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Sinha urges ADB to focus on core sector funding

Finance Minister Yashwant Sinha has asked the Asian Development Bank to focus its investments on development of infrastructure including rural telecommunication, rural electrification, roads and railways.

''The experience in our country suggests that an emphasis on rural connectivity is essential for poverty removal. Investment in areas such as rural telecommunications, rural electrification, rural roads and railways would provide lasting benefits. In pursuing the pro-poor strategy the ADB could focus its operations specially on these areas for investment,'' Sinha said in his speech at the 35th annual general meeting of the ADB being held at Shanghai.

Expressing concern over the reversal of capital flows since the 1997 Asian crisis, the finance minister said instruments should be designed to channel development funds from the multi-lateral institutions for socially productive investments by the private sector through credible intermediary institutions.

''Private funds would then also be forthcoming to add to these official flows'', Sinha observed.

While it was satisfying that the Moneterrey conference marked a forward movement in stepping up Official Development Assistance, the need for a more equitable regime of world trade with lesser non-tariff barriers and reduced subsidies in agriculture in developed countries could not be over-emphasised.

The real issues now facing the ADB are of resources, competitiveness and development effectiveness. ''We need to look beyond the current lending levels at which we are operating and prepare for a quantum leap'', he said.

Sinha asked could any dent on poverty be made when the gross assistance was so small. ''The bank has to be capable of raising more resources and has to help developing member countries in equipping themselves to be able to absorb such assistance productively'', he said.

The finance minister said the issue of financing for development is inextricably linked with the issue of indebtedness. Governments have resorted to huge borrowings to raise resources required for funding their development needs. Commensurate returns may not always be forthcoming to meet the expectations of their creditors or their own.

''Neither loans nor longings are adequately serviced leaving countries with no choice but to increase their debt burden even if it collateralizes their future'', he said.

The finance minister cautioned against multiplicity of development objectives and the resultant dilution of development effectiveness.

''When we consider how much we overload our delivery mechanisms with goal multiplicity, procedural rigidities, compliance obligations and subject them to multi-dimensional and diffused accountability, it is not surprising that the time taken for project preparation, approval and implementation is increasing and transaction costs are rising'', Sinha said.

UNI

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