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Why so much cry by the Congress Party on loan taken by PM Modi from Asia Infrastructure Investment Bank (AIIB) – the Chinese Bank?

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Akshaan Gupta
I am a Chartered Accountant. Love to read and write about current affairs. There is always a reason for something and one can know only by apprising themselves with the facts and truth.
 

Congress Party accused Modi Government, who took two loans totalling Rs 9,202 crore from a Beijing-based multilateral development bank in the thick of the border standoff. They lashed on to Modi Government on the borrowing taken from AIIB, despite Chinese troops who killed 20 Indian soldiers in the Galwan Valley on 15 June 2020.

The basic fundamental of AIIB being a Chinese Bank is incorrect. The Asian Infrastructure Investment Bank (AIIB) is a multilateral development bank with a mission to improve social and economic outcomes in Asia. Headquartered in Beijing, which began operations in January 2016 and has now grown to 102 approved members worldwide. India as the second-largest shareholder with 7.6% as the voting rights with China having 26.8% voting rights. India has invested in the shares of the bank. So what’s the issue when Modi Government borrows money from AIIB?

Read the Members of AIIB here.

AIIB’s senior management team includes Dr. D. J. Pandian who oversees all sovereign and non sovereign lending in South Asia and South East Asia. He is also responsible for the end-to-end management of the Bank’s project pipeline in these regions, from identification to implementation. From 2016 to 2019, Dr. Pandian served as AIIB’s Chief Investment Officer. Further, Sameer Kumar KHARE is one of the directors in AIIB who is an Additional Secretary in the Department of Economic Affairs, Ministry of Finance in India.

Why was the loan taken?

On 8 May 2020, AIIB approved a loan of USD 500 million (Rs 3,681 crores) to support India’s efforts to prevent, detect and respond to the threat posed by COVID-19 by strengthening the preparedness of the country’s national health system. The project was funded by AIIB’s Covid-19 Crisis Recovery Facility created to adapt to the urgent financing needs of the Bank’s members impacted by the pandemic. Further, On 19 June 2020, AIIB had approved a USD 750million loan (Rs 5,521 crores) to India to assist the government to strengthen its response to the adverse impacts of the COVID-19 pandemic on millions of poor and vulnerable households. The loan is Co-financed with the Asian Development Bank, the budgetary support will go toward bolstering economic aid for businesses, including for the informal sector, expanding social safety nets for the needy, and strengthening the Indian’s health care systems.

This is not the first time India has taken a loan from AIIB. On 15 November 2019, AIIB had approved USD 500 million for Mumbai Metro, which is expected to fast-track work on Mumbai’s suburban railway network, improving the safety and daily commute of millions of passengers across the city. The funds will contribute to a quadrupling of Virar-Dahanu Road corridor (64 kilometers) to provide an extension of the suburban railway service to connect peripheral areas with Mumbai. The project will also see the construction of a new suburban railway corridor between Panvel and Karjat localities (28 kilometers) to cater to commuters in the area under rapid urbanization and population growth

On 3 May 2017, The Board of Directors of the Asian Infrastructure Investment Bank (AIIB) approved a loan of US$160 million in support of the Andhra Pradesh – 24×7 Power for All project in the Republic of India with the objective to strengthen the power transmission and distribution system in the State of Andhra Pradesh.

More than two million people living in rural areas of Andhra Pradesh, India, stand to benefit from an improved road network connecting them with markets, schools, and other services after approval was provided by the Board of Directors of the Asian Infrastructure Investment Bank (AIIB) for a USD455-million loan. This project brings AIIB’s total commitments in India to USD 1.769 billion. The project aims to construct and upgrade more than 6,000 km of all-weather roads connecting around 3,300 rural habitations in Andhra Pradesh. In addition to improving transport links to facilitate the delivery of agricultural and farm goods to markets, all-weather connectivity is also expected to result in better health and education outcomes. School attendance rates, especially among girls, are expected to improve.

Approximately 1.5 million rural residents in Madhya Pradesh, India, stand to directly benefit from improved livelihoods, education, and mobility with the USD 140-million loan approved by the Board of Directors of the Asian Infrastructure Investment Bank (AIIB). The project, cofinanced with the World Bank, aims to improve rural road connectivity and management for residents of 5,640 villages who use the rural roads for daily activities. Livelihoods of the rural population will be improved by expanding income earning opportunities through better farm-to-market road connections. Moreover, more children are expected to enroll in higher education programs and school attendance is expected to improve. The road maintenance pilot under the project will employ more women, contributing to gender equality and income generation.

Asian Infrastructure Investment Bank (AIIB) approved a loan of US$329 million to build access roads to approximately 4,000 villages in all 33 districts of Gujarat, India. Insufficient road connectivity into these villages limits their ability to access healthcare services, bring their goods to market and access transportation for their children to attend school. This project will construct and upgrade district and farm-to-market roads for the villagers and provide approaches to educational institutions, schools, and hospitals. The upgraded road access is expected to have a positive impact on women and girls by improving school attendance rates for girls who currently drop out of school due to a lack of access to all-weather roads

Hence, the Congress party without knowing the facts starting accusing PM Modi for the loan taken. In fact, the loan taken is for the welfare of the poor and helping them to survive in this difficult days of Pandemic. Congress party and the youth congress members have only one agenda to mislead the people.

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Akshaan Gupta
I am a Chartered Accountant. Love to read and write about current affairs. There is always a reason for something and one can know only by apprising themselves with the facts and truth.

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