India has recently signed to become a founding member of New Development Bank (NDB) and also the Asian Infrastructure Investment Bank (AIIB). How will the role of the two Banks be different? Discuss the strategic significance of these two Banks for India.

GS 2
International Relations
2014
12.5 Marks

Subject: International Relations

India's strategic partnership with the New Development Bank (NDB) and Asian Infrastructure Investment Bank (AIIB) marks a significant shift in the global financial architecture. These institutions represent emerging economies' growing influence in international development finance, challenging the traditional dominance of Bretton Woods institutions.

Differential Roles of NDB and AIIB

New Development Bank (NDB):

  • Focuses on sustainable development and infrastructure projects in BRICS and other emerging economies.
  • Ensures democratic governance with equal 20% voting share for each founding member.
  • Has approved $7.5 billion in loans for India, with $4.2 billion already disbursed, including $2 billion COVID-19 emergency assistance.
  • Projects annual disbursements of $3-4 billion for the next three years.

Asian Infrastructure Investment Bank (AIIB):

  • Primarily focuses on infrastructure development in the Asian region.
  • Has a broader membership base with India holding 7.66% voting rights, second only to China's 26.65%.
  • Emphasizes connectivity projects under initiatives like Act East Policy.
  • Promotes sustainable infrastructure and cross-border integration in Asia.

Strategic Significance for India

Economic Benefits:

  • Provides alternative funding sources for India's massive infrastructure needs.
  • Supports initiatives like PM Gati Shakti and National Infrastructure Pipeline.
  • Helps reduce dependency on traditional lenders like World Bank and Asian Development Bank.

Geopolitical Advantages:

  • Enhances India's role in global financial governance.
  • Strengthens South-South cooperation and regional integration.
  • Balances China's economic influence through equal partnership in NDB.

Development Partnership:

  • Facilitates knowledge sharing and best practices in infrastructure development.
  • Supports India's emergence as a responsible global power.
  • Promotes sustainable development goals through green infrastructure financing.

The strategic partnership with NDB and AIIB reinforces India's position as a key player in the evolving multipolar world order while ensuring sustainable infrastructure financing for its development needs. These institutions complement India's vision of "Atmanirbhar Bharat" and its aspirations for a more equitable global financial system.

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