Following is the Text of the of the Union Finance Minister Shri Arun Jaitley’s Keynote Address at the Opening Ceremony of the Second Annual Meeting of the New Development Bank (NDB) in Delhi today:

“Governors of NDB and Heads of Delegations, President Kamath, Sir Chakrabarty, Mr. Hyer, Mr. Adesina, Distinguished Guests, Ladies and Gentlemen,

At the very outset, I welcome you all to India and wish a pleasant and enjoyable stay here. We are indeed privileged and honored to host the second Annual Meeting of the New Development Bank (NDB).

It is now more than a decade since the September, 2006 meeting of Foreign Ministers of Brazil, China, Russia and India in New York, where the foundations of BRICS were laid. The BRICS has grown and evolved in many ways since then, and  the NDB is a feather in its cap.

The Global Perspective is still challenging

The NDB has come up amidst huge expectations in a difficult time for the global economy. Finally some silver linings are emerging. After a sluggish performance in 2015 and 2016,global growth appears to be recovering, and is projected at 3.4%  in 2017 and 3.6 % in 2018. Buoyed by an expectation of fiscal stimulus, the United States economy has rebounded strongly, and is approaching full employment. The news is also good from other advanced economies, such as Spain and the United Kingdom, where domestic demand held up better than expected in the aftermath of the Brexit vote. But it is still an uneven story: in some other advanced economies, demand remains stagnant weighed by debt overhangs, high level of non-performing loans and uncertainty over future growth.

In emerging markets and developing economies (EMDEs), the overall growth is picking up, although growth prospects diverge across countries. The news from BRICS countries is generally encouraging. Chinese economy is holding firm amidst a major rebalancing. India continues to grow at a robust rate. Russia and Brazil, who were in the negative growth territory in 2016, are expected to turn to positive growth in 2017 and 2018. Overall, the EMDEs are expected to contribute more than three-quarters of total global growth the current year.

But there are newer challenges, most notably a possible shift towards inward-looking policy platforms and protectionism, a sharper than expected tightening in global financial conditions that could interact with balance sheet weaknesses in parts of the euro area and increased geopolitical tensions, including unpredictable economic policy of USA.

Opportunities amidst challenge

Amidst the challenges, lie the opportunities. The estimated unmet demand for infrastructure investment in EMDEs is gargantuan, estimated at above US$1 trillion a year by the World Bank. Most importantly, the EMDEs need to carry out this huge investment in a sustainable manner. The established MDBs are now capital constrained, and with their over emphasis on processes, are unable to meet this financing challenge. A Bank like the NDB is well poised to step into the void.

Since the establishment of the NDB in September 2015, President Kamath and his ream have done a commendable job. The formative years of an Institution are never easy, and the NDB has navigated this challenge with flying colours. It is really heartening to know that the Bank is now fully operational, with seven loans already approved by the Board of Directors. It has also successfully raised money from the market and I am sure will soon make its first disbursement in India. Setting up of an Africa Regional Centre is also under active consideration. The growing importance of the NDB is evident from the impressive array of guests present here, including several heads of multilateral development banks.

As the NDB moves on, it must be guided by the commitment and pledge of the Global leaders in 2015 to the Sustainable Development Goals, and to mobilize the means required to achieve the SDGs through a revitalized Global Partnership. Incidentally, the NDB was also established at the same time with the core mandate to finance sustainable development projects. Therefore, if we remain committed to the core principle of the NDB, we shall also be contributing to global consensus.

NDB must also be alive to the role envisioned for it by its founding nations.  It is an important vehicle for South- South cooperation. The five BRICS nations possess enormous amount of knowledge, technology and resources. There is a huge potential for every BRICS country to benefit from this collective body of knowledge and expertise.  As a BRICS institution, the NDB should be at the forefront to facilitate this knowledge and technology exchange.

Now I shall say a few words as India’s Governor.

Throughout this challenging time, India has remained a bright spot among the major economies. As per IMF’s assessment in January 2017, India’s growth in2016 would be 6.6 per cent and is projected to grow at 7.2 per cent and 7.7 per cent in 2017 and 2018. We have successfully implemented a slew of reform measures, including one of the largest currency reform initiatives ever implemented, which will move the Indian economy to a less cash trajectory, increase tax compliance and reduce the threats from counterfeit currency. Other major initiatives include merger of Railway budget with the General budget, passage of the landmark Goods and Service Tax bill, enactment of a comprehensive Insolvency and Bankruptcy Code, 2016, liberalization of the FDI policy, Initiatives and various facilitation measures to improve the attractiveness and competitiveness of India globally etc.

Expectations from the NDB

India has a huge unmet need for investment in infrastructure, estimated to the tune of ₹ 43 lakh crores (about USD 646 billion) over the next five years.  70 percent of this will be required in the power, roads and urban infrastructure sectors. Perhaps, our Prime Minister expressed it most eloquently when he said: “……..India alone offers the opportunities that could rival those of an entire continent. It offers today, the possibilities of a full century. And we want to do all this in a cleaner, greener and sustainable way.”This offers an enormous opportunity to an Institution like NDB, whose core mandate is sustainable infrastructure development.

I am happy to note that the first agreement for an NDB loan in India, to finance major district roads in Madhya Pradesh has been signed a couple of days back. With this the NDB will have its first footprint in India. We have proposed projects worth about USD 2 billion for NDB funding, which I hope will be taken up by the Board expeditiously.  We shall work with the NDB to develop a strong shelf of projects in specific areas such as Smart Cities, renewable energy, urban transport, including Metro Railways, clean coal technology, solid waste management and urban water supply.

Now the NDB is at cross-roads, and today, as Governors, we shall deliberate on Bank’s strategy for the next 5 years, including issues such as the Bank’s capital, loan portfolio and expansion of Membership. The uniqueness of NDB should lie in faster loan appraisal, a lean organizational structure resulting in lower cost of loans, a variety of financing instruments, including local currency financing, adoption of country system whenever possible and flexibility in responding to the needs of the clients.  These are the elements which would make NDB truly a “new” institution, and make it distinct from older MDBs. Being a lean organization, it is also expected that the NDB will not only offer loans at cheaper rate, but will also influence the more established MDBs to revisit their high cost model. Overall, it is our expectation that the Bank will bring in a whiff of freshness in project and loan appraisal, as also will be nimble footed to meet the expectations of its clients.

Mr. President, I hope India will have a long, fruitful, intensive and mutually beneficial partnership with the NDB. I conclude with the hope that the NDB will emerge as a development bank representing the voice and aspirations of the emerging developing nations, and will set a new trend in multilateral funding.

Thank you very much.”

^[1]Estimates of Global Investment Facility of the World Bank accessed at http://www.worldbank.org/en/programs/global-Infrastructure-facility

²Prime Minister’s address at the Vibrant Gujarat Summit