The Asian Development Bank (ADB) on Thursday committed USD 10 billion support for infrastructure building and immediate development needs of less-developed states in the country.
Besides, the Manila-based multi-lateral funding agency decided to increase the annual funding by USD 1 billion to USD 4 billion.
ADB expects India to grow by 7.4 percent in the current financial year and 7.6 percent in 2018-19.
Its President Takehiko Nakao said the ADB stands ready to meet immediate development needs of up to USD 5 billion over the five-year period for less developed states, including Uttar Pradesh, Bihar, Jharkhand, Odisha and Chhattisgarh, addressing critical infrastructure and capacity deficits.
He also confirmed that with ADB assistance, strategic planning for economic corridors is rapidly progressing.
The funding agency is prepared to invest up to USD 5 billion during 2018-2022 for infrastructure building to develop the East Coast Economic Corridor.
Nakao praised progress on attracting investments in manufacturing industries in the Corridor.
"Several reform measures introduced by the government for rationalising tax structure, boosting competitiveness and easing foreign direct investment norms in crucial sectors like infrastructure will contribute to its objective of achieving high and inclusive economic growth," he said.
Nakao added that further reforms both at central and state levels for improving efficiency in the land and labour markets and strengthening the banking sector will boost growth.
"I generally commended the government's resolve to address some of these issues. There has been some progress. However, there are some areas which require further strengthening of reforms. One of the issues for India is to integrate more with the global market," he said.
Besides, he said, labour practices still need some rationalisation.
"Regulation about FDI should also further be reformed. Land acquisition is a politically difficult issue. I hope that states and other authorities look at this. It is improving but still there is room for improvement," he said.
During the day, he met both Finance Minister Arun Jaitley and Commerce and Industry Minister Nirmala Sitharaman.
Both discussed a wide range of issues pertaining to enhanced cooperation between India and ADB.
Jaitley thanked ADB president for the continued support from ADB for development projects in India and for agreeing to enhance the lending operations of the Bank in India from USD 3 billion a year to USD 4 billion per annum.
ADB President, who was on a 3-day visit to India, also assured to expand the bank's assistance to relatively lesser developed states in the area of power (including renewable energy), transport, urban development, and health services.
Building on an ongoing USD 631 million project in the Vizag-Chennai section approved by the ADB Board in 2016, Nakao conveyed ADB's readiness to expand the Corridor further south in Tamil Nadu.
This combined total of USD 10 billion in major investments would be part of ADB's new country strategy, which proposes annual lending over the 5-year period of USD 3-4 billion from sovereign and non-sovereign operations.
The final amounts will depend on the implementation and readiness of projects under preparation and the borrowing policies of the central and state governments, he said.
"On the other hand, the government wants us to lend more but it also cares about the deficit. In short, the government is happy with our ideas but it is also asking us to do things in a speedy manner," he said.
Asked as to why India has been given USD 10 billion commitment, Nakao said, the discussion is that the international community should invest in infrastructure to raise growth.
"We must also invest more in climate change infrastructure. And also because of the sustainable development goals of the UN, we should make further efforts in poverty reduction," he said.
India is one of the important countries and ADB is also lending to China, though not in an increasing manner but the bank is keeping our lending to China, he said.
India is important country because of its capacity to implement projects to eliminate poverty, he added.
Nakao also agreed to India's suggestion to set up a regional hub in New Delhi for South Asia region, which could expedite the process of project preparation and delivery for India and other countries in the region.
India and ADB also agreed to increasingly adopt a country system for procurement and social and environmental safeguards for ADB-assisted projects in a time-bound manner.
During meeting with Sitharaman, both discussed the progress in Vizag-Chennai Industrial Corridor (VCIC).
She further mentioned that the Northern Extension of the ECEC from Vizag to Odisha and West Bengal is very important and ADB should accelerate the work thereon.
The minister also mentioned that the southern extension from Chennai to Kanyakumari should include extension up to Kollachal Port and even at Vizhinjam, as this would accrue several economic benefits to these areas.
Nakao appreciated the Government reforms towards the GST implementation and termed them as historic, he said.