In a move that could help bridge India’s infrastructural gap, the Asian Infrastructure and Investment Bank (AIIB) has approved $1.5 billion in loans to India for a host of infrastructure-based projects in 2018. While the loan will be utilized for the development of energy, roads and urban centres, there will be a special focus will be on enhancing India’s renewable energy capacity.
With 7.74 per cent equity share in the multilateral development bank, India is only second to China which holds 29.9 per cent. Operating from 2016, the 84-member bank, which was initiated by China, is focussed on supporting infrastructural development across the Asia-Pacific region.
According to India’s Finance Ministry, over the last two years AIIB has approved five projects in India amounting to more than USD 1 billion, while 12 projects worth USD 3.5 billion are in the pipeline. India’s National Investment and Infrastructure Fund will receive an assistance of $200 million as part of the newly approved loan and it is up to the Indian government to decide how to use the money.
While the AIIB is encouraging the transition to renewable energy, it does not oppose investment in coal-related projects entirely. With a demand for at least $125 billion in investments to fulfil its clean energy target of 175 GW by the end of 2022, India is looking at more foreign investments in its renewable energy sector. The AIIB loans are crucial for India given that they do not come with the social and environmental constraints that are characteristic of the financing of western banks.
India will host the third annual meeting of the AIIB in Mumbai from June 25-26 this year.
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