Asian Development Bank (ADB) president Masato Kanda has unveiled a $10 billion five-year initiative to transform urban infrastructure across India. The amount includes third-party capital and will be used for metro extensions, new regional rapid transit system corridors, and urban infrastructure and services. India is one of the strongest economies because of a strong domestic market and ongoing reforms, Kanda, who was in New Delhi last week, tells Deepshikha Sikarwar.
Edited Excerpts:
How do you see Asian economies navigating the current turbulence? What is your prescription for policymakers?
It is a difficult and unprecedented situation. There is tremendous uncertainty which impacts the Asian region, particularly economies exposed to external shocks because of their integration with the global markets. But, compared to the past, Asia is relatively strong because of sound macroeconomic policies and regional integration. Last year, developing Asia achieved 5% growth. If we continue to push the right policies, backed by sound macroeconomic interventions and structural reforms, while opening our economies, there's a high chance we can navigate the current situation effectively and emerge stronger.
India is seen as the fastest growing economy by various global agencies. What is your assessment of the geopolitical challenges confronting the country?
I agree with global agencies' assessment. I do believe that India is one of the strongest, most robust economies because of a strong domestic market and ongoing reforms. The ADB expects India's GDP at 6.7% this year (FY26) and 6.8% next year (FY27). This is 2 percentage points higher than the developing Asian economies. India can continue to be one of the fastest growing economies in the world by pushing ahead with reforms and sound economic policy.
I appreciate and support the ongoing reform efforts of the Indian government. Measures have been taken to increase the competitiveness, particularly of manufacturing sector, such as emphasis on skills development. We are proud of our contributions to upgrade the national industrial training institutes. India's commitment to engage with the global market is really good and it should continue this open policy.
In this really turbulent situation, it is important to support private sector development because it can bring about innovation, job creation and diversification in the economy through market mechanisms.
Would you like to suggest any specific policy interventions?
There are many elements and some of them India is already implementing. We are encouraging India to accelerate those. For instance, in trade, I appreciate the free trade agreement with the UK. It is also negotiating trade agreements with the EU and the US. Diversifying the industry as well as trading partners is a kind of insurance and also provides great opportunities for growth. There is big room to increase competitiveness, particularly in the manufacturing sector. We can support the upgrade of infrastructure, which will make the industry much more efficient. Human capital development is most important if India needs to reap a demographic dividend.
The US tariffs seek to reset the global manufacturing order and supply chains. How do you see things panning out?
This could have an enormous impact on the whole global economy, or even the geopolitical order. First is the direct negative demand shock. Trade will decrease and the trade uncertainty will stop or at least delay capital investment, which will decrease the aggregate demand. The supply chain disruption of trade will be quite a concern. The spill-over impact this uncertainty will create in financial and capital markets, including the foreign exchange market, is really worrying. This uncertainty will dampen investor confidence, bring in risk aversion, which will create the risk of capital outflow, as well as foreign exchange depreciation. But at the same time, it is a great opportunity to transform ourselves to be more resilient and stronger as a region.
For Asia, this is probably the moment to transform their economies and to diversify. Two things: One is to diversify their own economies, industrial structures, trade partners and supply chains. Second is more integration, particularly regional and sub-regional, to create regional resilience against external shocks. This turnaround could lead to the emergence of more diversified, multiple and more robust supply chains.
What will be ADB's support for India over the next few years?
At the moment, India is not just the largest borrower in terms of volume, but also in terms of quality in covering all sectors, including cutting-edge and frontier hi-tech. ADB has committed over $5 billion in annual lending. Our strategy is aligned with your national strategy of becoming a developed country by 2047. The over $5 billion will include $4.5 billion annual lending to sovereign and $1 billion to non-sovereign, including private sector.. We are focusing on sectors such as skills development... The other area is urban development. Our ambition is to increase our lending to India's urban development to $10 billion over five years, including third-party capital.
Edited Excerpts:
How do you see Asian economies navigating the current turbulence? What is your prescription for policymakers?
It is a difficult and unprecedented situation. There is tremendous uncertainty which impacts the Asian region, particularly economies exposed to external shocks because of their integration with the global markets. But, compared to the past, Asia is relatively strong because of sound macroeconomic policies and regional integration. Last year, developing Asia achieved 5% growth. If we continue to push the right policies, backed by sound macroeconomic interventions and structural reforms, while opening our economies, there's a high chance we can navigate the current situation effectively and emerge stronger.
India is seen as the fastest growing economy by various global agencies. What is your assessment of the geopolitical challenges confronting the country?
I agree with global agencies' assessment. I do believe that India is one of the strongest, most robust economies because of a strong domestic market and ongoing reforms. The ADB expects India's GDP at 6.7% this year (FY26) and 6.8% next year (FY27). This is 2 percentage points higher than the developing Asian economies. India can continue to be one of the fastest growing economies in the world by pushing ahead with reforms and sound economic policy.
I appreciate and support the ongoing reform efforts of the Indian government. Measures have been taken to increase the competitiveness, particularly of manufacturing sector, such as emphasis on skills development. We are proud of our contributions to upgrade the national industrial training institutes. India's commitment to engage with the global market is really good and it should continue this open policy.
In this really turbulent situation, it is important to support private sector development because it can bring about innovation, job creation and diversification in the economy through market mechanisms.
Would you like to suggest any specific policy interventions?
There are many elements and some of them India is already implementing. We are encouraging India to accelerate those. For instance, in trade, I appreciate the free trade agreement with the UK. It is also negotiating trade agreements with the EU and the US. Diversifying the industry as well as trading partners is a kind of insurance and also provides great opportunities for growth. There is big room to increase competitiveness, particularly in the manufacturing sector. We can support the upgrade of infrastructure, which will make the industry much more efficient. Human capital development is most important if India needs to reap a demographic dividend.
The US tariffs seek to reset the global manufacturing order and supply chains. How do you see things panning out?
This could have an enormous impact on the whole global economy, or even the geopolitical order. First is the direct negative demand shock. Trade will decrease and the trade uncertainty will stop or at least delay capital investment, which will decrease the aggregate demand. The supply chain disruption of trade will be quite a concern. The spill-over impact this uncertainty will create in financial and capital markets, including the foreign exchange market, is really worrying. This uncertainty will dampen investor confidence, bring in risk aversion, which will create the risk of capital outflow, as well as foreign exchange depreciation. But at the same time, it is a great opportunity to transform ourselves to be more resilient and stronger as a region.
For Asia, this is probably the moment to transform their economies and to diversify. Two things: One is to diversify their own economies, industrial structures, trade partners and supply chains. Second is more integration, particularly regional and sub-regional, to create regional resilience against external shocks. This turnaround could lead to the emergence of more diversified, multiple and more robust supply chains.
What will be ADB's support for India over the next few years?
At the moment, India is not just the largest borrower in terms of volume, but also in terms of quality in covering all sectors, including cutting-edge and frontier hi-tech. ADB has committed over $5 billion in annual lending. Our strategy is aligned with your national strategy of becoming a developed country by 2047. The over $5 billion will include $4.5 billion annual lending to sovereign and $1 billion to non-sovereign, including private sector.. We are focusing on sectors such as skills development... The other area is urban development. Our ambition is to increase our lending to India's urban development to $10 billion over five years, including third-party capital.
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