AIIB which stands for Asian Infrastructure Investment Bank was launched last month on 24th october 2014. I think that this bank along with the BRICS bank would pose a major challenge to the Bretton woods twins the IMF and the world bank and it has possibility of boosting the growth rate in infrastructure in India.
World Bank:US dominated bank
IMF:Europe led bank
ADB(Asian development bank):Japan dominated bank
BRICS new development bank:
AIIB:
World Bank:US dominated bank
- United States is discouraging the World Bank from lending to coal-based power projects in the asia.
IMF:Europe led bank
ADB(Asian development bank):Japan dominated bank
BRICS new development bank:
- At least 25 per cent of our power generation capacity over the next decade is based on Chinese equipment import. This means roughly $30 billion (about Rs 180,000 crore) of power equipment could be imported from China.
- The BRICS bank could also offer cheaper loans for such power projects in BRICS countries.
AIIB:
- Asian development bank lends not more than $10 billion a year while asia needs $800 billion of investment in infrastructure annually between now and 2020
Why this BRICS and AIIB are good for India?
- 12th Five year plan says we need $1 trillion dollar investment in infrastructure. Few billions dollars we get as ‘soft loan’ from AIIB, BRICS bank is help in achieving this plan.
- India is 2nd largest stakeholder in AIIB, so it has large voting power and help India in getting loans according to its interest
- Cheaper loans
reference:
http://www.rediff.com/news/column/how-brics-bank-can-affect-world-economics-and-politics/20140718.htm
2 comments:
What are the real motives behind development of these (AIIB & BRICS) banks?
1. Make truckloads of profits as it has the largest forex reserve in the world nearing to 3300b$ and want toi make use of it which have been lying dormant from decades and hence it wants to earn interest on the forex further increasing it
2. Motivate its maritime silk route policy and indirectly finance its own project under the name of loans given to other countries
3. China wants to counter IMF+ADB’s hegemony also help to popularize use of Chinese Yuan instead of US dollar.
4. Since AIIB will loan to Asian countries, it’ll slightly reduce world bank’s pressure to finance Asian projects. Then World bank can divert more funds to Africa. African development is also in India’s best interest because, Indian exports will increase and terror networks will weaken and also sea-piracy will decrease.
5. Countries without human right can also get loans as was not the case with Bretton woods because china doesn’t itself does focuses so much on human rights therefore bogus countries such as Timor might also get help.
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