Indian foreign aid

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Indian foreign aid is development assistance provided by the Government of India to other countries. According to the International Development Research Centre, India "does not adhere to any standard definition of development assistance. What the country calls 'overseas development assistance' is often a mixed bag of project assistance, purchase subsidies, lines of credit, travel costs, and technical training costs incurred by the Indian government."[1] India's foreign aid program covers over 60 countries across Asia, Africa and Latin America.[2]

History

India's foreign aid program began in 1949 by providing scholarships and humanitarian aid to nations affected by famine. Scholarship aid was primarily provided through the Colombo Plan. India began the International Technical and Economic Cooperation (ITEC) programme in 1964 to provide training and transfer expertise to other countries. The first beneficiaries of Indian foreign aid were Nepal and Bhutan. Since the 1950s, India provides annual grants to both those countries.[3][2]

Until 2003-04, the Ministry of Finance’s Department of Economic Affairs (DEA) extended lines of credit on the basis of credit agreements signed by the Government of India with the government of the recipient nation. The entire amount provided by the lines of credit was provided for in the Union Budget. Since 2003-04, the previous government to government system was replaced by a policy of Union Government supported lines of credit through the Exim Bank.[3]

Administration

Agencies

India does not have a dedicated aid agency. Most foreign aid work is conducted through multiple programs operating within different ministries of the Union Government. The Ministry of External Affairs (MEA) is the lead agency and co-ordinates between the various ministries. The other individual ministries have their own objectives and budgets both for bilateral programmes and for funding international organisations. The MEA plays the principal role in providing development aid through grants and project assistance. According to the German Development Institute (DIE), "MEA has various institutional arrangements under its wings, such as the Indian Technical and Economic Cooperation (ITEC) Programme, Aid to African countries through Special Commonwealth Assistance Programme for Africa (SCAAP), [and] Bilateral Aid to neighboring and other developing countries."[1] ITEC provides aid in the form of training in India, project assistance, study trips, and humanitarian assistance.[4]

Budget allocations for development assistance to some countries are also channeled through other ministries, including the Ministry of Defence and the Ministry of Finance. The Finance Ministry's Department of Economic Affairs (DEA) provides grants and extends lines of credit through the Exim Bank to developing countries on the advice of the MEA.[1][4] According to the MoF website, one of the DEA's major functions is "Government of India Supported Lines of Credit (LOCs) routed through EXIM Bank of India to countries of Asia (Excluding Bangladesh, Nepal, Bhutan) Africa, CIS region and Latin American region[,] which are being extended under the Indian Development and Economic Assistance Scheme (IDEAS)."[1] The Ministry of Water Resources has provided funding for hydro-electric projects in Nepal and Bhutan.[4] The size of contributions to the World Food Programme is decided by the Ministry of Agriculture. Other ministries may also be involved in aid programs in consultation with the MEA. The MEA remains the final authority on which countries receive assistance.[1]

In the 2007–2008 Union Budget, the government proposed the creation of a unified aid agency called the India International Development Cooperation Agency (IIDCA), which would consolidate Indian aid programs. However, the agency has not yet been established.[1]

Types of aid

According to economist Dweep Chanana, there are three parts to India's foreign assistance program:

  1. Grants and preferential bilateral loans to governments
  2. Contributions to international organisations (IOs) and financial institutions (IFIs)
  3. Subsidies for preferential bilateral loans provided through the Export Import (EXIM) Bank of India.

India also provides scholarships to foreign students through the Indian Council for Cultural Relations (ICCR) scholarship scheme.[1] The ICCR also conducts cultural exchanges.[3][5] India has also entered into numerous bilateral cooperation agreements for the provision of foreign aid.[1]

South Asia

Unlike most emerging donors, the vast majority of India's foreign aid is directed towards neighbouring countries. This focus on South Asia is aimed at boosting India's influence in the region.[2] India regularly provides aid to six of its seven neighbours in South Asia. India does not budget aid for Pakistan, but has often provided funds and humanitarian assistance in the aftermath of natural disasters in that country.

In 2014-15, India provided $1.4 billion, or 87% of India's foreign aid budget, to six South Asian countries.[6] India had a foreign aid budget of US$1.6 billion in 2015-16, a 26% increase over the previous fiscal. About 84% of the budget was given to South Asian nations. Bhutan received 63% of India's foreign aid budget, making it the highest recipient. Sri Lanka received US$80 million.[2]

Afghanistan

India rapidly increased its foreign aid to Afghanistan following the overthrow of the Taliban in 2001. Between 2002 and 2011, India provided over $1.5 billion in foreign aid to Afghanistan. By 2011, the country had overtaken Nepal as the second largest recipient of India's foreign aid. In May of the same year, India pledged an additional $500 million in aid to Afghanistan. India has primarily invested in infrastructure, capacity building, humanitarian aid, community-level development initiatives, public-private partnerships, as well as funding for small and medium enterprises (SMEs). In 2011, India was the fifth largest donor to Afghanistan, providing $112 million aid. Afghanistan received $89 million or 15% of India's technical cooperation budget in 2012-13. According to opinion polls, most Afghans have a favourable view of India's foreign aid program, and believe that more Indian development assistance is required, particularly after the withdrawal of NATO. India's aid program in Afghanistan has received strong backing from the United States.[2]

The new Afghan Parliament building.

