Foreign Affairs

India’s assistance diplomacy:Buying the influence?

New Delhi, September 2012
Earlier this week, Indian Foreign Secretary Ranjan Mathai told his diplomatic coterie during the fourth conference of Indian heads of the missions,that they have to embrace a significant cut of around 25,00 crores in funds for Ministry of External Affairs (MEA) this year. This prospective cut is one of the few instances of the tumultuous period India has been undergoing in its fiscal department for quite some time now whatsoever the positive manifestations of recent efforts of ‘big ticket reforms’ by Manmohan Singh-led government.
But from neighbourhood to the faraway lands whether in Africa, South America, Central Asia or Caribbean countries, India’s assistance have shown no sign of slashing even in these difficult times. Rather it has increased considerably over few years. The total appropriation for external grant and loan in 2012-13 budget stands at 5148.61 crore rupees which is 50 % and 70 % increment on what it was in 2011-12 and 2010-11.
India seems to have rolled its sleeves up to join the group of power which apparently ‘use assistance to buy the influence’ for long term strategic and economic interests,just a few to mention.
India has also established a different arm Development Partnership Administration( DPA) under MEA earlier this year with an objective to streamline the delivery of New Delhi aided development projects in developing countries, especially in neighbourhood and Africa. Basically DPA is like USAID in the US and DFID in the UK, but New Delhi, in an apparent bid to look different, does not want to present itself as the donor.
” We insist that what we mean by development partnership is not a donor recipient relationship. We don’t like to call ourselves a donor,” says Syed Akbaruddin–Spokesperson at MEA.
“We respond to the development priorities of our development partners without being intrusive in modality of projects and imposing conditions, for our mutual benefits,” claims Akbaruddin.
Larger chunk in neighbourhood:
MEA says, South Asia accounts for about 70% of India’s total commitments under grant assistance and 50 % projects are in this region. As of now, 135 grant assistance projects spread over 61 countries.
Apart from grant assistance, India provides Line of Credit (LoC ) or the loans at concessional rates. Another form of Indian assistance is via Indian Technical and Economic Cooperation (ITEC) under which varieties of courses or trainings are provided to students from developing countries in Indian institutions.
The biggest recipient country in neighborhood has been Bhutan as India is set to provide 12,00 crores in grant and another 300 crores as loan in the current fiscal year 2012-13.The total amount is quite a jump from the last year figure of 1000 crores. New Delhi has also upped its grant amount to Nepal to 270 crores (2012-13) from 150 crores(2011-12).Apart from this New Delhi had formally signed last year to provide Nepal a LoC of 250 million dollars, the pledge it made during President Rambaran Yadav’s India-visit in 2010.
Bangladesh has become the top recipient of soft loan from India with New Delhi’s pledge of 1 billion dollars LoC last year during the Prime Minister Manmohan Singh’s historic visit to Dhaka last year.
The Maldives, Sri Lanka, Myanmar and even country like Afghnaistan in India’s extended neighbourhood have seen a surge in grant from New Delhi over past few years.
Why is India spilling so much money in the neighbourhood?
In former Indian ambassador Veena Sikri’s view, there is no ‘vested interest’ rather ‘the assistance is driven by India’s genuine want for a stable neighbourhood’. This set of notion is also corroborated in the oft-stated views of PM, External Affairs Minister and Foreign Secretary lending primacy to the neighbourhood in foreign policy.
However, a source close to government frankly admits that it’s obvious to expect one’s genuine interests being addressed in other nation in exchange of assistance it extended.
” It’s not a new phenomenon.Every power wants its sphere of influence remain intact and further expand and it’s more obvious when it comes to your own backyard,” argues the source.
Criticism from inside
Foreign aid programs ended in almost 1980s in India however still there are some World Bank programs.Many take the establishment of DPA as one of the signs of India formally shedding its mantle of aid recipient country and transcending to the stature of donor.But equally a larger section believe that India has a lot of domestic problems it should focus on rather than distributing money to the foreign an illustration, India’s decision to provide $10 billion to ailing Eurozone in July despite its own frail economy, sparked a huge criticism in Indian media, intellectuals among others.
China factor!
On second week of July, National Security Advisor ShivShankar Menon discussed with Indian envoys stationed in neighbourhood to discuss the ways of ‘countering China’s increasing economic and diplomatic leverage in South Asia,’ according to a report in a leading Indian daily.That discussion concluded the urgency of fast-tracking the current bilateral projects through DPA, the report said. Though this kind of sense of competition seems to exist between these two rising economies, however, in formal statements, cooperation is the buzz word. However,despite few irritants, China and India have really taken the bilateral relationship to a new height which could be corroborated by a lot of facts. The quantum of bilateral trade has touched 75 billion US dollars which is projected to reach $100 billion by 2015. Exchanges of highest level visits and cooperation in international forums in issues like climate change, etc have been strong enough to signal burgeoning Sino-Indian ties.

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