India’s transition from Receiver to Donor of Foreign Aid

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    India’s Transition to Global Donor: Limitations and Prospects (ARI)
    India’s Transition to Global Donor: Limitations and Prospects (ARI) - Elcano

    Theme: India has increasingly sought to expand its activities as a donor, both to reposition itself as an emerging power and to use aid as an instrument for engaging with other developing countries. This ARI looks at the current state of India’s donor programme as regards both its size and scope, identifies India’s role within the multilateral aid scenario and evaluates the challenges and prospects for further growth.

    Abstract: India has expanded its aid programme over the past decade, emerging as a serious donor in certain countries. While the amounts remain small, India’s emergence has focused attention on its possible motives.

    The term ‘emerging donor’ has, over the past decade, become an accepted part of the development world’s lexicon, providing further evidence of the rise of emerging economies. This does not mean that the donors themselves are new. What is new is an increased recognition globally that emerging donors are now a viable complement, and in some cases a substitute, to aid from traditional donors.

    The emergence of these donors is particularly evident now because it occurs at a time when the developed world faces fundamental questions about its own socio-economic model. The financial crisis has undermined confidence amongst OECD countries, put their aid commitments in doubt and given rise to questions about their social welfare and free market models. It is into this vacuum that India has willingly stepped in to offer its own philosophy of development and growth.

    Disbursements by emerging donors were estimated at €8.5 billion in 2006.[1] While small (aid by OECD donors in 2006 totalled €103.9 billion),[2] the competition that these donors insert into what was once an oligopoly of high-income OECD nations has caused much consternation in development circles: China’s aid programme has prompted both awe and fear;[3] India’s stirs a mix of confusion and frustration abroad and pride and criticism at home.

    India started its aid programme soon after independence, with the budget speech of 1958 referring to INR100 million in multi-year grants to Nepal and an INR200 million loan to Myanmar.[4] Since then, but particularly over the past decade, India’s aid programme has evolved substantially, growing both in scale and ambition.

    This paper analyses the evolution of India’s giving in recent years. However, rather than simply describing what India gives and to whom, it primarily looks at three related questions: (1) what are the main characteristics that distinguish India’s aid?; (2) as India grows into a global donor, how is it likely to view multilateral engagement?; and (3) against the backdrop of almost certain growth in giving in the future, what are the challenges and options ahead?

    Analysis

    Defining India’s Giving

    At the outset it is worth establishing what constitutes aid in the context of India’s donor programme. Like most emerging donors, India’s aid-related activities do not follow the traditional definition of the Development Assistance Committee (DAC). Rather, an alternative definition can be considered: spending that furthers India’s standing as a donor. There are three parts to that spending, namely grants and preferential bilateral loans to governments, contributions to international organisations (IOs) and financial institutions (IFIs), and subsidies for preferential bilateral loans provided through the Export Import (EXIM) Bank of India.

    In 2010 India’s aid-related budget allocations were INR36.66 billion[6] (US$785 million in current dollars), a compound annual growth rate (CAGR) of 6.9% from 2004 to 2010. In addition, the EXIM bank in 2008 approved loans and guarantees worth INR352.47 billion with US$3.75 billion in operative lines of credit (see Table 2 and Graph 1).

    These numbers, while big, cannot compare with the giving of China or any of the established donors (China is estimated to have donated US$616 million in 2007 to Africa alone).[7] Thus, India’s ability to use its aid well depend not on how much it gives, but rather on how it directs its aid and what else it offers.

    Towards this end the country’s multilateral budget has increased rapidly. In 2008 and 2009 India spent INR30,719.4 and INR67,630 million respectively (US$2.1 billion) towards increasing its IMF share quota (IMF investment accounted for 66% of the entire budget in 2009). India has also been an enthusiastic donor to the World Food Programme (WFP).

    Secondly, these deficiencies expose India to the entire risk of aid giving, in particular allegations of neo-colonialism (a criticism often directed at OECD donors) or of undermining human rights (a criticism directed at China). Any move to expand direct aid should thus be made with caution
    .


    Conclusions: There is no doubt that recent changes to India’s aid programme mirror a more general re-think of India’s role in the world. Responding to increasing ambitions the programme has evolved to be more global, economic and bilateral. India has sought to engage more closely with the multilateral system, while creating its own niche within the development universe by remaining distinct from other donors.

    China has often used aid to facilitate access to natural resources. India’s approach, by contrast, is described by Kragelund[15] as being ‘on a smaller scale, a bit tardier and not spurring the same dichotomous reactions’. It can be argued that this has prevented India’s giving from realising its full strategic potential. However, that smaller scale and tardiness have also prevented India from tripping up on its own good intentions in what is still an early period of its programme.

    The risk is that as India increases its giving it may try to achieve too many things –political pre-eminence in its vicinity, economic links with East Africa and access to strategic resources (natural or military) in Burma or West Africa–. As that happens, India will expose itself to the same criticisms levelled against China and against traditional donors –a risk amplified by India’s institutional limitations that hinder transparency and accountability–. In short, India’s ambitions will continue to outstrip available resources and capabilities.

    Those limited resources should therefore be used as much to gain direct leverage as to promote India’s private and non-profit sectors in the developing world. Collaboration with other donors can happen, so long as it promotes those general principles. What is needed is a more conscious, transparent and cohesive approach to develop this strategy, rather than the current opportunistic one, because these sectors have always been India’s strengths.

    Dweep Chanana
    Advisor to private and institutional philanthropists with a Swiss private bank

    India’s Transition to Global Donor: Limitations and Prospects (ARI) - Elcano
     
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    Poor Little Rich Country
    BY PATRICK FRENCH | JUNE 24, 2011

    How do you categorize India, a nation that is at once fantastically wealthy and desperately poor?

    [​IMG]

    In May, the Indian government announced that it was giving $5 billion in aid to African countries in the interest of helping them meet their development goals. "We do not have all the answers," Prime Minister Manmohan Singh said, "but we have some experience in nation-building, which we are happy to share."

    The British could be forgiven for being annoyed with Singh's largesse. Britain, after all, currently gives more than $450 million a year in aid to India, and has plans to continue doing so for at least the next few years. The British economy is bumping in and out of a recession, while India's gross domestic product is growing at more than 8 percent a year. This has put the British government in the rather bizarre position of having to sell bonds in order to donate money to Asia's second-fastest-growing economy, even as the latter is itself getting into the philanthropy business.

    The policy is unpopular with most of the British press, which argues that because India has a space program and some flamboyant billionaires, it does not need aid -- especially when Britain cannot really afford it. (When the Labour government was voted out at last year's general election, the departing Finance Minister Liam Byrne left a one-line note on his desk for his successor: "I'm afraid there is no money." It was a joke -- but it was also true.) Nevertheless, Britain still sees itself as a donor nation, with all the obligations and international prestige that entails. This comes in part from a sense of postcolonial guilt: Prime Minister David Cameron spoke recently of a "sense of duty to help others" and the "strong moral case" for giving aid.

