ADB Current Affairs - 2019

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India ADB sign 190 million USD loan

On 12 October, 2019, the GoI signed a 190 million USD loan with the Asian Development Bank (ADB) to upgrade road transport in the state of Rajasthan. The project includes upgrading of 754 km of state highways, major district roads to two lane. The project will benefit 26 million people in 14 districts of Rajasthan.

The project also includes construction of more than 200 bus stops and 2 km of raised side walk.

In 2017, the bank offered 220 million USD of loan to upgrade 1,000 km of road.

India and ADB

India is one of the founding members of the ADB. It is the fourth largest shareholder in the bank. In 1980s and 1990s the bank supported the government’s program of industrialization. India got its first loan from the bank in 1986 as Industrial credit to introduce new technologies and to modernize medium-sized industries.

About ADB

The bank was established in 1966. The headquarters of the bank is located in Philippines. The bank was modeled close to World Bank. Every year ADB releases an annual report that summarizes its budget, operations and other materials for review by the public.

ADB is a UN observer. Japan and US hold the largest shares of the bank as of 2016. China is the third largest shareholder followed by India and Australia.

ADB to finance Railways Track Electrification Project in India

The Asian Development Bank (ADB) has signed an agreement to electrify railway tracks in India under Railways Track Electrification Project. As per agreement ADB will provide $750 million (equivalent in Indian Rupee) long-term financing to Indian Railway Finance Corporation (IRFC).

About ADB Loan Agreement

  • It is the largest single non-sovereign loan ever committed by ADB to a member country.
  • The proceeds of loan amount will be utilized by Indian Railway Finance Corporation (IRFC) to fund Railways Track Electrification Project.
  • About Project: It was launched as part of Railways broad modernization program which will help India’s railway sector to shift from dependence on fossil fuels towards electric power.
  • The electrification assets will be leased to Indian Railways (country’s national railway system) under a long-term lease agreement.
  • IRFC will use loaned amount to install electric traction equipment along 3,378 km of existing railway lines, so as to enable migration of passenger and freight traffic from diesel to electric traction.
  • Significance: This is a flagship project to demonstrate ADB’s strategy of supporting the key state-owned enterprises in strategic sectors and also reflects a major push by ADB’s private sector operations into transport infrastructure, and particularly railways.

About Indian Railway Finance Corporation (IRFC)

  • It is financing arm of Indian Railways that was set up in 1986.
  • It works toward mobilizing funds from domestic and international capital markets.
  • It is complete government owned entity and is registered as Non-Banking Finance Company (NBFC).

About Asian Development Bank (ADB)

  • It is regional development bank and multilateral lending agency. It was established on 19 December 1966 and is headquartered in Manila, Philippines.
  • It is an official United Nations (UN) Observer.
  • Objective: It envisions inclusive, resilient, prosperous, and sustainable Asia and Pacific, and aims towards sustaining efforts to eradicate extreme poverty in region.
  • Members: In 1966 ADB was started with 31 member countries. At present there are 68 member nation which includes 49 from Asia-Pacific region (including India) and 19 from outside. It is collectively owned by its members.
  • Members Votes: It is closely modeled on World Bank (WB) and has similar weighted voting system to it, like votes are distributed in proportion with member’s capital subscriptions to bank. As of 2016 United States and Japan hold largest proportion of shares.

Function:

  • To promote social and economic development by financially assisting its members and partners by providing loans, technical assistance, grants and equity investments
  • Finance: It gives finance assistance to both sovereign countries and to private entities. It also provides soft loans to poorer countries and hard loans to middle-income countries.
  • Its lending is mostly concentrated in five operational areas namely finance sector development, environment, climate Change and disaster management, education, regional cooperation integration and private sector lending.