How India will be benefited from being a founding member of AIIB? Discuss various challenges in front of AIIB.
The Asian Infrastructure Investment Bank (AIIB) has been launched by the Chinese President Xi Jinping in January, 2016.
India is founding member of both IMF and the AIIB. India’s share of Special Drawing Rights (SDR) is only 2.28% it is second largest shareholder of AIIB with 8.52% shares that automatically gives India an opportunity to present its views. AIIB gives an opportunity to India break away from IMF as it is difficult to borrow from IMF considering the western hegemony. AIIB will provide an opportunity for Indian corporates to expand their operations. Development of transportation corridors across Asia will be a win-win situation for all countries of the region. AIIB is a positive step to fight at IMF for early reforms considering the changes in the global economic order.
However, there are certain challenges before AIIB. Critics argue that the new bank may not consider environmental, social and anticorruption while funding the development projects. AIIB also differs from other multilateral lenders such as World Bank and the Asian Development Bank as it focuses only on infrastructure projects rather than prioritizing poverty reduction. There is a risk of misallocation of funds to mega-projects that have little impact on inclusive economic growth. Finally, running a multilateral organisation having different national interests is not an easy task.
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