    The situation suggests just how dramatically the economic rise of Asia has undone centuries of experience, and the expectation that the West will retain the hegemony it has had for the past 400 years. It is increasingly difficult to classify whether a nation is rich or poor, and terms such as "the Global South" and "the Third World" have to be heavily qualified to take into account the fact that large sections of the population in countries like China, Brazil, and India now have a purchasing power matching that of people in "the West."

    In 1951, the American diplomat Bill Bullitt described the condition of India in Life magazine: "An immense country containing 357 million people," he wrote, "with enormous natural resources and superb fighting men, India can neither feed herself nor defend herself against serious attacks. An inhabitant of India lives, on average, 27 years. His annual income is about $50. About 90 out of 100 Indians cannot read or write. They exist in squalor and fear of famine." Today, it would be hard to make such an absolute statement about India. Poverty certainly remains a chronic problem, but it exists alongside pockets of substantial wealth. An Indian's life expectancy at birth now stands at 67 years, and continues to rise. It is necessary perhaps to think in a different way, and to see that a country like India, like Schrödinger's cat, exists in at least two forms simultaneously: rich and poor.

    The most important change of the last two decades, since the beginning of economic liberalization, has been the transformation of middle-class Indian aspiration. Although the stagnant days of the controlled economy and the "Permit Raj" -- when important decisions depended on a bureaucrat's authorization -- had their own stability, they also stifled opportunity and individual talent. Members of the professional middle class frequently preferred to seek their fortune in more meritocratic societies abroad.

    The modern Indian middle class has a new chance to shape its own destiny in a way that was not previously possible. You can move to your own house using a home loan and live outside the joint family; you can buy a car that is not an Ambassador or a Fiat; you can travel abroad and see how people in other countries live; you can watch your politicians accept bribes or dance with prostitutes on television in local media sting operations while surfing your way to Desperate Housewives or Kaun Banega Crorepati, an Indian adaptation of Who Wants to Be a Millionaire? Businesspeople who have succeeded on their own merits overseas, such as PepsiCo CEO Indra Nooyi, are presented as national heroes.

    Poor Little Rich Country - By Patrick French | Foreign Policy
     
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    Indian aid to different countries is much more than what people talk in open. like few I could search as below and many other references: :india:

     
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    and now we may compare India with Britain, which offers only around $300mill aid per year, which is till 2015 only, not more, but they want multi billions deals from India in return, and their own news papers report like as below :tsk: :facepalm:

     
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    in the language of their own Foreign Policy Expert, this is what British had done with India till 1951 and where India stands right now? and, why would we help them to bring India in the state of 1947/1951 again??????

    after my valuable experience with the British Origin Politicians of US/UK/Australia/Canada, I always advice that, "if you find snakes and a British origin Politician/Diplomat then first kill that British Origin Politician/Diplomat and later think for the snakes." no one would give his hands to 'evil intentions' of British origin politicians of US/UK/Australia/Canada......

    there is no meaning to cheat ourselves and giving space to those snakes who only want to harm India, the nation and its people. like, if they offer little bit aid for the poor then its simply means that they want to cheat you on the other side..... while Indian Middle Class itself pay heavy subsidies for its poor, over $20bil per year subsidies for just the poor people based in agriculture in India only???? then why would India need foreign interference in its country :ranger:
     
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    Amid slowdown, India ramps up aid for neighbours
    Mar 18, 2012

    NEW DELHI: A difficult economic situation notwithstanding, India will be stepping up its assistance programme to its neighbouring countries in the coming fiscal.

    The biggest chunk of India's assistance programme is reserved for Afghanistan, Myanmar and Bhutan that are provided for in the 12th five-year Plan. But under the non-plan head, Bhutan takes the largest chunk with a combined loan-grant amount of Rs 1,500 crore. Bhutan has traditionally been the largest recipient of Indian aid, with massive hydro-electric projects being covered in the Plan expenditure. :thumb:

    Afghanistan and Myanmar are big recipients, both strategically vital for India's security and economic interests. India has invested heavily in infrastructure projects in Afghanistan, including roads, parliament buildings and capacity building for the Afghans in various fields. India also runs the biggest children's hospital in Kabul. :thumb:

    However, recently, India won the Hajigak iron ore mines that will necessitate building several roads connecting the mines to border points. A new component of India's aid package to Afghanistan is in the security sector. As a result of the strategic partnership agreement with Afghanistan last year, India is committed to training and equipping Afghan national security forces. This will include training programmes, to be mainly held in India.

    New Delhi is building a multi-modal transport system in Myanmar that could also serve to improve trade with the country that India now regards as the gateway to south-east Asia. :truestory:

    Other countries that will continue to receive Indian aid this fiscal is Sri Lanka, where India has invested in rehabilitation and rebuilding programmes in the north, railway lines and oil terminals as well as building houses for the internally displaced persons from the Tamil regions. Bangladesh also takes a sizeable chunk of Rs 250 crore after the PM announced a $1-billion credit line for the country in 2010. :tsk:

    Bafflingly, the government spends a minuscule amount for "energy security" in the MEA, but it's so small that it's unclear what this would be used for. Equally strangely, Mongolia gets Rs 2 crore this year from India, but the reason for that remains unclear.

    Amid slowdown, India ramps up aid for neighbours - Times Of India
     
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    India to Provide 600 University Scholarships to Afghans

    India will offer 600 scholarships to Afghan students over the next five years in the fields of agriculture, civil service and forestry, the UN Development Programme (UNDP) said Sunday.

    An agreement between Afghanistan's Ministry of Agriculture, Irrigation and Livestock and India's government will see the 600 scholarships granted to Afghans undertaking Bachelors, Masters and Ph.D. courses in Indian Universities.

    The scholarships are supported by the UNDP under its assistance to Afghanistan in the National Institution Building Project (NIBP), according to a statement on the UNDP website.

    In other news, the NIBP is helping Afghanistan's Ministry of Labor and Social Affairs, Martyrs and Disabled the put together a national policy on child labour, the statement added.

    According to the UNDP website, the main focus of the NIBP is to build the professional capacity of leading Afghan government ministries and agencies at both the national and sub-national level.

    An NIBP board meeting to be held in Kabul on Monday is expected to be attended by senior government officials and representatives from the embassies of India, Japan, Denmark, Sweden, Poland, Kazakhstan, Italy and Australia.

    India to Provide 600 University Scholarships to Afghans
     
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    22,000 new scholarships for African students in various academic courses: Preneet Kaur

    New Delhi, Mar 1 (ANI): Highlighting India's commitment to development in Africa, Minister of State for External Affairs Preneet Kaur said here on Thursday that 22,000 new scholarships for African students in various academic courses and training programmes, including special agriculture scholarships and C.V. Raman fellowships have been made available. :thumb:

    Kaur, who was addressing the inaugural session of India-Africa Science and Technology Ministerial Conference, said proposals for the institutional strengthening of identified institutions in Africa and the transfer of need based technologies have also been initiated.

