India on Monday warned that lending limits at the Asian Development Bank (ADB) risk constraining growth ambitions across developing economies, as it pushed for expansion of the bank’s financing capacity and a faster overhaul of multilateral development frameworks amid rising global uncertainty.
Addressing the ADB’s annual Board of Governors meeting, Minister of State for Finance Pankaj Chaudhary said the scale of current global challenges demands a shift from incremental support to large, coordinated financing responses.
“ADB will need to develop strategies that address the evolving needs of larger developing member countries such as India,” Chaudhary said, flagging that existing lending caps could soon become a binding constraint on development financing.
India called for the continuation and expansion of capital augmentation tools, including hybrid and callable capital, to ensure that exposure limits do not restrict borrowing programmes.
It also urged broader reforms across multilateral development banks (MDBs), focusing on enhancing risk appetite, optimising balance sheet use, and crowding in private capital.
The push reflects a growing concern in New Delhi that traditional development finance models are ill-equipped to meet the scale of investment required in infrastructure, climate transition, and human capital — sectors that demand long-term, affordable funding at significantly higher volumes.
India reiterated the need to operationalise the long-discussed “billions to trillions” agenda, which seeks to leverage public funds to mobilise much larger pools of private investment. Officials argued that without structural reforms, MDBs will struggle to act as catalysts for this transition.
Global headwinds sharpen urgency
India’s intervention comes at a time when the macroeconomic environment is becoming increasingly fragile. The ADB recently cut its growth forecast for developing Asia and the Pacific to 4.7 per cent for 2026, down from an earlier estimate of 5.1 per cent, citing the economic fallout from the ongoing conflict in West Asia.
ADB President Masato Kanda described the downgrade as a “significant” revision, pointing to rising energy prices, tighter financial conditions, and weakening trade flows as key risks weighing on regional growth.
The bank also raised its inflation projection to 5.2 per cent for 2026, warning that a prolonged or escalating conflict could further derail growth. In a downside scenario where oil prices remain elevated, ADB estimates regional growth could slow to as low as 4.2 per cent, while inflation could spike sharply.
These projections broadly align with warnings from global institutions such as the International Monetary Fund, which has also lowered its global growth outlook, underscoring the widespread impact of geopolitical tensions on economic stability.
ADB scales up ambitions, but gaps remain
Even as risks mount, the ADB has stepped up its regional investment push. The bank recently unveiled a $70 billion programme aimed at expanding energy and digital infrastructure across Asia-Pacific by 2035.
The plan includes a $50 billion Pan-Asia Power Grid Initiative to integrate renewable energy across borders, build transmission networks, and expand electricity access to millions. A further $20 billion has been earmarked for digital connectivity projects, including fibre-optic networks, subsea cables, and data infrastructure to improve broadband access and reduce costs in underserved regions.
In parallel, the ADB has launched a new financing facility to support critical mineral supply chains — seen as essential for clean energy technologies, electric vehicles, and advanced manufacturing. The initiative aims to help developing countries move up the value chain, from raw material extraction to processing and manufacturing.
However, India indicated that such initiatives, while significant, must be backed by deeper institutional reforms to maximise impact and scale.
India’s development needs and strategic push
New Delhi underscored that despite strong macroeconomic fundamentals and resilience to global shocks, India continues to face substantial development requirements — particularly in infrastructure expansion, climate adaptation, and human capital investment.
Meeting these needs will require sustained access to affordable, long-tenor financing, something India argues current MDB frameworks are not fully equipped to provide at scale.
India also highlighted ADB’s role beyond financing, positioning it as a key knowledge and innovation partner — especially in advancing digital public infrastructure, where India’s own experience is increasingly being seen as a model for inclusive growth.
With inputs from agencies.
First Published:
May 05, 2026, 07:53 IST
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