China led 21 Asian nations, including India, in forming a multilateral financial front in the form of the Asian Infrastructure Investment Bank (AIIB), being seen as a challenger to the U.S.-backed Bretton Woods institutions.
India signed a memorandum of understanding, along with Pakistan, Sri Lanka, Bangladesh and Nepal and others, as the founding member of the AIIB on Friday.
Usha Titus, Joint Secretary, Economic Affairs division of the Finance Ministry, signed the MoU on India’s behalf. With an initial subscribed capital of $50 billion, the setting up of the Beijing-headquartered AIIB has been welcomed by the World Bank and the Asian Development Bank. However, the U.S. has expressed concerns over the bank’s “ambiguous nature” and lack of “transparency.”
Reacting to the criticism, Chinese Foreign Ministry spokesperson Hua Chunying on Friday said “during the whole process of the AIIB, China has maintained communication and coordination with Japan, the U.S. and Indonesia and other countries.”
The 21-nation group comprises Bangladesh, Brunei, Cambodia, China, India, Kazakhstan, Kuwait, Laos, Malaysia, Mongolia, Myanmar, Nepal, Oman, Pakistan, the Philippines, Qatar, Singapore, Sri Lanka, Thailand, Uzbekistan and Vietnam.
FICCI secretary-general A. Didar Singh called it a “very positive development in the sense that it opens up more borrowing opportunities.”
Kerry voices concern
U.S. Secretary of State John Kerry, who was in Jakarta to attend President Joko Widodo’s inauguration ceremony on Monday, had reportedly told Australian PM Tony Abbott directly about the US’ reservations on the AIIB.
“We have concerns about the ambiguous nature of the AIIB proposal as it currently stands, that we have also expressed publicly,” Reuters quoted U.S. State Department spokeswoman Jen Psaki as saying. Not everyone was optimistic about India’s potential gains from the multilateral financial partnership.
“I don’t think India stands to gain much out of the AIIB…it is unclear how it will benefit us,” eminent economist and senior fellow at the Centre for Policy research Rajiv Kumar told The Hindu .
“If India is to be part of this Chinese initiative rivalling U.S.-backed multilateral lending organisations, it should at least get some tangible benefit out of it…it should leverage its participation for some clear diplomatic or strategic gain,” Mr. Kumar said.
Published - October 25, 2014 12:01 am IST