    "There is a provision for 22,000 new scholarships for African students in various academic courses and training programmes including special agriculture scholarships and C.V. Raman fellowships," said Kaur.

    "As per India's commitment to assist African countries in the field of Science and Technology, proposals for institutional strengthening of identified institutions in Africa and transfer of need based technologies have also been initiated," she added.

    She informed that her ministry has duly secured approvals from the Union Cabinet to support these initiatives through its "Aid to Africa" budget.

    Kaur also said that India has successfully implemented the Pan-African e-Network Project, including tele-education, tele-medicine and connectivity between leaders in 47 African countries and an agreement has also been signed for its implementation in the 48th country, South Sudan recently.

    Under the framework of the Science and Technology Initiatives for Africa, Department of Science and Technology in partnership with Ministry of External Affairs organised the 'India-Africa Science and Technology Ministers Conference'.

    This major ministerial level event has being organised in close coordination with the African Union Commission and is being attended by science and technology ministers from across the African continent along with senior official from various countries. he event is expected to provide a platform for the advocacy, outreach and commitment of India under the framework of the New Science and Technology Cooperation Initiative with Africa.

    The ministerial conference also intends to help to develop linkages and also secure the interests and commitments of the African partners to this Indian initiative. (ANI)

    22,000 new scholarships for African students in various academic courses: Preneet Kaur
     
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    India sets up $15 billion global aid agency
    July 2, 2012

    Not long after grumblers in the UK asked their own government why it was giving money to India, if it was giving its own money away, India unveiled a global aid agency on the order of the UK's Department for International Development (DFID) or the US Agency for International Development (USAID).

    Called the Development Partnership Administration (DPA), the agency is designed to streamline and make more transparent India's growing foreign aid program, which has expanded from almost nothing a decade ago to a sizable outlay targeting more than 60 developing countries.

    The DPA will have around $15 billion to spend over the next five years, India's Sunday Guardian newspaper reported. It will be headed by Ministry of External Affairs' (MEA) additional secretary P.S. Raghavan and will bring under one umbrella all agencies involved with foreign aid and development projects within the foreign ministry, the paper said.

    "We do not like to call ourselves a donor," the Sunday Guardian quoted Syed Akbaruddin, joint secretary with the Ministry of External Affairs, as saying. "We call it development partnership because it is in the framework of sharing development experiences. It follows a model different from that followed in the conventional North-South economic cooperation patterns, hence the designation of Development Partnership Administration, it is administering our development partnership projects." :thumb: :india:

    So far, India's foreign aid program has made major donations to Sri Lanka, Myanmar and Afghanistan, signaling that along with helping its neighbors New Delhi (like Washington and Beijing) views economic aid as an important foreign policy tool.

    Too bad the bean counters still complain that there's not enough in the coffers to feed everybody in India.

    India sets up $15 billion global aid agency | GlobalPost
     
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    We have new GDP Per Capita on PPP calculation for India as below:

    now poverty of India is because of its over population. Most of the problems of India is because of its Over Population and India has to reduce its population only. otherwise India has around 350mil Upper Middle Class, more than total population in 1947, whose per capita income on PPP is similar to the Very High HDI countries like Argentina, Poland, Saudi Arabia etc. one day I calculated as below:-

    first, we find GDP on PPP of India was $4.45tn in 2011 but its still manipulated by the US/UK since 2007. as, till 2006, we had a different way of measuring GDP on PPP which used to include estimated undocumented part of GDP also. and I remember, this way GDP of high population 'developing' countries was around 50% to 80% higher, and for the middle order countries like Brazil/Turkey it was around 10% higher. and for the developed nations, the difference was hardly around 1% to 3% by that "Old Method" which was in application till 2006. like as below:

    means, GDP of India on PPP was already $5.16tn in 2006. again we have India's growth rate since 2007 as below:

    India GDP Annual Growth Rate

    here we find, "Average Growth Rate" of India from first quarter of 2007 till the December quarter 2012, stood at around 7.7%, on 'annual' basis. hence considering GDP on PPP of India at $5.16tn in 2006 by Old Method, we may calculate its value by 2012, after 6 years since early 2007, as below:

    GDP on PPP of India by end 2012 = 5.16*1.077*1.077*1.077*1.077*1.077*1.077= $8.053tn

    but we would also get to know that PPP value consider value of goods and serivces in US$ term, means we would include the factor of inflation of United States also. and even if we consider average 2.0% inflation of US for those six year in between early 2007 to 2012, with considering an overall factor of just 1.10 this way, then GDP on PPP of India comes around = 8.053* 1.1= $8.86tn by 2012. and it still hasn't included 'Value Added' effects also........

    again, we know that share of agriculture was around 17% in India's GDP in 2012. therefore, we find share of agriculture in indian economy, 0.17 * 8.86= $1.506 trillions, on which 50% population of india is dependent. means around 600mil people based on agriculture in india have per capita income around = $2,500 on PPP by 2012, which is itself similar to the lower middle order countries.

    this way, 8.858 - 1.50 = $7.36tn is left for rest of 600mil people based in industry and service in India, with per capita income of around $12,366 on PPP which is higher than Brazil..........

    again, we have news that 25% of the population of cities are either in slum or in bit better condition only. so we would consider per capita income of 300mil living in cities in low condition at hardly $3,000 which takes a share of $900bil from its GDP. hence we are then left with around 7.36 - 0.90 = $6.46tn, around, for rest of 300 mil people living in cities, the so called Middle Class of India with per capita income around $21,533 on PPP this way.

    but it is estimated that out of total 600mil people based in agriculture sector, it also has around 50mil Lower Middle Class with Per Capita Income around $12,000 on PPP. (as we know that agriculture has higher share of 'undocumented' part, with that, Agriculture also has higher share of non-taxable business of India.) so we find total middle class of India around 350mil with per capita income around $20,000 on PPP which is similar to Very High HDI countries like Argentina, Poland, Saudi Arabia etc, which is more than total population of India at the time of freedom in 1947 :ranger:

     
    Last edited: Dec 18, 2012
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    India doles out rs 26bn aid grant to bhutan
    17 March 2012 |

    At the 2012 budget presentation in the Indian parliament, the Indian finance minister, Pranab Mukherjee yesterday said Rs 2,638 crore or about Nu 26bn has been kept aside as aid for Bhutan.

    Last year, the Indian government provided Nu 20bn in aid to Bhutan.

    Amidst an ongoing rupee crisis, this Nu 26bn which will come to the country as development aid is expected to ease rupee shortage in the country. The government is expecting the budget to be released by the Indian government during the month of April this year.

    Finance minister Lyonpo Wangdi Norbu during a press conference earlier said that he is expecting the money to be released after the Indian budget presentation is over.