In January 2006, India invested 1,457 crore (equivalent to 21 billion or US$310 million in 2020) to complete the reconstruction of the Salma Dam in Herat Province.[7] The dam was originally built in 1976 on the Hari River, but was damaged early during the Soviet war in Afghanistan.[8] The reconstruction of the dam was first initiated by an Indian company (WAPCOS Ltd.) in 1988, but the project could not be completed due to the ongoing instability caused by the civil war.[9] On 25 December 2015, the new Afghan Parliament building, financed and constructed by India, was inaugurated by Indian Prime Minister Narendra Modi during a state visit.[10][11]

Bangladesh

The Government of Bangladesh and the Exim Bank of India signed a line of credit agreement worth $1 billion on 7 August 2010.[1] India allocated an aid budget of $56 million for Bangladesh in 2014-15.[12]

Bhutan

Bhutan was one of the first beneficiaries of Indian foreign aid. Since the 1950s, India has provided annual grants to the country.[3] Bhutan has historically been the largest recipient of India's foreign aid.[2] In December 2009, twelve memorandums of understanding (MoUs) were signed in the areas of hydropower, narcotics, information technology, medicine, agriculture, civil aviation, and environment between India and Bhutan.[1] Bhutan received $213 million or 36% of India's foreign technical co-operation budget in 2012-13,[2] and India spent $469.7 million constructing hydro-power plants in Bhutan in 2013-14. The Indian government has stated that part of the reason for investing heavily in hydroelectricity is because Bhutan has abundant water resources and the surplus power generated can be purchased by India to meet its own power needs.[6]

In 2014-15, Bhutan received over a billion dollars in aid from India, accounting for 64% of India's foreign aid, and receiving 58% more aid than it did in 2013-14.[6] In the 2015-16, fiscal Bhutan received 63% of India's total foreign aid budget.[2]

Nepal

Nepal was one of the first beneficiaries of Indian foreign aid. Since the 1950s, India has provided annual grants to the country.[3] Nepal has historically been the second highest recipient of India's foreign aid, after Bhutan. Since 2012, India has invested primarily in health, infrastructure, rural development, and education in Nepal.[1][2]

Nepal received 8% ($49 million) of India’s technical cooperation budget in 2012-13.[2] The country received $75 million in aid from India in 2014-15.[13]

Maldives

India allocated an aid budget of $29 million for the Maldives in 2014-15.[12]

Pakistan

In 2010, following extensive flooding in Pakistan that resulted in over 2,000 deaths, India donated $500,000 through the UN Central Emergency Response Fund (CERF) and $20 million to the Pakistan Emergency Response Fund. India was the third largest donor to Pakistan in 2010, providing $26.1 million.[14]

Sri Lanka

Following the end of the Sri Lankan Civil War in 2009, India began constructing homes in Sri Lanka for internally displaced persons. India also invested in the rehabilitation of ports and harbors, airports, and cultural landmarks in the country.[14]

Sri Lanka received $83 million in aid from India in 2014-15,[13] and $80 million in 2015-16.[2]

Rest of Asia

Myanmar

India allocated an aid budget of $53 million for Myanmar in 2014-15.[12]

North Korea

India is one of North Korea's largest food aid providers.[15] In 2002 and 2004, India contributed 2000 tonnes of food grains to help North Korea tide over severe famine like conditions. In 2010, India responded to North Korea's request for food aid and made available 1300 tonnes of pulses and wheat worth $1 million through the World Food Programme.[16][17]

Palestine

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Library at al-Azhar University, Gaza Strip

At the Washington Donors Conference in October 1995, India pledged $1 million for assistance to the Palestinian people. At the subsequent pledging conference in Paris in January 1996, India pledged another $1 million for the construction of a library-cum-activity centre at the Palestinian Technical College in Deir-El-Balah and another library at the Al-Azhar University in Gaza. At another International Donors Conference in Washington DC on 30 November 1998, India pledged another US$1 million, of which $300,000 was disbursed to Al-Azhar University for the construction of two additional floors to its library, while the remaining amount was utilised for a Human Resource Development Programme.

