India’s infrastructure needs will push it to reconsider BRI: analysts

By Zhang Dan Source:Global Times Published: 2019/1/29 22:18:40

AIIB President, Jin Liqun, addresses a speech of the inaugural Asian Infrastructure Finance report written by the bank in Beijing, February 29. Photo: Zhang Dan/GT

The weak balance sheets of some Indian commercial banks as well as concerns about the credit environment have posed challenges to India's flagship projects, the Asian Infrastructure Investment Bank (AIIB) said in its inaugural Asian Infrastructure Finance report released on Tuesday. 

This situation may push India to reconsider and embrace the China-proposed Belt and Road initiative (BRI) due to the huge need for infrastructure projects, which will become an issue after the 2019 Indian general election, analysts told the Global Times. 

The AIIB's report noted concerns about financing and the lending environment in India due to the collapse of Indian infrastructure development and the finance company known as Infrastructure Leasing and Financial Services. Another issue is the high rate of non-performing assets among Indian banks. Those factors all pose challenges to the timely implementation of flagship infrastructure projects. 

India's infrastructure transaction activity -- total completed and ongoing transactions -- slowed each year from 2014 to 2016. After reaching $72.7 billion in 2014, the figure dropped to $48.9 billion in 2015 and then to $40.4 billion in 2016, the report said.

"The active motivation for India to join the AIIB at the outset comes from a domestic shortage of infrastructure construction and investment. The AIIB has a low interest rate on its loans. Hence, India is giving positive reactions to the AIIB's infrastructure projects," Zhao Gancheng, director of the Center for Asia-Pacific Studies at the Shanghai Institute for International Studies, told the Global Times on Tuesday.

Joachim von Amsberg, vice-president of policy and strategy for AIIB, agreed. "India's infrastructure finance needs are very large, and the country has the largest financing requirements because of its size and scale on the stage in its development," von Amsberg told the Global Times in a recent interview. 

This situation may push India to reconsider the BRI, because the country can benefit more from joining the initiative, analysts said. "India may lose the opportunity to improve its domestic infrastructure and development in other areas if it continues to resist the BRI," said Song Guoyou, director of Fudan University's Center for Economic Diplomacy.

Newspaper headline: India’s flagship projects will push it to join BRI


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