    Business Bhutan also learnt that the finance secretary Lam Dorji and acting foreign minister Lyonpo Khandu Wangchuk at the sidelines of Mangdechhu hydropower project meeting were supposed to meet the Indian finance minister to discuss about the release of the budget and also initiate talks to increase the standby credit line from Rs 3bn to Rs 6bn.

    While the Royal Monetary Authority is desperately trying to rein in rupee shortage in the country by means of monetory tools, the government apart from using the fiscal tool is heavily depending on aid from India.

    So far, the Indian government has committed a total of Rs 34bn, of which Rs 7bn has already been allocated for small development programs.

    Earlier the finance minister explained that since the money committed was not been disbursed on time, the government incurred expenditure of Nu 1.5bn for the small development program which further fuelled rupee depletion.

    The Indian government will soon replace the amount. “If this money comes, we will be better off,” said Lyonpo Wangdi Norbu.

    The prime minister and the finance minister were not available for comments.

    An economist Business Bhutan talked to however asked, “For how long Bhutan will depend on aids from India which will only be a short term measure to deal with the current situation of rupee shortage?”

    He said Bhutan needs to look beyond India in terms of trade and investment with countries like Thailand, Bangladesh and Nepal.

    The government is also expecting inflow of rupee once the grant and loans from India for hydropower projects like Sunkosh, Mangdechhu and four other joint ventures embarks. :india:

    Business Bhutan - Nations only Financial Newspaper
     
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    India doles out Rs 26bn aid grant to Bhutan
    17 March 2012

    At the 2012 budget presentation in the Indian parliament, the Indian finance minister, Pranab Mukherjee yesterday said Rs 2,638 crore or about Nu 26bn has been kept aside as aid for Bhutan.

    Last year, the Indian government provided Nu 20bn in aid to Bhutan.

    Amidst an ongoing rupee crisis, this Nu 26bn which will come to the country as development aid is expected to ease rupee shortage in the country. The government is expecting the budget to be released by the Indian government during the month of April this year.

    Finance minister Lyonpo Wangdi Norbu during a press conference earlier said that he is expecting the money to be released after the Indian budget presentation is over.

    Business Bhutan also learnt that the finance secretary Lam Dorji and acting foreign minister Lyonpo Khandu Wangchuk at the sidelines of Mangdechhu hydropower project meeting were supposed to meet the Indian finance minister to discuss about the release of the budget and also initiate talks to increase the standby credit line from Rs 3bn to Rs 6bn.

    While the Royal Monetary Authority is desperately trying to rein in rupee shortage in the country by means of monetory tools, the government apart from using the fiscal tool is heavily depending on aid from India.

    So far, the Indian government has committed a total of Rs 34bn, of which Rs 7bn has already been allocated for small development programs.

    Earlier the finance minister explained that since the money committed was not been disbursed on time, the government incurred expenditure of Nu 1.5bn for the small development program which further fuelled rupee depletion.

    The Indian government will soon replace the amount. “If this money comes, we will be better off,” said Lyonpo Wangdi Norbu.

    The prime minister and the finance minister were not available for comments.

    An economist Business Bhutan talked to however asked, “For how long Bhutan will depend on aids from India which will only be a short term measure to deal with the current situation of rupee shortage?”

    He said Bhutan needs to look beyond India in terms of trade and investment with countries like Thailand, Bangladesh and Nepal.

    The government is also expecting inflow of rupee once the grant and loans from India for hydropower projects like Sunkosh, Mangdechhu and four other joint ventures embarks. :india:

    Business Bhutan - Nations only Financial Newspaper
     
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    World urged to show commitment to poor countries

    New Delhi, Feb 19 (IANS) A day after India announced a $500-million aid package for the Least Developed Countries (LDCs), the global community was Saturday urged to show its political commitment in addressing extreme poverty and other developmental challenges of such nations.Issuing a joint statement at the end of the two-day India-Least Developed Countries ministerial conference, the two sides said “key development challenges of the LDCs” were extreme poverty, productive capacity through structural transformation, economic growth, participation in international trade and resilience against vulnerabilities.

    The joint statement called upon the international community to “express its highest political commitment in support of the Istanbul Programme of Action and to the successful and ambitious outcome of the 4th UN-LDC conference”.

    The Istanbul conference to be hosted by Turkey May 9-13 this year will be the fourth in the series of the UN-LDC conferences held so far. The first two in 1981 and 1991 were held in Paris and the third was in Brussels in 2001.

    The conferences are organised by the UN for developmental initiatives in the LDCs and the actions required at international levels to respond to challenges effectively.

    The Delhi conference, organised to underline India’s commitment to South-South cooperation, asserted that “the interconnected and globalised world has made it essential for the international community to accord its highest priority to the cause of LDCs to ensure global peace, security and prosperity.”

    The statement said that the upcoming “Istanbul conference must galvanize global action in support of the development needs of LDCs, whose progress would bring greater global growth and opportunities for all. The LDCs’ perspective must be taken into account while making decisions on global economic governance”.

    Underlining its commitment to South-South cooperation, India Friday announced $500 million aid for a host of projects in Least Developed Countries (LDCs) and offered to share its developmental experience with them.

    External Affairs Minister S.M. Krishna, while inaugurating the two-day ministerial conferenceFriday, announced a raft of additional contributions for LDCs, including another five scholarships every year under the Indian Technical and Economic Cooperation Programme for each LDC and a special fund of $5 million over the next five years for the follow up to UN LDC Four to be held in Istanbul in May.

    Around 35 ministers and 40 Permanent Representatives to the UN from the LDCs participated in the conference.

    During the last United Nations review in 2009, the UN defined LDCs as those countries which have a three-year average estimate of gross national income (GNI) per capita of less than $905. Countries with populations over 75 million are excluded.

    India enjoys a multi-dimensional relationship with LDCs and has been in the forefront of assisting their development through generous lines of credit and other forms of assistance. Over the decades, the foreign direct investment from India to LDC countries has increased dramatically, and is estimated to be around $35 billion.

    India has provided 4.3 billion lines of credit to LDCs over the years. :thumb:

    World urged to show commitment to poor countries - Thaindian News
     
    Last edited: Jan 28, 2013
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    Dollar Billionaires in Poor Countries: India’s “Philantrocapitalism”
    September 10, 2012

    In this time of global financial crisis, when so many are suffering financial hardship, most countries have witnessed increases in their number of dollar millionaires. These ‘High Net-Worth Individuals’ (HNWI), according to a report by Capgemini and Merrill Lynch Wealth Management, have in recent years more than doubled in India. In 2008-09, India had 84,000 HNWIs. By 2010, it had risen by 50 per cent (126,700), the biggest increase of all countries.

    In the worldwide list of dollar billionaires for 2010, India ranked third with 69, behind China (128) and the US (403). Forbes states, however, that the wealthiest 100 Indians are collectively worth $276 billion, while their top 100 Chinese counterparts are worth $170 billion. The three richest Indians together had more wealth the top 24 Chinese billionaires combined.

