Vasudeva Kutumbakam has been the ethos that India has practiced for centuries, and generations of Indians believe in Atithi Devo Bhava, and I am delighted that we have delegates from over 86 countries in my own city of Mumbai. Over 3,000 delegates, who have come to participate in this 3rd Annual General Meeting of AIIB.
These are all signs of a resurgent India, an evolving India, an India that is becoming more and more relevant around the World. The fact that in a short span of 2 years, we have hosted in India three very major events related to multilateral development banks. We first had the New Development Bank Annual Meeting in India, followed by the Africa Development Bank meeting in Gandhinagar and now the AIIB in quick succession.
All of these reflecting the new found confidence that we have in our ability to host such major events and also the fact that the world is looking to India, as I said earlier in the day, probably the world’s biggest and best opportunity for the public sector, for the private sector, for multilateral banks, for international banks, for investment in infrastructure creation, for investment in technology, for investment in innovation, research. And it is this newfound confidence about India’s growing strength that is attracting international bodies to come and operate out of India, come and participate in this big opportunity that India presents.
We in India are delighted to be a part of AIIB. It is a matter of great pride for all countries and founding partner associated with AIIB that a concept that was first mooted in 2014 was able to mature in a short span of 6 to 7 months into an international agreement and by 25th December, 2015, we actually had a Multilateral Development Bank in place, in operation with India as the second largest shareholder, holding over 8% of the stock of capital of the AIIB.
It’s again a matter of great happiness for us that amongst the lending that AIIB has approved so far, India is the largest recipient of development capital, development funds with over 25% of the fund commitment so far made by AIIB of about 4.2 billion dollars. We are the largest recipients in India.
In some sense, the growing need for multi-development banks in the Asian context also resonates very well with the thrust that the Modi government is giving to creating sustainable infrastructure in the country. We do believe that a robust framework, which is predictable, simple, easy to navigate and also very stable, is necessary for infrastructure to come into the country, investment to come into the country. We also believe that highest levels of probity, transparency and accountability are very important ingredients for the success of investments in infrastructure. And our energies and efforts in the last 4 years have been focused in creating that framework, which excites investment into India.
We have also had huge focus on sustainability – be it our programme to promote renewable energy in the country, be it our programme for the smart cities mission, be it the vision of Prime Minister Modi that by 2022, every citizen in this country will have a shelter on his head, with 24X7 electricity, with a good toilet, with clean drinking water, access by road to his village, to his home, internet connectivity through the length and breadth of the country to digitalise the economy going forward.
An honest economy where formal business will be the credo, will be the way we work, good healthcare facilities, good education in the vicinity of each ones homes and it is that new India that we are trying to create in which the role of Multilateral Development Banks, like the AIIB, are extremely important. We once again welcome all the delegates to our city to the city of Mumbai, a city which, I believe is great fun, is a lovely city, a city which has improved its rankings in the Swachhta index in the last year significantly, a city which is engaging with international global efforts for better quality of life for the people of the city, a city which is host to one of the largest bouquet of infrastructure projects under the leadership of Chief Minister Shri Devendra Fadnavis where we are looking at expanding the rail network, the metro network, the road network. A new airport coming up on the outskirts of the city, a trans harbour link to connect the island city to the mainland.
In one sense, truly reflecting the spirit of an emerging new India. So thank you very much friends from the media for the interest you have shown in this event, in this very-very important engagement that Mumbai and Maharashtra are playing host to and an engagement which all Indians are proud of.
Q: Just want to ask the focus here with AIIB will be to, sort of, I don’t want you to comment so much as much on the competition that, you know, the funding agencies are buying for the slice of the Indian infrastructure pie as much as a comment on the focus of AIIB and how it will be different from the other multilaterals.
A: AIIB being a newer organisation has focused very deeply in creating robust processes within the organization. So, I must say that the risk controls, the auditing processes that AIIB has developed as an MDB are truly exceptional. They go beyond but we have seen in the past. So, that is one distinguishing feature of the AIIB. Also, the AIIB has restricted its focus investments to certain operational areas like rural infrastructure, energy and power, environmental protection, transportation and telecommunication, water supply and sanitation and urban development and logistics. So, largely, it’s very-very focused only on infrastructure projects, whereas many multilateral development agencies go even beyond that into a lot of social spending and social projects. The AIIB, as it stands today, is an organisation that will help create sustainability in the long run and I think the Asian context that it is focusing on is very important for India.
