INDIA’S APPROACH TO DEVELOPMENT COOPERATION
Sachin Chaturvedi & Anthea
Mulakala (Eds)
Routledge
190 pages; Rs 695
Aid to nations has been a slugfest to buy economic supremacy. This was the case through the Cold War years and it remains true in the 21st century too. As the BRICS countries begin constructing the elements of a new economic architecture to supplant the roles played by the European and American power houses, the operation of aid diplomacy has become a big part of the discussions. Would it, for instance, just be a case of replacing one set of nations with another, especially in Africa?
India has a peculiar role in this respect. It expects to receive about $2.75 billion in aid but will also give away $1.68 billion, according to the Budget Estimate for 2016-17. What gives? A sizeable portion of that aid goes to Bhutan and Nepal and is now slowly building up in Afghanistan. Within the global pecking order this is somewhat like the description of the Sun in the Milky Way, a medium-sized entity. Also, despite the noise about China, its Budget is comparable too, at $6.4 billion (2014). In fact, the BRICS’ total, including Russia at just a shade less than $10 billion, would put it at close to fourth position globally, next to Japan and just after USA, UK, and Germany. India on its own would rank somewhere near South Korea and Spain at 15th or 16th position in the OECD ranking of aid givers.
Juggling with these figures is interesting in the context of reading India’s Approach to Development Cooperation, essays on the theme edited by Sachin Chaturvedi, director general of Delhi-based think tank, RIS, and Anthea Mulakala, director for International Development Cooperation at Asia Foundation.
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The volume explores the trend lines in India’s “development cooperation” instead of the somewhat pejorative term “aid”. As the Indian economy gears up the scale of these activities, it is indeed worth checking out if the Indian experience has offered a different dimension to the highly charged field. As economists have pointed out, China has often cloaked its aid with an insistence on preferential bidding rights for its companies in the recipient countries in addition to setting a pre-determined rate of interest on the projects without any reference to what the projects would actually earn. India has eschewed that path.
Yet sticking to its knitting, is it time then for India to club its aid programmes into one agency? It is not just a question of replacing the muscle of the North nations with a similar one from South, such as China. As Xiaoyun Li and Taidong Zhou explain in chapter 6, “although China’s aid programme also involve several ministries…MOFCOM’s department of foreign assistance has taken the lead in their coordination and management”.
As the two editors argue in the concluding chapter, the Indian experience is by contrast shaped by “parallel track with its recipient experience and over time, has shaped a new understanding of donor and recipient as mutual beneficiaries and equal partners”, as Bishwambher Pyakuryal and Mr Chaturvedi demonstrate, has worked for Nepal.
To make donor diplomacy provide a welcome patina for other nations too, it might be useful for India to club the various outreach programmes under a nominally common umbrella. It will also assure the receiving countries about how the money would fit their schemes rather than that of the host country. This could particularly help provide more support to the extensive line of credit (LoC) that India runs, an aid protocol that is inviting attention in OECD nations too — data that is often overlooked.
From 2008 till 2014 for instance, India has signed 121 of these LoCs of which 90, or over 74 per cent, were with African nations. “In a limited manner, they have served to counterbalance the growing influence of China in many African countries,” Prabodh Saxena, former IAS officer working on the aid desk and now a consultant with multilateral institution, writes. He argues that despite their potential, the LoCs are often allowed to be rewritten or not enforced strongly and blames the “absence of a professional agency” at the government level for those aberrations. “Are LoCs financial products or diplomatic instruments,” he asks and adduces evidence to show how the contrasting position on the question between the finance ministry and the external affairs ministry has often blunted their advantage as “safe financing option for Indian exporters…and as a means to strengthen Indian development partnerships”.
As Mr Chaturvedi and Ms Mulakala point out after surveying the literature “Indian cooperation has expanded and diversified over the years, extending its reach beyond its immediate neighbourhood to more distant partners…(but) India’s Development Partnership Administration has yet to fully realise its role as a central repository of all Indian projects. In fact, the DPA needs to go beyond this”. With the Western world rethinking the role of aid, the leading Southern nations need to ensure they work the aid money judiciously. A common Indian aid agency would be a good start.