6th Annual Meet: AIIB | 27 Oct 2021

Why in News

Recently, the Union Minister of Finance participated in the 6th Annual Meeting of the Board of Governors of Asian Infrastructure Investment Bank (AIIB).

Key Points

  • India’s Stand:
    • Help in Covid:
      • Appreciated AIIB’s prompt actions in providing financial support to Member Countries, including India, in their efforts to contain and combat Covid-19.
    • Multilateral Banking:
      • Emphasised the importance of multilateral banks in supplementing countries’ efforts to cope with the Covid-19 crisis and the looming climate crisis.
    • Expectations from the Bank:
      • Need to explore investment opportunities in the creation and development of assets in social infrastructure sectors.
      • To further intensify private sector capital mobilisation for inclusive and green development.
      • To set up a Resident Board and Regional Offices to ensure accountability, transparency and quality of operations and investments.
  • AIIB’s Stand:
    • Suggestion for India:
      • It should strike a balance between ramping up physical infrastructure and the social infrastructure such as healthcare systems.
    • Future Endeavours in India:
      • It would look to fund both social as well as climate-resilient infrastructure in India in the coming years.
      • It will align its operations with the goals of the Paris Agreement to cope with climate change.

India and AIIB

  • India was among the AIIB’s 57 founding members in 2016.
  • It is also its second-largest shareholder (with 7.62% voting shares) after China (26.06%).
  • It has received USD 4.35 billion from the Bank. This is the highest of any country, with the bank so far approving loans of USD 19.6 billion to support 87 projects in 24 countries.
    • Turkey is second with USD 1.95 billion.
  • AIIB has approved financing projects in India in a host of sectors like energy, transport and water including the Bangalore metro rail project (USD 335 million), Gujarat rural roads project (USD 329 million) and Phase 3 of the Mumbai urban transport project (USD 500 million).
    • India needed to develop modern infrastructure and when the Bank screened proposals, it worked with the government to ensure that priority was given to infrastructure projects which could deal with climate change.
  • In a recent virtual meeting, India said that it expects AIIB to introduce new financing instruments, provide financing for social infrastructure and to integrate development of climate resilient and sustainable energy access infrastructure into AIIB’s recovery response to the Covid-19 crisis.
    • This implies that India is unlikely to alter its engagement with the China-led Asian Infrastructure Investment Bank (AIIB), despite a host of offensive measures announced recently to reduce its trade and investment links with China.

Asian Infrastructure Investment Bank

  • It is a multilateral development bank with a mission to improve social and economic outcomes in Asia.
    • It meets clients’ needs by unlocking new capital and investing in infrastructure that is green, technology-enabled and promotes regional connectivity.
  • It is established by the AIIB Articles of Agreement (entered into force December 2015) which is a multilateral treaty.
    • The Parties (57 founding members) to agreement comprise the Membership of the Bank.
    • AIIB’s membership has grown to 102 countries now.
  • It is headquartered in Beijing and began its operations in January 2016.

Source: TH