Roadmap for Answer Writing
Introduction
- Define the Banks: Start by explaining what the New Development Bank (NDB) and the Asian Infrastructure Investment Bank (AIIB) are, including their primary objectives.
- Contextual Importance: Briefly state why India’s membership in these banks is significant for its economic and strategic interests.
Body
1. Differences in Role and Function
- NDB’s Focus: Emphasize that the NDB, established by BRICS nations, primarily funds sustainable development projects in member countries, particularly in emerging economies.
- AIIB’s Focus: Highlight that the AIIB aims to address infrastructure financing gaps across Asia and beyond, with a broader membership that includes both Asian and non-Asian countries.
2. Membership and Governance
- NDB Governance: Explain that the NDB has five founding members (Brazil, Russia, India, China, and South Africa) and operates on an equal governance model.
- AIIB Governance: Discuss that the AIIB has a larger membership (103 approved members) with China as the largest shareholder, which may influence decision-making processes.
3. Strategic Significance for India
- Access to Funding: Discuss how both banks provide India with critical funding for infrastructure projects, which are essential for economic growth.
- Diversification of Funding Sources: Explain how membership allows India to diversify its funding sources beyond traditional Western-dominated institutions.
- Regional Leadership: Mention how engaging with these banks enhances India’s leadership role in the Asia-Pacific region and among developing nations.
- Sustainable Development Goals (SDGs): Highlight how both banks align with India’s commitment to achieving SDGs through financing inclusive growth and climate resilience.
Conclusion
- Summarize Key Points: Recap the distinct roles of the NDB and AIIB and their strategic significance for India.
- Future Outlook: Suggest that leveraging the potential of both banks will be crucial for India’s long-term economic and infrastructural goals.
Relevant Facts for Inclusion
- NDB’s Establishment: The NDB was established in 2014 by BRICS nations to support public or private projects through loans, guarantees, equity participation, and other financial instruments .
- AIIB’s Mission: The AIIB focuses on sustainable infrastructure and development in Asia, with a mission to improve economic and social outcomes .
- India’s Stake: India is a significant stakeholder in both banks, which allows it to influence their policies and priorities.
Model Answer
Introduction
India’s recent decision to become a founding member of the New Development Bank (NDB) and the Asian Infrastructure Investment Bank (AIIB) has generated interest in the role these two banks will play in the global economic landscape.
Body
Understand the Differences
Strategic Significance for India:
Conclusion
The NDB and AIIB have different roles, with the NDB emphasizing sustainable development and the AIIB focusing on broader infrastructure needs. Both banks offer funding opportunities for India’s development while allowing it to shape their policies and governance as a founding member, thereby strengthening economic ties with other countries.
Role Differences Between NDB and AIIB:
Strategic Significance for India:
Conclusion: The roles of the NDB and AIIB are distinct, with the former having a global focus on sustainable development and the latter concentrating on Asian infrastructure. For India, these banks are strategically significant as they provide crucial financial support for infrastructure projects, enhance regional influence, and support domestic economic growth.