India borrowed from Beijing-headquartered bank month after Galwan clash

Sandeep Dikshit

Tribune News Service

New Delhi, September 16

Even as the External Affairs Ministry blamed the Chinese for the flare-up on the Line of Actual Control (LAC), the government again confirmed that it had taken loans from Beijing-headquartered multilateral banks after the Galwan Valley clash on June 15.

One of the loans was taken over a month after the clashes, according to official social media posts of the Union Finance Ministry.

The Finance Ministry had stated on June 18 — three days after the Galwan Valley clash—that India had opted for a $750 million loan from the Beijing-headquartered Asian Infrastructure Investment Bank (AIIB) to strengthen its response to the adverse impacts of Covid on poor and vulnerable households.

The government can claim that the processing of the loan took place before the clashes. But it has also come to light that the Centre also signed a $ 500 million agreement with AIIB on August 24 to improve the network capacity of Mumbai’s suburban railway system.

Despite the bad blood with China, India’s borrowing programme proceeded on a parallel track. Finance Minister Nirmala Sitharaman attended the annual meeting of the AIIB Board by video conferencing where the Chinese President was the star speaker.

AIIB is the brainchild of Chinese President Xi Jinping and was set up in 2016 as an alternative to the World Bank and the Asian Development Bank, dominated by the US and Japan. It is aimed at mainly promoting the One Belt and One Road (OBOR) Initiative but now has a wide membership base of 103 countries, including India which has 8 per cent stake in the venture. India has also borrowed from the Shanghai-based New Development Bank (NDB), promoted by the BRICS countries.

In May, India had taken a $ 500 million Covid project from AIIB and had also borrowed $ 1 billion from NDB. In rupee terms, the two China-led banks have so far lent India Rs 17,000 crore to fight the aftereffects of Covid.

Opposed by the US, the AIIB has approved loans to about 20 countries, including Nepal and Bangladesh in India’s neighborhood.