HPAS/Allied Mains 2022 Answer Writing Challenge Day 235: Model Answer

Question: What is the New Development Bank? How does it help in development of Indian economy? (8 marks/120 words)

Answer:

The New Development Bank (NDB) is a multilateral financial institution founded in 2014 by the BRICS countries (Brazil, Russia, India, China and South Africa). Its purpose is to fund infrastructure and sustainable development projects in BRICS and other emerging market economies and developing countries. The Bank has an initial authorized capital of 100 billion dollars, and an initial subscribed capital of 50 billion dollars. The Bank has its headquarters in Shanghai, China.

The main objectives of NDB operations are:

(i) fostering development of member countries,

(ii) supporting economic growth,

(iii) promoting competitiveness and facilitating job creation, and

(iv) building a knowledge sharing platform among developing countries.

Its role in the development of Indian economy:

The core purpose of the NDB is to mobilize resources for infrastructure and sustainable development in BRICS countries. It will develop and deepen local capital markets in its member states by providing loans denominated in local currency in addition to US dollar loans.

• In the NDB’s first year, it approved a first set of projects, one in each of its five member countries, totaling $911 million.
• The $250 million loan to India’s Canara Bank for 500 megawatts of renewable-energy projects in India.

• It has pledged support for several important infrastructure projects in India, including the Mumbai Metro rail, the Delhi-Ghaziabad-Meerut Regional Rapid Transit System, and a variety of renewable energy projects.
• The NDB has also authorized 14 Indian projects totaling roughly USD 4.2 billion.
• India announced a one-billion-dollar financing agreement with the NDB in 2020 to improve rural jobs and infrastructure.
• In 2019, NDB cofinanced a project seeking to improve urban mobility in India by improving and expanding its railway system.