India’s journey from aid recipient to a donor

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Providing assistance to other nations has become a key foreign policy measure to establish India’s clout abroad.

Iranian President Hassan Rouhani inaugurated the Chahbhar port in the South Western Province of Iran two months ago.  An event that would otherwise go unnoticed in the Indian media, quite surprisingly grabbed much attention in the country. The reason: the port was developed on an aid of USD 500 million, provided by India. In 2015, Indian Prime Minister Narendra Modi, on a historic visit to Afghanistan, opened the Parliament Building, built with Indian assistance, in Iran. In June 2016, the Prime Minister travelled to Afghanistan to inaugurate the Salma Dam, also known as the India-Afghan friendship dam, rightly named so, highlighting India’s contribution in its construction. These are inclusions to an ever-growing list of countries, which include Sri Lanka, Myanmar and Mongolia, that benefit from India’s benevolence.

According to statistics provided by the UK’s Foreign and Common Wealth office, India finances around 80 percent of Bhutan’s budget. Nepal also is a key beneficiary of aids given by the Indian government. India’s aid projects in the 21 century go farther beyond its neighbourhood and are now reaching as far as Africa. At the Indo-Africa summit held in New Delhi in 2015, MoUs were inked with many African nations to provide assistance for infrastructure projects and in other areas, enhancing India’s growing presence in the continent.

“Over the past decade, India’s transformation from being an aid recipient to a donor has become much more pronounced, with aid programmes increasingly seen as a powerful foreign policy tool, particularly in the neighbourhood and in Africa. In both those cases, our aid programmes have been characterised by a willingness to let the recipient set the terms, a respect for the priorities and the culture of the recipients, and a focus on projects that promote self-reliance, economic growth and political democracy (including women’s empowerment). However, despite our growing aid footprint, we are struggling to manage the responsibility that comes along with our aid development programmes, be it through the tracking of their progress against the stated objectives, or even in directing our aid efforts to areas that will support our long-term national and foreign policy priorities. This is where I think the impact and efficacy of our programmes are blunted, and where a national aid agency, styled around the USAID or DIFD for example, would be beneficial.”
Dr. Shashi Tharoor MP, Lok Sabha

It may come as a surprise to many that a country that was largely perceived to be an aid recipient nation now claims the status of a donor nation. But such generosity on India’s part is not new, neither is it unprecedented.  India has been a major source of assistance to two of its closest neighbours Nepal and Bhutan, since independence. India has also provided assistance to other Asian and African nations with the aim of achieving friendly relations with them. In recent decades, however, there has been a change, not only in the quantum of aid that flows out of the country, but also the principles that drive such aid provisions. An idea that was initially conceived to bring a sense of solidarity among newly independent nations has now evolved into a key foreign policy measure to establish India’s clout abroad. As India seeks to portray itself as an emerging world power, it can least afford to undermine the benefits of aid programmes in a fast-changing world.

John Samuel and Abraham George of Institute for Sustainable Development and Governance, a Thiruvananthapuram-based think-tank, in a recent report, argue that it is time India established a full-fledged aid agency along the lines of USAID.

Afghanistan’s new Parliament building.

Further, for the effective functioning and implementation of such aid programs, there is a pressing need to establish well-oiled administrative machinery. Proposals were made by the government in 2003 and in 2007 to set up independent aid agencies, but failed to take off. Currently the government’s aid programmes are directed through initiatives like the Indian Technical and Economic Cooperation (ITEC), the EXIM bank and Lines of Credits. In 2012, the Central Government established the Development Partnership Administration under the Ministry of External Affairs to streamline, co-ordinate and rationalise the delivery of aid. Comprising of three divisions, the DPA works closely with the territorial divisions of the ministry on projects under India’s development assistance initiatives. While such measures by the government are a welcome move, India still lacks the kind of coherent structures that are present in the developed nations for the purpose of aid delivery. Not only is India ill-equipped on the administrative front, the country’s development program still lacks clear objectives and scores a nil in accounting and monitoring. John Samuel and Abraham George of Institute for Sustainable Development and Governance, a Thiruvananthapuram-based think-tank, in a recent report, argue that it is time India established a full-fledged aid agency along the lines of USAID. They further go on to state that such a move will elevate India’s development co-operation initiatives to ensure greater visibility, profile and strategic importance. The incoherence and discord in India’s aid delivery mechanism only serves to strengthen this argument.

Given India’s recent foray into this territory, one would be inclined to question the relevance of such an agency. But, instances of mismanagement in implementation of projects abroad, including the delay in the construction of the Afghan Parliament building, is sufficient to substantiate such scepticism. In an ever-changing world order, if India seeks to compete with a burgeoning China, it is essential to revamp its outlook in matters of foreign affairs and establish an International Aid Agency.