The plan, which was being driven by India, will see sovereign wealth funds (SWFs) and pensionfunds invest in securities floated by the World Bank, which will also chip in with resources. The multilateral agency is looking to raise resources from middle income countries.

This corpus will then be used for lending to infrastructure projects, with the cost of funds lower than what is usually paid when developing countries or their companies raise resources from the markets, said a source familiar with the matter.

Pension funds and SWFs can hope to earn better returns than what they earn by parking funds in developed countries. And, by investing the funds with the World Bank, they transfer the risk which they would have had to take had they invested directly in developing countries.

“The World Bank is receptive to the idea and so is a majority of the membership,” said an official who did not wish to be identified. Sources said the corpus and other modalities would be finalized once the structure is worked out in detail.

In April, finance minister P Chidambaram had said that the World Bank had asked two of its managing directors to put together a paper on the issue after discussions took place in Washington.

If the move goes through in the autumn meeting, it will be a big boost for developing countries which have been hit by fears of an adverse impact of the US Federal Reserve’s moves to withdraw the stimulus package. The new lending window can help meet their fund requirements – especially for long-term resources – at a very reasonable cost.

The government has estimated that India alone needs $1-trillion funding to build roads, power plants, ports and airports during the five-year period ending March 2017, with nearly half the investment coming from the private sector.

 Reuters

Nearly 1 billion Yuan project comes to light after seven failed attempts over the past 50 years

China on Thursday opened a new highway that links what the government has described as Tibet’s “last isolated county” – located near the border with Arunachal Pradesh – with the rest of the country and will now provide all-weather access to the strategically-important region.

Chinese state media have hailed the opening of the highway to Medog – which lies close to the disputed eastern section of the border with India – as a technological breakthrough, with the project finally coming to fruition after seven failed attempts over the past fifty years.

China first started attempting to build the highway to Medog – a landlocked county in Tibet’s Nyingchi prefecture – in the 1960s, according to State media reports, in the aftermath of the 1962 war with India.

With Thursday’s opening of the road, every county in Tibet is now linked through the highway network, underlining the widening infrastructure gulf across the disputed border, even as India belatedly pushes forward an upgrading of border roads in more difficult terrain.

The official Xinhua News Agency on Thursday described Medog as “the last roadless county in China”. Before this week, Medog was the only one of China’s 2,100 counties to remain isolated from the highway network, according to State broadcaster China Central Television (CCTV).

What the project will do

State media reports have focused on the development benefits that the project would bring and have sought to play down the strategic dimensions. Local officials said the road’s opening will bring down commodity prices and widen access to healthcare.

The road will also provide access to the border county for nine months of the year. That the government was willing to spend as much as 950 million Yuan – or $ 155 million – on a 117-km highway, with ostensibly few economic returns expected, has underscored the project’s importance to State planners.

Local officials said prior to the opening of the highway, reaching Medog required traversing the treacherous Galung La and Doxong La mountains at an altitude of 4,000 metres. With frequent landslides, the road was often rendered impassable.

Now, the road will be accessible for “8 to 9 months per year, barring major natural disasters”, Ge Yutao, Communist Party head of the transportation department for the Tibet Autonomous Region (TAR), told Xinhua.

Work on the 117-km road began in 2009, a year after the project was given the green light by the State Council, or Cabinet.

Renewed attention on infrastructure projects

The opening of the road comes at a time when there has been renewed attention on infrastructure projects in border areas in India and China.

Last week, both countries signed a Border Defence Cooperation Agreement (BDCA) during Prime Minister Manmohan Singh’s visit to Beijing, aimed at expanding confidence-building measures. The agreement calls for setting up channels of communication between military commands, increasing the number of border personnel meetings, and formalising rules such as no tailing of patrols, to built trust and avoid incidents.

The agreement does not specify or limit either country’s plans to boost infrastructure – an issue that, analysts say, has in the past triggered tensions along the disputed Line of Actual Control (LAC), most notably in April when a Chinese incursion sparked a three-week-long stand-off in Depsang, Ladakh.

Han Hua, a South Asia scholar at Peking University, suggested in a recent interview that the “basic reason” for the incident was “too much construction” along the border. The Chinese side, she acknowledged, did not have to build closer to the disputed LAC because their infrastructure, as well as more favourable terrain enabled quicker mobilisation.

“If we don’t have the overall collaboration of the military, policy-makers and decision-makers on both sides,” she said, “it will be difficult to avoid such incidents”.

‘India’s plans will not be limited’

The BDCA, Indian officials said, will not limit India’s plans to upgrade infrastructure. It recognises the principle of equal and mutual security, which allows either side to pursue its security in its own way. At the same time, officials say the BDCA will still help “regulate activity” along the border by opening up new channels of communication, even as the border continues to remain a matter of dispute.

On Thursday, Chinese Defence Ministry spokesperson Yang Yujun told a regular press conference that military personnel would hold “regular meetings” and “make joint efforts” to maintain peace in border areas, following the signing of the BDCA. The agreement, he said according to a Xinhua report, “summarised good practices and experiences on the management of differences in China-India border areas”.

Source-http://www.thehindu.com