SASEC Initiative of the ADB and its value for India

SASEC Initiative of the ADB and its value for India


Question - Asian Infrastructure Investment Bank which has recently added Russia to its group of members, will face stiff competition from other banks in this region such as the ADB. Discuss the SASEC Initiative of the ADB and its value for India.

SASEC (South Asia Subregional Economic Cooperation) Programme

• This programme was established n 2001

• It is a project based partnership between the Asian countries of India, Nepal, The Ladies, Bhutan, Sri Lanka and Bangladesh.

• The aim is to work for the promotion of regional prosperity through enhancement of cross border connectivity

• Boosting trade among member nations and strengthening economic cooperation is another aim of the SASEC

• Shared vision and commitment of SASEC is to boost trade and cooperation between South Asian nations by creating linkages in East and Southeast Asia

• The initiative also works towards facilitation of cross border movement of goods, business and persons

• SASEC aims at improving the quality of life and enhancing opportunities for people in this region

• SASEC has tremendous potential to enhance connectivity to Asian regional markets in a region which needs greater economic integration

• SASEC has also helped countries to strengthen basic infrastructural facilities such as rail, road and air links

• The aim is to provide impetus for South Asian intraregional trade and boost the growth of economies in this region

• Asian Development Bank serves as a secretariat to the SASEC and provides financial as well as technical support for this programme

• SASEC also works to enhance energy security in this region

• SASEC seeks to strengthen multimodal cross border transport networks and open up trade with East and Southeast Asia

• Programme also helps to remove administrative blockages and speed up time required for movement of goods and persons in this region

Value for India

• India signed a loan agreement with ADB for USD 300 million for enhancing regional road connectivity across the North Bengal-North Eastern Region as part of SASEC South Asian Sub-regional Economic Cooperation (SASEC) Road Connectivity Investment Program

• The current loan is the first tranche under USD 500 million multi-tranche program

• About 500 kms of road will be constructed through this programme

• Tranche 1 project will improve road connectivity and efficiency of global trade corridors through expansion of roads in North Bengal and North Eastern region of India

• Last mile connectivity will be provided as part of this programme; aim is inclusive growth and development

Facts and Stats

• From 2001 onwards, SASEC’s 6 nations have implemented close to 33 regional projects adding up to more than a total of USD 6 billion in the following fields:
- Energy
- Transport
- Trade Facilitation
- ICT-Information and Communication Technology

• The Tranche 1 project under ADB-SASEC programme will lead to the construction of two national highways adding 150 km in West Bengal and state roads of the length of 180 km in Manipur, extending to Myanmar.

• Project will reach completion by December 31, 2021

• ADB’s USD 300 million loan constitutes nearly 71% of total project cost pegged at USD 425 million

• State and Central governments will provide counterpart finance of USD 125 million

• Loan given by ADB for Tranche 1 project has a 25 year repayment term; this includes a 5 year grace period with annual interest rate assessed in line with LIBOR lending facility of ADB.
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