Following a visit of a security delegation to India in March 1997, led by the Head of the Palestinian Security Forces, Maj Gen Nasser Yussef, India offered 51 specialised security training slots to Palestinians in various disciplines during the year 1997-98, which accounted for an estimated expenditure of 55 lakh. India also continued to offer 8 scholarships under ICCR schemes to Palestinian students for higher studies in India, while also offering several slots for training courses under the ITEC programme.

India added more than 50 training slots, at a cost of 40.63 lakh, for Palestinian personnel for specialised training courses during the financial year 1998-99, where 58 Palestinian officers completed their training. During the financial year 1999-2000, 38 more Palestinian officers utilised the facilities for training.[18] In October 2008, PAP President Mahmoud Abbas visited New Delhi where he met with then Prime Minister Manmohan Singh who announced an assistance of US$20 million to the Palestinian Authority and promised to do all New Delhi can to help it in the PNA's endeavours.[19]

PNA President Mahmoud Abbas paid a state visit to India in September 2012, during which India pledged US$10 million as aid. Indian officials said it was the third such donation, adding that New Delhi was committed to helping other development projects. Three pacts – on building schools, on Information Technology and imparting vocational training – were signed between the two side after the talks. Indian Prime Minister Manmohan Singh said, "Support for the Palestinian cause has been a cornerstone of India's foreign policy. I reiterated India's firm support for the struggle of the Palestinian people to achieve a sovereign, independent, viable and united state of Palestine with East Jerusalem as its capital."[20]

Refugees

The first group of Palestinian refugees from Iraq arrived in India in March 2006. Most were unable to find work in India as they spoke only Arabic, although some found employment with the UNHCR's non-governmental partners. All refugees were granted free medical care at government-owned hospitals. Of the 165 Palestinian refugees who came to India from Iraq, 137 received clearance for resettlement in Sweden.[21]

Africa

In 2006, India launched its flagship aid initiative in Africa by constructing the $125 million Pan-African e-Network, the continent's largest tele-education and telemedicine initiative. The network links 47 African countries with schools and hospitals in India through satellite and fiber-optic links.[2]

At the second India-Africa Forum Summit in Addis Ababa, Ethiopia in 2011, then Indian Prime Minister Manmohan Singh expressed India's desire to help African nations with their development needs. Singh announced that India would invest $700 million to establish educational institutions and training programs in several African countries, including Uganda, Ghana, Botswana and Burundi. The Prime Minister also announced $5 billion in lines of credit for African nations. India made further commitments to Africa at the third India-Africa Forum Summit in 2014.[2]

India allocated $43 million or 7% of its technical cooperation budget to African countries in 2012-13, a 4% increase over the previous fiscal.[2] India budgeted $63 million in aid to African countries in 2014-15, less than 5% of its total foreign aid budget and slightly higher than the previous fiscal.[13]

Latin America

India provided $5 million in aid to Latin American countries in 2014-15, less than 5% of India’s aid budget and slightly higher than the previous fiscal.[13]

Other contributions

The Indian government prefers to handle its aid program and does not route assistance through non-governmental organizations, with the exception of the Indian Red Cross (IRC). The IRC is closely linked with the government as the President of India also serves as the president of the IRC, the Minister of Health serves as its chair person, and district collectors serve as IRC chairs at the district level. The Indian government has also coordinated aid through Indian companies in the public and private sector.[4] Apart from these efforts, India also makes financial contributions to the United Nations (UN) and other multilateral organizations. India is the largest provider of personnel for UN peacekeeping operations and humanitarian assistance in the aftermath of a crisis.[3]

New Development Bank

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The New Development Bank (NDB), formerly referred to as the BRICS Development Bank, is a multilateral development bank established by the BRICS states.[22] According to the Agreement on the NDB, "the Bank shall support public or private projects through loans, guarantees, equity participation and other financial instruments." Moreover, the NDB "shall cooperate with international organizations and other financial entities, and provide technical assistance for projects to be supported by the Bank."[22]

References

  1. 1.00 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 Lua error in package.lua at line 80: module 'strict' not found.  This article incorporates text from this source, which is in the public domain.
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  3. 3.0 3.1 3.2 3.3 3.4 3.5 https://casi.sas.upenn.edu/sites/casi.sas.upenn.edu/files/upiasi/E.%20Sridharan%20-%20IDRC,%20India%20as%20an%20Emerging%20Donor,%20June%202014.pdf
  4. 4.0 4.1 4.2 4.3 http://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-files/416.pdf
  5. http://web.idrc.ca/uploads/user-S/12441474461Case_of_India.pdf
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  9. http://www.redorbit.com/news/science/430036/india_to_resume_work_on_salma_dam_in_western_afghanistan/index.html
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  19. NDTV.com: India announces $20 mn aid for Palestine
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