ADB to recommend DBT to other developing nations

Lauding the govt's Direct Benefit Transfer scheme, multilateral funding agency ADB said it will advise other developing nations to implement it in order to check corruption and prevent leakages in subsidies. "I think it is a great effort. We are learning a lot from India. You are now building a bio information and then you are providing direct subsidy without any intermediary. That would significantly reduce corruption and inefficiencies," Asian Development Bank (ADB) Chief Economist Changyong Rhee told a media conference in Greater Noida on Saturday. "We at ADB will really push this idea to other developing countries as a way to enhance public finance and as a way to enhance transparency," he said. Rhee said public service delivery in the Asian region has improved remarkably in the last 30-40 years due to rapid growth. However, he said slowdown may have a negative impact on the public delivery system and called for better targeting of subsidies. "Countries need to shift from general targeting to focused targeting approach as lion's share of the subsidies are taken away by the rich," Rhee said adding the leakage in the current Public Distribution System (PDS) in India is enormous. The government rolled out the DBT scheme from 1st January in 43 districts in the first phase. The scheme would now be extended to 78 more districts from July as will be expanded to include LPG subsidy in a phased manner to cover 20 districts by 15th May. Facing challenges in maintaining current lending levels: ADB The Asian Development Bank (ADB) has hinted it might have to lower its lending programme to developing countries including India, saying its investments are not yielding adequate returns. The Manila-based multilateral lender had extended USD 2.4 billion loan to India across sectors like transport, energy, commerce, industry, trade and finance in 2012. India is the biggest borrower of ADB. "We have no solid base of capital to continue to lend at higher levels than before. But of course there are challenges to keep this level of lending. We have now entered a level of lending of USD 10 billion compared to USD 5 or USD 6 billion before. But can we keep this level of lending? That itself is a challenge.... "Because our income from investments of surplus resources, which is mostly lend to European countries, that return on investment is smaller than expected because of lower interest rates. So we hope to solve this issue of maintaining a sustainable lending level. We are working on this issue," ADB President Takehiko Nakao said in Greater Noida on Thursday. Addressing the first press conference after taking over as ADB chief last month, Nakao said in India there are many projects, including the Delhi Mumbai Industrial Corridor, highways and rail projects which the ADB would be interested in promoting. Nakao said participation of private sector was necessary to promote infrastructure in emerging economies as the capacity of lending of the multilateral lender is limited. He said while over the 10 year period, the infrastructure financing needs for Asian countries would be USD 8 trillion, whereas the bank's capacity of lending is USD 10 billion. "We have to continue to mobilise resources for infrastructure financing through good taxation and mobillise savings of people to investment in infrastructure," he said. He noted that it was only through infrastructure development that poverty could be eradicated. Co-financing with the private sector and attracting offshore money would act as a catalyst in promoting infrastructure finance," he said. Answering questions on the growth potential of Asian economies, Nakao said Asian growth has been more robust than expected after the global economic crisis in 2008. "It is because of domestic and indigenous demand that India, China and other emerging market economies in Asia have enjoyed stronger growth and I think it will continue," he said adding Advanced Economies would continue to have slower growth for now but Asia will have stronger growth led by strong consumption demand. To a query on ADB's strategy after the establishment of the proposed BRICS Bank, Nakao said: "We can support the BRICS Bank if necessary... We don't have to change our business model because of BRICS Bank." The BRICS Bank is seen as an institution complementing the World Bank or the ADB and addressing the infrastructure funding requirements of the member countries--Brazil, Russia, India, China and South Africa. ADB is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth. Established in 1966, it has 67 members. In 2012, ADB's assistance totalled USD 21.6 billion, including co-financing of USD 8.3 billion.