FM asks ADB to focus on pvt sector investment
Chidambaram said higher international energy prices and global imbalances pose a downward risks to growth in Asia.india Updated: May 06, 2006 12:16 IST
Finance Minister P Chidambaram on Friday asked multilateral development finance institution 'Asian Development Bank' to re-adjust its focus from public sector lending to facilitating private sector investment in member countries and reduce its loan charges.
"We believe that ADB needs to re-adjust its focus from public sector lending to a more fleet-footed financial intermediary and knowledge bank that helps developing member countries attract more private sector investment," he said at a session on ADB Board of Governors.
Chidambaram, who chairs the Board, said higher international energy prices and global imbalances pose a downward risks to growth in Asia.
The multiplier effect of ADB's assistance through a public-private partnership model would be much higher than the current approach of reliance on mostly public infrastructure projects, he said.
Despite surging oil prices and the possibility of sharp adjustments in exchange and interest rates induced by widening international payment imbalances, the finance minister expressed optimism on the outlook for growth in Asia and a healthy demand for Asian output in the next few years.
On the initiative for monetary and financial cooperation and integration, Chidambaram asked ADB to follow an approach of consensus and inclusion rather than being exclusionary.
He said the bank's loan charges as compared to the cost of funds from other sources are critical for growth of the the Manila-based institution's business. More
The commitment fee should not be treated as a source of income and it should be possible either to eliminate or substantially reduce the commitment fee through improvements in operations and internal efficiency of the bank," he said.
Pointing out that the country has achieved an average growth of nearly 8 per cent in the last three years, he said: "It is our constant endeavour to address challenges before us by deepening the reforms and to put the country on a trend growth rate of 8 to 10 per cent to eliminate poverty and achieving the millennium development goals by 2015."
The investment rate in India is around 30 per cent of GDP, and has been largely funded by domestic savings, he said adding there is need to supplement domestic resources with foreign investments.