New Delhi: Asian Development Bank will provide up to 6.47 billion dollar assistance to India in the next three years.

The average annual lending of ADB will be to the tune of 2.1 billion dollar, ADB said in its Country Strategy and Program Update released today (Oct 6, 2004).

Out of the total 6.47 billion dollar loans to India, ADB has earmarked 37.8 per cent of the assistance for transport, 15.5 per cent each for energy and urban infrastructure, and 12.4 per cent for financial sector.

ADB has also allocated 11.5 per cent of the loans for agriculture and water management, and 7.3 per cent for governance and public resource management.

Keeping in mind the size and scale of India's needs, ADB has also hiked its lending targets to 7.4 billion dollar during 2003-06.

The hike in ADB assistance to India comes in the context of robust economic performance and the need to attain the UN's Millennium Development Goals (MDGs). "The proposed scale of assistance is also justified by India's strong economic and reforms performance," ADB said. With a current account surplus of 1.4 per cent of GDP, large forex reserves of more than 107 billion dollars, a prudent Debt-GDP ratio of 17.8 per cent and Debt-Service ratio of only 10.4 per cent, ADB said, "India's capacity to absorb external assistance is not an issue."

Observing that there has been significant progress on all relevant millennium development goals, ADB said efforts should be stepped up in the slow progress areas.

"The 10th Plan has accordingly recommended an enhancement of 80 per cent in public social expenditure. This effort needs to be supported by the development community, including ADB, since achieving global MDGs by 2015 will depend significantly on outcomes in India," it said.

India's outstanding debt to ADB was only 2.3 billion dollars as on May 31, 2004, which is 10 per cent of the bank's total debt outstanding.

The proposed assistance would raise ADB's India exposure to about 18 per cent by 2007.