Indian Politics & Policy Volume 1, Number 2, Fall 2018 | Page 88

Foreign Assistance in India’s Foreign Policy: Political and Economic Determinants
An Overall Assessment
Four major points emerge from an
overall assessment of the Indian
development partnership program.
First, India eschews terms like
aid and donor, and prefers to use the
term “development partner” as a fellow
developing country and DAC aid recipient.
It is only with the formation of the
DPA, that India’s “demand-driven” and
politically punctuated assistance can be
said to have acquired the character of
a program. As the amounts increased,
it gradually acquired the character of
a program in two shifts—the shift to
LOCs through the Exim Bank from
2004, and the formation of the DPA as
an implementation agency in 2012.
Second, while the purpose of
partnership is admittedly political, it is
meant to cultivate goodwill toward India
and long-term relationships rather
than immediate payoffs, either political
or economic, particularly in the case of
Africa.
Third, the MEA considers the
ITEC program the most cost-effective
and the one that had yielded the best
returns in terms of long-term goodwill
because it trains key personnel in India
and builds long-term human relationships.
These are considered important as
money alone is not enough to buy influence.
India, because of English language
education, is seen to have a comparative
advantage in education and training of
developing country personnel.
Fourth, there is no clear economic
development philosophy or
macroeconomic policy prescription
that emerges from a scrutiny of the development
partnership program. The
basic philosophy seems to be seen as a
fellow developing country partner that
fits in with what the recipient wants
except that the assistance is largely
tied to India-sourced supplies, similar
in this respect to early-stage Western
aid. However, if the development
partnership program acquires a more
programmatic rather than a jerky, politically
punctuated, and ad hoc character,
one might expect a prescriptive
development strategy to emerge over
time either on its own or in learning/
partnering processes with established
Western aid programs or in the context
of new, South-led lending institutions
like the NDB and the AIIB. However,
this might possibly be in tension with
the explicit policy position at present
that the development program is to
serve national, that is, foreign policy interests,
although these have been seen
so far in a long-term perspective.
Overall, India appears to have
operated on the realist assumptions of
power politics and interest-orientation
in its assistance policies, particularly
with its neighbors, and especially energy
security as regards Africa, as argued
by Six (2009) and Fuchs and Vadlamannati
(2013), and in line with the earlier
work on developed donor motivations
by Alesina and Dollar (2000). However,
as we said earlier, the Indian focus
is on the long run more than for immediate
gains. India’s partnership relationships
with Bhutan, Nepal, Bangladesh,
and Sri Lanka, and with Afghanistan
and Myanmar, remain essentially de-
85