A: We are open. In fact, I met President Jin at Davos on 24th of January earlier this year and he expressed a lot of interest in taking up the next level of high-speed corridor projects that India would envisage going forward and we had a very engaging discussion, particularly, on the Golden Quadrilateral and it’s laterals, which is the real area where we have a lot of demand for high-speed connectivity and AIIB would possibly be in the horizon for any such projects in the future.
A: If I can add to your question. Our financing needs are so enormous that we maximize our borrowings from all the multilaterals, including the AIIB, and not only multilaterals, but also bilaterals. So, the HSR funding from Japan which we used to do about 3 billion dollars a year is now expected to go up to about five billion dollars in year. So, we need our funds from everyone. So, everyone is welcomed. Thank you
Q: Goyalji, Umesh Kumar, senior journalist from Delhi, also a Mumbaikar. My question – Yesterday I asked one question to the vice president of the AIIB that is instead of investing only on the infrastructure, we have the backward areas like North Eastern states and Naxalite belt, why not focusing on horticulture areas, etc. My second question is, last year recapitalization government has kept some of the banks… I am just comparing just give me a chance. So, our banks, we have the capability like SBI is the giant bank, one of the biggest in the world. So will there be any business effect on our nationalized banks?
A: I think as regards the first question, every organisation has its niche strengths and this organisation’s strengths are in a certain level of focus areas on infrastructure which I just mentioned. There are other organisations which can support horticulture, agriculture and we do continue to engage with different wings of the World Bank, which are relevant to those projects, and certainly, our Indian Banking System is very-very strong and we are very proud of the Indian banks. They are doing yeoman’s service in the economic development of the country, but there is no contradiction between the two – these projects, the funding that the Multilateral Development Banks give are many times in conjunction with what other banks or the other financers give. There is no contradiction between the two.
Q: Hello sir, I am Tanya, I am from Mint. I have a question regarding the political context that AIIB works in. It’s widely perceived as being a Chinese led Bank and its investments are tinged with that context. We have seen one of the first projects that AIIB sanctioned was the China-Pakistan economic corridor towards rebuilding the Silk route. So, how does the Indian government respond to this, you know, are there particular concerns that you would have?
A: Well, I just mentioned, India is the largest recipient, almost 1.2 billion dollars out of 4 and half billion dollars that have been sanctioned so far, have been received by Indian projects – some in the public sector, some also in the private sector. They are already looking at a bouquet of almost 9 or 10 more projects to be financed in India. So, I personally believe every multilateral bank has many dimensions and one cannot dictate what projects they will invest in other countries. I think we should look at what we can do and what we can benefit out of such engagements rather than focusing our effort on trying to see what they should not be doing.
Q: So, there are no political concerns about the China-Pakistan corridor?
A: These are independent organizations. It’s not a Chinese-led or American-led or a European-led institution. It is always a multilateral Institution.
A: Well, we will put up all our requirements to all Multilateral Development Banks and other available avenues of finance. Whoever gives us the best deal, we are open to it. DFCC is already fully financed, we don’t need any more funding.
Q: Both the DFCCs and the East and West corridors. These have been, funding has been tied up….?
A: …. in which Indian Government works. The democratic framework where rule of law prevails, the very good regulatory environment that we have in India and, today, I personally do not see money as a reason why we will not be able to do good projects. We have to build up our capacities and rapidly expand infrastructure which you have seen in the last 4 years. The thrust and focus of this government has been to expand our infrastructure across the length and breadth of the country.
Q: Sir, Debdeep Choudhary from the Japanese newspaper, Sankei Shimbun. In the earlier seminar also, it was mentioned that in the infrastructure projects in India, land acquisition is a big problem. The AIIB President also mentioned it. How is the government trying to meet this challenge, because we have recently seen in the bullet train project, some protests have come up in Gujarat and Maharashtra. So, what is the plan of the government in mitigating those challenges?
