadership ADB stands ready to meet immediate development needs of up to $5 billion over the 5-year period for less developed states, including Uttar Pradesh, Bihar, Jharkhand, Odisha, and Chhattisgarh, addressing critical infrastructure and capacity deficits.
Mr. Nakao also confirmed that with ADB assistance, strategic planning for economic corridors is rapidly progressing. ADB is prepared to invest up to $5 billion during 2018-2022 for infrastructure building to develop the East Coast Economic Corridor. He praised progress on attracting investments in manufacturing industries in the Corridor. Building on an ongoing $631 million project in the Vizag-Chennai section approved by the ADB Board in 2016, Mr. Nakao conveyed ADB's readiness to expand the Corridor further south in Tamil Nadu.
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This combined total of $10 billion in major investments would be part of ADB's new country strategy, which proposes annual lending over the 5-year period of $3 billion-$4 billion from sovereign and nonsovereign operations. The final amounts will depend on the implementation readiness of projects under preparation and the borrowing policies of the central and state governments.
The new country strategy aims at (i) boosting competitiveness and job creation; (ii) providing inclusive infrastructure and services; and (iii) addressing climate change and environmental challenges. Development of core infrastructure in the transport, energy, and urban sectors would remain the focus of ADB's India operations, along with continuing support to skills development, irrigation and agricultural value chains, and urban health.
Earlier on his visit, Mr. Nakao travelled to Lucknow to meet with Uttar Pradesh Chief Minister Yogi Adityanath and discussed ADB's possible investment in the coming years in smart cities, water supply and sanitation, state and district roads, rapid rail transport, electricity distribution, and heritage restoration. A $300 million loan approved last year to upgrade major district roads in the state was signed in the presence of Mr. Nakao and the Chief Minister.
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