Indian Politics & Policy Volume 1, Number 2, Fall 2018 | Page 72

Foreign Assistance in India’s Foreign Policy: Political and Economic Determinants
2011, and 2015, the Afghan president’s
visit to India in 2011, and the Indian
prime minister’s visit to Bangladesh
in 2017, all of which were followed by
major increases in assistance commitments.
The requests are processed by
the country desk, i.e., the political (territorial)
division of the MEA, which
makes a decision on whether and how
to respond. Assistance requests and
hence, assistance decisions reflected
in annual numbers are not—and cannot
realistically be expected to be—a
smooth affair but jerky and politically
punctuated. Except for long-term Plan
assistance to countries like Bhutan and
Nepal, one can expect the numbers to
jump up and down with events.
Once a policy decision is made
by the relevant political division of the
MEA, the DPA is then charged with implementing
the decision. After the shift
to Exim Bank LOCs for project loans,
including import of Indian equipment,
the MEA now gives 95 percent of the total
assistance, reflected in Statement 11
of the Government of India’s Expenditure
Budget, with about 5 percent coming
from some other ministries such as
Science and Technology, Health, and
Renewable Energy. The factors that will
shape the likely mix of bilateral and
multilateral modes of Indian development
partnership are unclear and need
better understanding, particularly with
India’s future participation in new institutions
like the (BRICS’) NDB and the
AIIB.
The experience of various DAC
donor agencies and their relationship
to their respective foreign ministries is
being studied, particularly the models
of the Japan International Cooperation
Agency (JICA), UK’s Department for
International Development (DFID),
and the US Agency for International
Development (USAID). The DPA has
observed that the independently spunoff
DFID in the UK developed tensions
with the Foreign and Commonwealth
Office, and that USAID is gradually being
reintegrated into the State Department.
Internal issues that the DPA is
currently addressing include: (a) budget
allocations—funds are needed early
in the financial year; (b) the approval
process—an empowered committee is
proposed to be set up to speed up LOCs
selected by host countries; (c) efforts to
move away from the monopolization of
projects by a few companies and reduce
over-dependence on public enterprises;
(d) streamlining contracting/procurement
procedures.
India is striving to emerge as a
South–South cooperation leader, cofounding
the Global Network of Exim
Banks and Development Finance Institutions
in 2006, promoting the establishment
of the Development Cooperation
Forum in 2007, and becoming
one of the largest contributors to the
Commonwealth Fund for Technical
Cooperation, and has now joined the
NDB (which is based in Shanghai but
headed by an Indian for its first five
years) and the AIIB. Will it strive to
marshal its limited foreign assistance
resources through those multilateral institutions
where it has a leadership role,
but which might be relatively small, or
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