    You don’t have to look very far for evidence of their wealth, with more than 30 luxury skyscrapers springing up in Mumbai. For the rich occupants, the taller, the better, to escape from the reality of India below — the railway tracks, low-rise tenements, choking traffic and the 55 per cent of the city’s population who live in slums. People are paying nearly two million dollars for a designer apartment, built in complexes with private cinemas, swimming pools, floodlit tennis courts and high-level security. Developers believe each year Mumbai can absorb between 30,000 and 40,000 more homes in the one million dollar-plus category. :india: (Another housing bubble in the making?)

    Such extreme wealth doesn’t go unnoticed. In the UK, people are questioning the decision to keep giving India some $460 million of aid annually, which makes India the largest single recipient of British aid. Many ordinary Brits are asking if it can be right that the downtrodden British taxpayer gives such sums to a nation that boasts such wealth (albeit highly concentrated).

    Siphoning off the country’s wealth

    Some of the most damning comments about India come from French author Dominique Lapierre, whose book royalties from ‘City of Joy’ fund projects for the underprivileged in India. He is frustrated by the greed and corruption that he encounters.

    Lapierre’s non profit organisation, City of Joy Aid, runs a network of clinics, schools, rehabilitation centres and hospital boats. It operates 14 projects in India, most in the Sunderbans area. However, 90 per cent of free medicines get stolen in the journey from Delhi to Kolkata, and the project is thus forced to buy them at high prices from the market.

    A few years ago, Lapierre set up in Delhi a trust which offers a tax-deductible certificate for all donations. With more than a hint of disappointment, he notes the foundation still does not have any funds from affluent Indians who seem reluctant to help their fellow country-folk.

    Quite the opposite, it seems. Much of India’s wealth has been creamed off into Swiss banks, robbing ordinary folk of a quality of life they can now only but dream of. According to some estimates, it could be over Rs 7,280,000 crore (around $1.6 trillion). Data from the Swiss Banking Association in 2006 indicated that India had more black money than the rest of the world combined, or 13 times India’s total national debt. :usa: Global Finance Integrity notes this siphoning of wealth has served to widen the gap between rich and poor and asserts the main guilty parties have been private organisations and High Net Worth Individuals.

    By contrast, Global management and consulting firm Bain notes philanthropic donations amount to just 0.6 per cent of India’s GDP. This is not too good when compared to giving in the US and UK, for example, but is better than rates in other developing countries like Brazil and China. In the US, individuals and corporations are responsible for 75 per cent of charitable gifts, whereas in India individual and corporate donations make up only 10 per cent of charitable giving. Some 65 per cent comes from India’s central and state government, and the remaining gifts are provided by foreign organisations.

    In India, giving does not rise with income and education. As a percentage of household income, donations by the wealthy actually decrease. From an analysis of 30 HNWIs in India, Bain noted that they contribute, on average, just around one-fourth of one per cent of their net worth to social and charitable causes.

    All of this is not meant to imply that philanthropy is absent in India. Far from it. Vineet Nayyar’s Rs 30 crore gift (just under $7 million) to the Essel Social Welfare Foundation is a high-profile example of philanthropic giving. Over the years, Rohini Nilekani has donated $40 million to numerous causes that try to tackle the root causes of social problems and not merely the symptoms. Her biggest contribution has been to Arghyam, a Bangalore foundation that promotes clean water and hygiene, which now has projects in 800 villages. Philanthropy can and does positively impact people’s daily lives.

    Philanthrocapitalism: a plaster on a gaping wound

    What is really required, though, is a proper redistributive system of taxation, effective welfare provision and genuine economic democracy through forms of common ownership to help address inequality and poverty. In the absence of such things, wealthy philanthrocapitalists will have a major say in deciding which problems are addressed and how, and some will be highly selective.

    For instance, critics of Bill Gates say his foundation often ends up favouring his commercial investments. Instead of paying taxes to the state coffers, he donates his profits where it is favourable to him economically, such as supporting GM crops in Africa or high tech patented medicines. ‘Giving’ often acts as a smokescreen for channeling funds into pet projects and ‘business as usual’, with rich corporations receiving money to shape the world in their own image and ultimately for their own benefit. Apparent benevolence can have sinister motives, just like certain governments which provide money in the form of ‘development aid’ that is intentionally used to fund actions that serve geo-political self interest and ultimately undermine the recipient state.

    Philanthropy isn’t necessarily opposed to capitalism; it’s very much part of it. Capitalism is designed to ensure that the flow of wealth goes upwards and remains there via, among other things, the privatisation of public assets, deregulation of the financial sector, the use of subsidies and tax policies that favour the rich, the legal obligation to maximise shareholder profits and the consistent downward pressures on labour costs.

    Professor Ha Joon Chang of Cambridge University says that economics isn’t a social science anymore, but adopts the role the Catholic Church played in medieval Europe. Essentially, economic neo liberalism is secular theology used to justify the prevailing system, with the hope that some drops of wealth will trickle down an extremely thin funnel to placate the mass of the population. Widening the funnel slightly by making benevolent donations will not address the underlying issues of a failed system. :usa:

    For example, consider that one in four people in India is hungry and every second child is underweight and stunted. Environmentalist Vandana Shiva argues that hunger is a structural part of the design of the industrialised, globalised food system and of the design of capital-intensive, chemical-intensive monocultures of industrial agriculture. The long-term solution for hunger lies in moving away from and challenging the centralised, globalised food supply controlled by a handful of profiteering corporations.

    This type of built-in structural inequality, whether it concerns hunger, poverty, housing, income or health, is part and parcel of a development process that is skewed by elite interests in India and at the World Bank and by the corporations that pull the strings at the World Trade Organisation, who have all succeeded in getting their ‘globalisation’ agenda accepted. No amount of philanthropy, regardless of how well meaning it may be, will remedy the overall destructive effects of the type of capitalism (and massive corruption) being embraced by India’s economic and political leaders.

    Originally from the northwest of England, Colin Todhunter has spent many years in India. He has written extensively for the Bangalore-based Deccan Herald, New Indian Express and Morning Star (Britain). His articles have also appeared in many other newspapers, journals and books. His East by Northwest site is at: East by Northwest :thumb:

    http://www.globalresearch.ca/dollar...-countries-indias-philantrocapitalism/5303905
     
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    Can India ‘Fix’ Afghanistan? - NY Times
    June 7, 2012

    As the United States winds down its military engagement in Afghanistan, optimism is growing about the role India can play to stabilize and develop the country.

    This week, visiting United States Secretary of Defense Leon Panetta encouraged Indian leaders to take a more active role in Afghanistan, involvement once considered by the United States as merely an opportunistic way for India to antagonize Pakistan.

    The United States’ encouragement is hardly needed. India plans to “intensify” its already “high level political engagement and broad-based development assistance in a wide range of sectors,” India’s minister for external affairs, S.M. Krishna, told Afghanistan’s visiting foreign minister, Zalmai Rassoul, in a speech in New Delhi last month. With assistance from Europe and the United States expected to drop substantially, India may be left as one of Afghanistan’s most prominent aid partners.

