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Indian groups submit recommendations for AIIB’s review of their Environmental and Social Framework

The Asian Infrastructure Investment Bank (AIIB), after four years of its operations, is undertaking a review of its environmental and social framework. 30 Indian Civil Society Organizations submitted their recommendations and concerns regarding the process of review and it’s content and scope. 

As one of the biggest recipients of AIIB’s funding, this process has significant meaning for India especially, given the context and trajectory of development followed. India, in recent times, has focused on developing massive infrastructure, which require enormous investments. This resulted in India opening itself to mega projects financed by international, national and private financial institutions. In these circumstances, it is essential for Multilateral Development Banks like AIIB to develop robust, comprehensive and strong environmental and social policies which are implemented and monitored well. To merely rely on the country systems is not enough; rather the ESF should go beyond the country system to strengthen them further. At a time when other MDBs are also undergoing review of their policies, AIIB should take a progressive leap as the first MDB from the global south to show its commitment towards building infrastructure through robust policies and with entire commitment towards protecting people and the environment.

In the four years of operation, AIIB’s membership has grown to 102 approved members worldwide and has funded 64 projects across Asia to the tune of USD12.24 billion. India alone has received investments close to USD 3 billion for the 14 approved projects. These projects include investments in energy, transport and water sectors. Of the 14 approved projects 4 are financial intermediary projects and 4 are co-financed projects. Of the current approved portfolio for India, 33.33% projects are co-financed and the other 33% are financial intermediary projects while only 33% constitutes stand alone projects. Co-financed and FI projects with current policies only bring limited liability and accountability for AIIB. The AIIB’s current ESF is not adequate to prevent risk and harm arising from this form of lending. The policy is inadequate and needs to be relooked. In its brief lending history, AIIB has funded several projects of mega scale which are been marred by massive environmental and social concerns like the Mumbai Urban Transport Project – Phase III (MUTP), Bangalore Metro Rail Project – Line R6 both projects of massive scale.  The now scrapped Amravati Sustainable Capital City Project, which was being considered by AIIB for financial support as a co-financer along with World Bank as the lead financier, also speaks volume for the need to have multiple checks and balances.

Currently, 5 projects worth USD1.7 billion are proposed for financing in India. These include energy, water and transport sector Projects. Chennai Metro Rail Phase 2 Project – Corridor 4 is one of them, which is a co-financed project. The other to proposed project to watch out for is Karnataka Rural Water Supply Project (KRWSP) worth UDS 400 million which will basically promote Public-Private Partnership (PPP) models in water supply and sanitation.

Read the full statement

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