The Asian Development Bank (ADB) will invest $10 billion over five years to upgrade India’s urban infrastructure, including metro rail, RRTS, sanitation, and TOD projects. Backed by the Urban Challenge Fund, the plan involves sovereign loans, private financing, and third-party capital, with technical support to design viable projects and boost local government capacity.
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The Asian Development Bank (ADB) has announced to invest $10 billion in India's urban infrastructure.
The Asian Development Bank (ADB) to invest $10 billion to improve India's cities over the next five years.
How Will the Funding Work?
Sovereign Loans: These are loans given directly by the ADB to the Indian government for specific projects.
Private Sector Financing: The ADB will work to attract and facilitate investment from private companies into urban projects.
Third-Party Capital: This involves mobilizing funds from other investors (beyond the direct private sector involved in a project) to co-invest alongside ADB and the government.
Urban Challenge Fund (UCF): This Indian government initiative is a central piece. The ADB is supporting the UCF to help attract private investment into urban infrastructure.
Technical Assistance: ADB has committed $3 million to help design "bankable projects" (projects attractive to investors) and improve the capabilities of state governments and urban local bodies (municipalities) to manage these projects.
Metro Rail Extensions: Expanding existing metro networks.
New Regional Rapid Transit System (RRTS) Corridors: Developing new high-speed regional train lines (like the Delhi-Meerut RRTS).
General Urban Infrastructure and Services: This is a broad category that can include water supply, sanitation, solid waste management, housing, and more.
Transit-Oriented Development (TOD): This means developing urban areas around transport hubs to make them more accessible, reduce reliance on private vehicles, and create vibrant community spaces.
Water and Sanitation Upgrades: Based on prior analytical work in 100 cities.
Rooftop Solar Capacity: Scaling up the installation of solar panels on rooftops.
It is a regional development bank, established in 1966, and headquarters are in Manila, Philippines.
India is a founding member of the ADB.
Poverty Eradication and Inclusive Growth => The ADB's core mission is to fight extreme poverty and promote economic growth that benefits everyone.
Financial Assistance => It provides loans (both "hard" loans on commercial terms and "soft" loans with lower interest rates for poorer nations), grants, equity investments, and technical assistance to its member countries. This funding supports a wide range of development projects.
Infrastructure Development => A major focus is on infrastructure projects like transportation (roads, railways, metro systems), energy (including renewable energy), urban development, water supply, and sanitation.
Social Development => The ADB invests in sectors like education, healthcare, and social protection to improve human capital and quality of life.
Regional Cooperation and Integration => It promotes cooperation among member countries through initiatives like cross-border infrastructure, trade facilitation, and knowledge sharing.
Policy Advice and Knowledge Sharing => The ADB offers technical expertise, policy advice, research, and capacity-building programs to help member countries achieve their development goals.
Environmental Sustainability and Climate Change => The ADB is focusing on climate change mitigation and adaptation, aiming to build climate and disaster resilience and enhance environmental sustainability. It has committed to significantly increase its climate financing.
Private Sector Development => The Bank also works to encourage private sector investment and supports public-private partnerships.
Membership => The ADB has 69 member countries. This includes 49 regional members from Asia and the Pacific and 20 non-regional members from other parts of the world (like the USA and European countries).
Membership is open to members of the UN Economic and Social Commission for Asia and the Pacific (UNESCAP) and other regional and non-regional developed countries.
The ADB has a three-tier structure
Board of Governors => This is the highest decision-making body, with each member country represented (usually by its finance minister or central bank governor). The Board of Governors elects the President.
Board of Directors: Composed of 12 members (8 from regional members, 4 from non-regional) elected by the Board of Governors, this body oversees the bank's operations and approves projects.
Management: Led by the President, this team implements the policies and decisions. Traditionally, the President of the ADB has always been Japanese, as Japan is one of the largest shareholders.
Voting System
The ADB uses a weighted voting system, similar to the World Bank, where votes are distributed in proportion to a member's capital subscription.
Largest shareholders are Japan and the United States (each with 15.6%), China (6.4%), India (6.3%), and Australia (5.8%).
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PRACTICE QUESTION Q. Consider the following statements in the context of the governance structure of the Asian Development Bank (ADB): 1. The Board of Governors is the highest policy-making body, composed of one representative from each member state. 2. Japan and the United States jointly hold the largest proportion of subscribed capital, giving them the most voting rights. 3. The President, traditionally Japanese, chairs the Board of Directors and is elected by the Board of Governors. How many of the above statements are correct? A) Only one B) Only two C) All three D) None Answer: C Explanation: Statement 1 is correct: The ADB's highest policy-making body is the Board of Governors, which includes one representative from each member nation. Statement 2 is correct: Japan and the United States are the ADB's largest shareholders, and have the highest voting power within the institution. Japan and the United States each hold the largest proportion of shares at 15.6%. China holds 6.4%, India holds 6.3%, and Australia holds 5.7% Statement 3 is correct: There is a tradition for the ADB President to be Japanese, given Japan's significant role in the bank. The current President, Masato Kanda (as of June 2025), is Japanese. The President chairs the Board of Directors and is elected by the Board of Governors. |
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