    Here on India Ink, we have been asking: Does this make any sense? On first glance, at least, India seems an unlikely provider of development assistance because of the serious issues troubling it at home. Many of the same things that Afghanistan needs, from infrastructure to education, India is having troubles providing for many citizens, even without the regular threat of attacks from the Taliban.

    India’s state-run power industry struggles to get enough fuel thanks to mismanagement and bureaucracy, even its brightest youth can’t land a spot at a good university and about third of its citizens live in destitute poverty, with hundreds of millions malnourished. The current central government is grappling with a growing deficit, shrinking economic growth and an increasingly dissatisfied voter base.

    It’s no surprise that India’s Afghanistan plans have been greeted with some skepticis
    m.

    “In the land of the blind, the one-eyed man is king,” said Rajeev Malik, an economist at CLSA, a research and brokerage house, who has been a sharp critic of India’s fiscal policy and government. “India has not managed to fix these issues itself,” he said, but added that the country “probably has more experience than Afghanistan.”

    India’s on-the-ground aid record, though limited, has been decent.

    India has committed some $2 billion in aid to Afghanistan, of which $1 billion has been spent, according to the Ministry of External Affairs. Indian public and private companies have built a highway to Iran, put up transmission lines to bring power to Kabul, are constructing a new Parliament building and working on a hydro-electric project in western Afghanistan.

    India sent one million tons of high-protein biscuits to Afghanistan, and plans to follow that with an additional 250,000 tons this year. There are 1,000 Afghan students on scholarships in Indian universities right now.

    More ambitious plans are in place. In October of last year, when Afghanistan’s president, Hamid Karzai, visited India, the two countries signed a strategic agreement that said India would train and equip Afghan security forces. This month, India is holding meetings for regional investors interested in Afghanistan in New Delhi.

    Invitees include Turkey, China and Pakistan. Over a dinner in May in New Delhi, Mr. Rassoul told Indian government advisers Afghanistan would like India to concentrate on building up governance, law courts and health care.

    “We don’t want a fundamentalist Afghanistan, just like everyone else,” explained Syed Akbaruddin, spokesman for India’s Ministry of External Affairs, in a recent interview. “We don’t want an Afghanistan that slides backward.”

    The two countries share ties cemented long ago, he said, citing the well-known Rabindranath Tagore story “Kabuliwala,” about an Afghan fruit seller who befriends an Indian girl. India has a limited physical presence on the ground in Afghanistan, he said, which should quell concerns that India is focused on containing or antagonizing Pakistan. “What do we have in Afghanistan that is a threat to Pakistan?,” he asked rhetorically.

    India’s aid to Afghanistan comes without any conditions, unlike aid to India from foreign countries in the past, he said. India is not pressuring the Afghanistan government to improve, say, education for girls, or rights for women, but is focusing on infrastructure and other concrete projects, he said. :india:

    India’s projects in Afghanistan are “replicas of what India has been able to successfully implement in some part of India or the other,” said Mr. Akbaruddin. “They have been incubated in some part of India.”

    Staunch supporters of India’s involvement say sheer practicality of the alliance makes it work.

    “Today the average Afghan knows that for many of the things that would lead to an improved quality of life, India offers the most viable option,” said C. Uday Bhaskar, a security analyst based in New Delhi.

    To explain, he offered an example: The quality of higher education in Britain or the United States or Australia might be better than in India, he said, but most Afghans can’t afford Western universities, and if even they could, they probably wouldn’t get a visa to go anyway.

    Much of what is on Afghanistan’s “wish list” can be “enabled in a considerable degree by India,” Mr. Bhaskar said. President Karzai himself attended an Indian university, doing his postgraduate studies at Himachal Pradesh University, in Shimla.

    Others note that the “aid” relationship is not new. “People forget this has been going on quietly for a long time,” said K. Shankar Bajpai, a former ambassador to China, Pakistan and the United States, who is now an analyst with Delhi Policy Group. For six decades, India was “very much engaged” in Afghanistan, working on everything from building tunnels through the mountains of the Hindu Kush to education and health programs.

    Recently, the two countries have built up a “friendly relationship without some of the imperial hang-ups that spoiled Delhi and Kabul’s relationship in the past,” he said. In a sign of this friendliness, in March, Prime Minister Manmohan Singh called Mr. Karzai to congratulate him on the birth of his daughter.

    Another factor to consider is that while India’s development problems weigh heavily on the country’s poor and middle class, facilities for the wealthy in India are often world class. Many of Afghanistan’s wealthy are already beneficiaries, and these upper-class industries and ties are only expected to grow.

    Take health care: India’s private hospitals, and especially those in New Delhi, serve as de facto doctors’ offices for wealthy Afghans, who are just a two-hour flight away. Hospitals like Max Healthcare’s giant facility in Saket have special facilitators for Afghan patients who come for everything from in vitro fertilization treatments to heart trouble, doctors say. Often, their Afghan patients pay in crisp United States dollar bills.

    On the other end of the economic spectrum, at least one Indian charity has also been successful in Afghanistan.

    The Self Employed Women’s Association(SEWA), which starts women’s self-help groups, has been running vocational training programs in Afghanistan since 2008, teaching women to make jam and sew clothing, among other skills. The group said it has trained 3,000 Afghan women so far, despite two fatal terrorist attacks on the team in Kabul. The women, who are often orphans or widows, use the training to earn an income outside their home.

    Whether the ambitious plans in industries like mining and manufacturing will work out remains to be seen. In November, a consortium of public and private Indian companies, led by the state-owned Steel Authority of India, won a bid to mine in three states in Afghanistan, which includes the construction of a six million-ton steel plant, an 800-megawatt power plant and 200 kilometers each of road, rail and transmission lines – as well as a pledge to set aside one percent of profits for establishing educational and medical facilities.

    “We are very bullish about this,” the chairman of SAIL said when the deal was announced. Total investment by the Indian companies is pegged at $10.8 billion. :thumb:

    The big numbers, heavy-duty infrastructure plans and optimistic outlook are a stark contrast to SAIL’s India performance. In February, SAIL said quarterly profits fell by more than 40 percent from the same period the year before, thanks in part to higher raw material costs and SAIL’s inability to get coal from another state-owned company.

    Can India 'Fix' Afghanistan? - NYTimes.com
     
    Last edited: Feb 6, 2013
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    India keeps aside Nu 36.14 bn ($700mil) for Bhutan in its annual budge
    01 March 2013

    India’s 2013-2014 annual budget has set aside Nu 36.14 ($700mil) bn for Bhutan in their financial year from 1st April 2013 to 31st March 2014.

    According to the bulky budget report available on India’s Ministry of Finance website aid to Bhutan comes under the ‘Grants and Loans to Foreign Governments’ heading.

