ADB too says India will overtake China in growth

The Asian Development Bank (ADB) has projected that India would grow at 7.8 per cent in 2015-16 and 8.2 per cent the next fiscal, overtaking China.

  • The International Monetary Fund too had made a similar forecast of India’s growth overtaking China’s in 2016.

Important observations made by the ADB:

  • The expected monetary-policy easing and higher capital expenditure on infrastructure projects would lift India’s growth from 7.4 per cent in 2014-15.
  • China’s growth would slow down to 7.2 per cent this year and to 7 per cent in 2016, against an average of 8.5 per cent in the period since the global financial crisis. China has lowered its official economic growth forecast to about 7 per cent for 2015.
  • Developing Asia will see slower growth this year and in 2016. A pick-up in India, cheaper commodity prices and reviving demand in the West will help support the region.
  • As in 2014, this year and the next, the region will continue to grow at an average of 6.3 per cent but slower than the average 6.7 per cent between 2009 and 2013. Lower oil prices will reduce inflation in developing
  • Asia to 2.6 per cent from 3.1 per cent last year.

About ADB:

  • It is a regional development bank established on 22 August 1966 and is headquartered in Philippines.

Aim:

  • to facilitate economic development of countries in Asia. It also aims for an Asia and Pacific free from poverty.

Membership:

  • The bank admits the members of the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP, formerly known as the United Nations Economic Commission for Asia and the Far East) and non-regional developed countries.
  • Currently, it has 67 members – of which 48 are from within Asia and the Pacific and 19 outside.
  • ADB was modeled closely on the World Bank, and has a similar weighted voting system where votes are distributed in proportion with member’s capital subscriptions.

Funding:

  • ADB raises funds through bond issues on the world’s capital markets.
  • ADB also rely on its members’ contributions, retained earnings from its lending operations, and the repayment of loans.
  • Japan holds the largest proportions of shares at 15.67%. The United States holds 15.56%, China holds 6.47%, India holds 6.36%, and Australia holds 5.81%.

Board of Governors:

  • It is the highest policy-making body of the bank.
  • It is composed of one representative from each member state.
  • The Board of Governors also elect the bank’s President who is the chairperson of the Board of Directors and manages ADB.
  • The Alternate Board of Governors are nominated by Board of Governors of ADB’s 67 to represent them at the Annual Meeting that meets formally once year to be held in a member country.

Loans:

  • It offers both Hard Loans and Soft loans.
  • The ADB offers “hard” loans from ordinary capital resources (OCR) on commercial terms, and the Asian Development Fund (ADF) affiliated with the ADB extends “soft” loans from special fund resources with concessional conditions.
  • ADB focuses on five core areas of operations: infrastructure; the environment, including climate change; regional cooperation and integration; finance sector development; and education.
  • The Asian Development Fund (ADF) bridges the development gap in Asia and the Pacific, home to both the world’s fast-rising and most vulnerable economies. ADF is a major instrument of concessional financing that has supported equitable and sustainable development in the region since 1973.
  • Funded by ADB’s member countries, it offers loans at very low interest rates as well as grants to help reduce poverty in ADB’s poorest member countries.

Sources: The Hindu, ADB, Wiki.

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