The Asian Development Bank on Wednesday announced plans to provide an annual $2 billion loan to India for the next five years till 2017 but warned that the country will have to resolve complex policy and regulatory issues to return to a high growth path.
“Return to a high growth trajectory is possible, but this will require persisting with reforms and resolving some complex policy and regulatory issues, including those relating to land acquisition for industrial activity, environmental clearances, and allocation of licenses for natural resources,” said a release by the multilateral lending agency.
Earlier in October, the agency had trimmed India’s growth forecast to 4.7 per cent in 2013-14 from an earlier forecast of 6 per cent on grounds of supply side bottlenecks and delay in structural reforms.
Though the government has been hopeful of the economy posting a 5.5 per cent growth, other external agencies too have scaled down India’s GDP forecast. The World Bank had slashed its India growth projection to 4.7 per cent, while IMF lowered its India growth estimate to 3.75 per cent for 2013-14.
To sustain high and inclusive growth, ADB said India needs to expand and consolidate structural reforms, remove infrastructure deficit, and improve quality and coverage of basic social services.
Meanwhile, it also announced plans to provide $10 billion lending to India over the next five years as part of its new country partnership strategy for 2013-2017 with India for job creation, improving infrastructure and environmental sustainability. This will also make India the lender’s single biggest client, representing one fifth of its total operations.
The World Bank had earlier this year had promised to provide $3 billion to $5 billion annually for the next four years to meet development needs.