    Of this Nu 10.89 bn is grant for Bhutan’s five year plans. For non plan activities in Bhutan which is primarily hydro projects Nu 10.56 bn has been set aside as grant while another Nu 14.68 bn has been set aside as the loan component. :thumb:

    These figures will come as an encouragement to the ongoing 10th plan and 11th plan talks between Bhutanese and Indian officials in New Delhi.

    Bhutan is seeking the balance Nu 5 bn for the remaining portion of the 10th plan and another Nu 45 ($850mil) bn for the upcoming 11th plan.

    According to a government official the Nu 10.89 bn grant for Bhutan’s five year plans could include the pending Nu 5 bn for Bhutan’s tenth plan that technically ends by July 2013. He said the remainder 5.89 bn could be India’s contribution to Bhutan’s 11th plan until 31st March 2013.

    India’s plan assistance is usually staggered over a five year period.

    Though the Indian government has budgeted a total of Nu 25.24 bn ($500mil) for the hydro projects the requirements of the ongoing three projects of Punatsangchu I, Punatsangchu II and Mangdechu is around Nu 28 bn.

    Managing Director (MD) of the 1200 MW Punatsangchu I and 1000 MW Punatsangchu II project R.N Khazanchi said that the requirement for both P I and P II is 20.80 bn for the upcoming 2013-2014 financial year. :thumb:

    Similarly the MD of the Mangdechu Hydroelectric project A.K Mishra said the requirement for his project would be Nu 7.86 bn for the 2013 and 2014 financial year.

    A Bhutanese hydropower official said that though it was not sure they would try and start preliminary pre construction works for 620 MW Amochu Reservoir project, 2,560 MW Sunkosh Reservoir project and the four Joint Venture projects of Chamkarchu (670MW) in Bumthang, Kholongchu (600 MW) in Yangtse, and Wangchu (600MW) and Bunakha reservoir (180 MW) in Chukha.

    The official said incase these projects start pre construction activities like access roads, offices etc then additional budget would be needed from India.
    Bhutan’s financial year on the other hand is from 30th June 2012 to 1st July 2013.

    As per the “Grants and Loans to Foreign Governments’ budget head the total aid and loans to various foreign governments and institutions is Nu 70.18 bn for 2013-2014 of which Bhutan’s share is more than 50 % at Nu 36.14 bn.

    With the Indian economy slowing down and a growing fiscal deficit there was concern that foreign aid by India to various countries including Bhutan would suffer this year. :ranger:

    However, the state visit of His Majesty the King saw assurances from the Indian Prime Minister Manmohan Singh, Finance Minister P. Chidambaram and Foreign Minister Salman Khurshid that India would meet all its commitments to Bhutan.

    This was followed up by a shorter thank you visit of Lyonchhen who was also given similar assurances.

    India’s total Budget expenditure for its 1.2 bn population is around USD 305.33 bn to be spent in the 12 months between April 2013 and March 2014.

    India keeps aside Nu 36.14 bn for Bhutan in its annual budget - The Bhutanese
     
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    A Global Shift in Foreign Aid, Starting in India
    November 15, 2012

    Britain’s decision to stop giving development aid to India by 2015 marks a turning point in the former colonial power’s relations with New Delhi, and is raising questions about the global future of foreign aid in a fast-changing economic world order.

    “Having visited India I have seen firsthand the tremendous progress being made,” the British development secretary, Justine Greening, said Nov. 9, while announcing the end of more than 50 years of aid to India. “India is successfully developing, and our own bilateral relationship has to keep up with 21st century India,” she said.

    Britain’s move may be just the first in a full-scale pullback of aid to faster-growing developing nations, some aid professionals believe.

    “There is a real concern that all the major donors are looking at excluding emerging economies from their aid programs,” Emma Seery, the head of development finance at Oxfam, said by telephone. “These countries have large pockets of poverty, and we are afraid that this trend will remove this extra lifeline from the poorest,” she said.

    For decades, the United Nations has urged developed countries to spend 0.7 percent of their national income on aid to poorer nations, a target that continues to be elusive. According to the most recent figures of the Development Assistance Committee, a consortium of the world’s main donors, the developed world gave nearly $120 billion in assistance to the developing world in 2009, or 0.32 percent.

    The United States, which doled out some $30 billion in 2010, leads the pack.

    But many traditional donors are now openly reconsidering the need for, and role of, foreign aid. The United States, for example, facing a budget crisis, has considered proposals to significantly trim the billions in foreign aid it gives. “The proposals have raised the spectre of deep cuts in food and medicine for Africa, in relief for disaster-affected places like Pakistan and Japan, in political and economic assistance for the new democracies of the Middle East, and even for the Peace Corps,” Steven Lee Myers wrote in The New York Times last year.

    U.S. aid to India, targeted toward clean energy, food security and health, has dropped 25 percent in recent years, from nearly $127 million in 2010 to a proposed $98.3 million in 2013. India’s emergence as a regional and global power, the 2012 annual letter from the U.S. Agency for International Development said, “creates an opportunity to evolve the traditional donor recipient model of development into a true partnership.”

    This threatened drought of Western aid comes as some emerging market countries, including India, have themselves become donors to more impoverished countries.

    Before a visit this week from President Hamid Karzai of Afghanistan, aimed at wooing investment, India approved development projects in Afghanistan to the tune of $100 million as part of India’s $2 billion aid package to the war-torn country. In 2010, the country extended a $1 billion line of credit to Bangladesh, the highest ever one-time assistance, and last year, it offered $5 billion in credit to African nations. With a broadening aid portfolio, New Delhi recently announced plans to set up its own aid agency.

    For India, once the world’s largest foreign aid recipient, with some $55 billion funneled to the country between 1951 and 1992, the change from recipient to donor comes as the country tries to redefine its role in the international community.

    For decades, as India made its haphazard transition from being a British colony to an economic powerhouse, it depended heavily on aid from prosperous nations and international institutions. In 1958, for instance, Britain offered India some ₤40 million in foreign aid, as India struggled to build a nation and implement its second five-year economic plan. British Treasury officials referred to the “long-term problems of Indian development” when announcing the package.

    Sixty years later, Britain’s decision to pull the plug on funding to India was met with little more than a shrug by India’s political class. “We don’t really need the aid,” P. Chidambaram, the finance minister, said last week. “We have accepted it in the past, but I think both countries have agreed that we can emphasize on trade rather than aid.”

    Part of the reason for such nonchalance, analysts say, is that British aid to India, which amounts to $450 million per year and is used primarily in health care and education, is small. Last year, the finance minister at the time, Pranab Mukherjee, reportedly dismissed the funds as “peanuts” compared to India’s own spending. (Mr. Mukherjee is now the president of India.)

    Indeed, in recent years, India has ramped up its spending on social welfare programs, including a large rural employment scheme and a food subsidy system, aimed at lifting its millions out of poverty.