A: Well, we are working in a democratic setup and everybody has a right to raise issues, to make suggestions, to engage with new project authorities and I think it’s incumbent on any good infrastructure developer to take the local communities along with him, involve them in the development of the project and, certainly, highlight what would be good and how it would impact their lives in the future. While with the new land acquisition laws giving four times the market value for the land that is acquired, by and large, we have not faced any major stress in land acquisition any more in the country. There are pockets where, off and on, a little more engagement is required. I have discussed with both the Chief Ministers of Maharashtra and Gujarat and I think the discussions are at an advanced stage.
The environmental and social impact studies either have been completed or are nearing completion and I personally don’t see any stress in getting the land. In fact, the high speed rail corridor has even offered a larger compensation if the land is made available by the land owners by consent and that’s a nice, happy way to implement a project.
So, we have actually gone one step forward to offer an additional 1x of the market price of land. So, really instead of four times, we are willing to pay 5 times if the land comes through consent, otherwise, it will have to go through the acquisition mode. But to my mind, the villages both in Palghar, where there is a little pocket and in the Surat belt, both stand to benefit hugely from the high-speed rail corridor.
The entire stretch Mumbai to Ahmedabad will develop and blossom somewhat like the Beijing-Shanghai sector, which was mentioned in the seminar today as truly taken off as an engine of growth for China. Similarly, I see Mumbai-Ahmedabad as the first such corridor which will expand the economy in the entire region and we also hope to then take this to other areas of the country.
Q: Sir, This is Ashish from PTI. Sir, this was in context of your comments about probity and integrity being an important aspect for the government. Sir, we have seen actions against the Bank of Maharashtra brass.
A: Let’s stick to AIIB at this stage.
Q: Sene from Business Line. So, my question is since Indian banks have shut shops for investment to infrastructure companies, for infrastructure projects. Are we to assume that the only infra-financing will be now government and probably, multilateral agency driven, sort of, or you see some possibilities of private banks also investing in the infra sector?
A: Well, I don’t think Indian banks have shut shop. For a good project, there is no dearth of capital both debt and equity. So, to my mind, Indian banks will continue to play an important role in financing the infrastructural needs of the country. And we will supplement it with Multilateral Development Banks, with Government support. You have seen in the road sector, we have done a lot of hybrid annuity projects in the… we also have viability gap funding given out for many projects. Then, there are many projects where we mitigate the initial risk with government investing and setting up the project and then divesting it or monetizing it at a second stage when the project is mature. So, we are looking at all options and Indian banks will continue to finance such projects, good projects, good promoters. There will be no stopping or bar for that.
Q: I am correspondent from CCTV China. So, my question is – India has huge demand of investment in infrastructure sector. So, I want to know till now has already some project being supported by AIIB or not? And what do you think in future AIIB will help to contribute more? Thank you.
A: Well, so far, the AIIB has already approved several projects in India. I think out of the total 4.4 billion dollars of projects that have been approved, 25 projects which have been approved, India has almost 28%.
1.2 billion dollars worth of projects which have been approved by the AIIB. I am sure these are six projects which have been approved and now yesterday, they have approved a seventh project. So, the 1.2 billion dollars will become 1.4 billion dollars with their recent decision to invest 200 million dollars in the NIIF – the National Infrastructure Investment Fund. I think, another 9 projects worth 2.4 billion dollars which have been posed to the AIIB for funding, of which, four projects worth 860 million are non-sovereign funding, private projects. So, there is a good pipeline of projects that is under consideration of AIIB and we do hope to engage very actively in the future landing activities and future growth of the AIIB through different government and private projects in India.
Q: Sir, this is Anup Roy from Business Standard. What exactly is India’s plan for AIIB in the sense, equity contribution, more equity contribution?
A: See, we have 8.7% share – 20% is paid in cash, the rest is in commitments. Three instalments have already paid, which has been paid by all others. So, at this moment, there is no further capital call. Total paid capital of AIIB – 20 billion dollars – we will have 8.7 % of that.