ADB approves $2.6 billion in Sovereign lending to India in 2023

The Asian Development Bank (ADB) has sanctioned $2.6 billion in sovereign lending to India in the calendar year 2023. The loan sanctioned by ADB in 2023 will be used to finance urban development projects, promote the power sector, support industrial corridor development, support horticulture, enhance connectivity and build India’s climate resilience.

Sovereign means supreme power, and in India the government of India is sovereign. Thus, a sovereign loan means a loan given to the government of India.  It includes a loan the ADB gives for a project in a particular state. The loan is basically given to the government of India, and the repayment of the loan is the responsibility of the government of India, even though it may be used to implement a project in a state. 

Sovereign Loans extended by ADB in 2023

According to the  ADB, the sovereign loans sanctioned in 2023 focus on projects and programmes that will further India’s structural transformation, create jobs, address infrastructure gaps, promote green growth, and promote social and economic inclusiveness while deploying smart technologies and innovations.

The loans included funding for the Visakhapatnam–Chennai Industrial Corridor which will boost the industrial development of India.

It provided loans to fund projects to improve urban services in the states of Uttarakhand, Rajasthan, and Tripura; road connectivity in Madhya Pradesh and Bihar, Boosting horticulture development in Himachal Pradesh and the expansion of the Delhi–Meerut rapid rail transit corridor. 

ADB knowledge-based support to India 

The ADB, apart from providing loans and grants, also provides knowledge support through technical and operational studies.

The bank has helped the Union Ministry of Commerce formulate the national logistics costs calculation framework.

It has assisted the Government of Assam to prepare a strategic framework for developing its urban sector. 

Technical assistance and Loans to Private Sector 

Apart from sanctioning  $2.6 billion in loans to the government of India, the ADB has also sanctioned $23.53 million as loans for technical assistance and a grant of $4.1 million.

A grant means that the government of India will not return the money to the ADB. 

The  ADB has also sanctioned over $1 billion in loans to the private sector in 2023.

India and the Asian Development Bank 

India has been a member of the ADB since its foundation in 1966. The first loan to India was granted by ADB to India in 1986. Since then, India has been the largest borrower of the ADB, and it has never defaulted on its loan repayment.

To date, ADB has provided loans, grants, and technical assistance totalling $55.3 billion to India. 

India is the fourth largest shareholder of the ADB.

The top five largest shareholders of the ADB are:

• United States and Japan(each with 15.6% of total shares), 
• People's Republic of China (6.4%), 
• India (6.3%), and 
• Australia (5.8%). 

About the Asian Development Bank 

The Asian Development Bank is a regional multilateral institution with a focus on the Asia-Pacific region. 

The bank provides loans, grants, technical assistance and equity investments to the member countries and its partners to promote social and economic development.

The Bank was founded on 19 December, 1966, with 31 countries, including India, as its founding members. 

Currently, it has 68 members, 49 of whom are from the Asia Pacific region and 19 from outside the region.

Headquarters: Mandaluyong City, Philippines.

President : Masatsugu Asakawa (Citizen of Japan).