    But perhaps more significant is the fact that India now sees – and projects – itself as a global power and a partner to developed nations like Britain, rejecting the traditional model of rich nations aiding poor ones. “Aid is past, trade is future,” Foreign Minister Salman Khurshid recently said.

    This ambition stems from the Indian economy, which, even with a recent slackening, continues to grow at a faster rate than other large economies. In 2007, the World Bank moved India to a “lower middle income” country from a “low income” one. But, activists point out, it continues to be a country of rampant poverty and vast inequities. Despite two decades of growth, over 400 million people in India live on less than $1.25 a day, and the country’s malnutrition figures are among the worst in the world. India has had some success with its welfare programs, but it spends only 0.9 percent of gross domestic product on health care, among the lowest in the world, and 3 percent on education.

    This dichotomy appears to be in tune with global trends in poverty. A 2010 study by economist Andy Sumner at the Institute of Development Studies titled “The New Bottom Billion” found that two decades ago, 93 percent of the world’s poorest lived in low-income countries. Now, nearly three-quarters of them, or one billion people, live in middle-income economies.

    Economists at the Asian Development Bank, too, speak of a “middle income trap,” where rapid growth in short periods of time is followed by economic stagnation. While India is growing fast, said Rana Hasan, ADB’s principal economist in India, “historical record tells us this is not the time to disengage.”

    In recent years, ADB, which focuses primarily on infrastructure projects in India, has moved its focus from large nationwide projects such as highways and power grids to development projects in “lagging” states, like Bihar, Chattisgarh and Assam.

    British aid in India, said Ms. Seery of Oxfam, has a “real and significant impact,” and its withdrawal could have significant negative repercussions for its poorest. It has played a major role, she said, in India’s successful drive to eliminate polio, and it continues to help children attend primary schools and to give women and children access to good health care. “The decision to unaid,” Ms. Seery said, “was too hasty from a development perspective.”

    Some Indian analysts argue that the decision has less to do with India’s development than Britain’s own political and economic compulsions. In recent years, Britain has become home to a strong anti-aid sentiment, with a section of the political class arguing that India, which has its own space program, no longer needs aid from Britain, itself in the throes of an economic slowdown.

    In a poll by The Guardian newspaper, which asked if Britain should stop granting aid to India “in response to its former colony’s ‘rapid growth and development progress’ over the past decade,” 89 percent responded in the affirmative.

    Others say Britain’s new approach stems from the absence of quid pro quo. Last year, India’s decision to select a French company over its British rival for a multi-billion dollar contract to supply fighter planes caused great furor in London, with several British politicians saying India ought to have favored the British company on account of the millions it receives in aid from Britain.

    “They believe that British aid must get a bang for its buck, which means it must spread British influence,” said Jayati Ghosh, a professor of economics at Jawaharlal National University in New Delhi. “The aid is just not doing that anymore.”

    A Global Shift in Foreign Aid, Starting in India - NYTimes.com
     
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    Emerging Aid Donors: India

    India’s experience as a long-standing recipient of aid from developed countries is well known and well documented, but far less so its own role as a provider of development assistance to other countries. In the last decade, India has quietly become a significant donor of aid to other less developed countries, and current trends suggest that it could become a net exporter of aid in the next few years. This transformation is being driven by a combination of factors, including India’s self-conscious role as an emerging power, its competition with China for political influence and energy resources, and the rapid growth of its economy, including both its non-profit and private sectors. :thumb:

    Around the mid-1980s, India was the world’s largest recipient of multilateral aid and among the top recipients of bilateral aid. However, Indian economic reforms that began in the early 1990s have almost doubled the country’s long-term annual GDP growth, consequent to which foreign aid has become far less central to India’s overall economic development. In fact, the level of both multilateral and bilateral support has dropped sharply in the last decade, and it is currently less than US $ 2 billion annually, which is just about 0.2 percent of India’s GDP.

    In contrast, India’s own overseas development assistance (ODA) program, which officially began in 1964 when a separate budget heading for foreign aid was first created, has grown rapidly in recent years (table below), registering a compound annual growth rate of 6.9% from 2004 to 2010. In fact, India’s accumulated aid over the last 3 decades currently stands at over US $2.5 billion – for a poor country that represents a significant financial outreach.

    Table 1. India's foreign aid-related budget, 2004-10 (INR million)

    The bulk of India’s overseas assistance is directed at neighbouring countries of Bhutan, Afghanistan and Nepal, while a significant and increasing share is directed to African nations. Approximately 60 percent of Indian ODA is spent on training of civil servants, engineers and public-sector managers of recipient nations; about 30 percent is spent on providing soft loans to foreign governments to enable them to purchase Indian equipment or services, such as trucks, ground-water pumps, medicines, public health infrastructure or railway equipment; and the remainder 10 percent is spent on project-related costs abroad, such as feasibility studies or technical expertise from India on government-run institutions such as hospitals, railway services and universities. In general, India gives very little aid as outright cash grants. :thumb:

    Training and education are done under ITEC (Indian Technical and Economic Cooperation Programme), a department within the MEA, with Indian diplomatic missions abroad acting as major contact points. Soft lines of credit are usually channeled and managed by the EXIM Bank of India, a public sector bank which works under the administrative control of the Ministry of Finance.

    The single-most defining characteristic of India’s overseas aid program is that it attempts to share India’s own experience in poverty alleviation and development through an active pipeline of consultants and experts. The bulk of Indian aid is spent on human training, capacity building and other “soft” investments in recipient nations, though it also supports a number of physical projects through financial or technical assistance. :thumb:

    Of course, India's economic diplomacy has just barely begun and is way behind China’s in hard numbers, and in fact Chinese ODA is estimated to be about ten times larger than India’s. However India has a vast array of IT and other knowledge-based skills, English language skills, human capital, institutions and legacies that constitute tremendous potential for providing technical assistance to others, all at relatively low cost. In addition, India has a long tradition of democracy that may be relevant for governance reform in many poorer countries.

    Overall, there are many reasons to believe that India is moving to become a major player in the development assistance world. At the outset, there is the simple geopolitics of aid and India’s quest for regional power status, even membership as a permanent member in a restructured UN Security Council. India’s growing middle class and a confident entrepreneurial class have created a huge appetite for energy sources and simultaneously allowed the country to parley its economic footprint abroad. And of course, India has also found a strategic opening for itself after the collapse of the Soviet Union which disrupted the steady source of economic assistance to many poor countries of Africa and Asia. All these broad trends have coalesced to propel India into the donor category. :india:

    However, despite its expanding foray in ODA, India’s attempts have been filled with many inconsistencies and even incoherence. There is still no single ODA agency in India’s vast bureaucratic empire, though successive governments have contemplated creating a dedicated aid agency. There is a belated recognition in India’s foreign policy establishment that if Indian ODA is to achieve its unstated but evident aim of helping India become an influential regional player, its development assistance effort will need more money, better focus, sharper delivery and a more professional administration.

    Emerging Aid Donors: India - NORRAG
     
    Last edited: Apr 13, 2013

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