Tag Archives | Foreign Aid

In Pragati: infographic on foreign aid out of India

My second infographic in Pragati this week was on foreign aid going out of India:

4 foreign aid

What makes aid from India different from western aid is that India prefers not to include conditionality clauses such as democracy and good governance, respecting the partner country’s sovereignty. Staying consistent with the Gujral doctrine, the government of India likes to avoid terms like foreign aid or development assistance, both of which are common in the Organisation of Economic Co-operation and Development’s parlance. India prefers to refer to aid as development cooperation or development partnership, and this flows down to the ethos with which grants are given.

Few are asking questions of the effectiveness of Indian aid – both in achieving development goals in partner countries and in generating benefits for India. It remains largely unknown, beyond anecdotal evidence. As the Indian taxpayer starts paying more, the DPA like USAID in the United States and DfID in the United Kingdom will be expected to provide greater accountability. The creation of DPA also provides an opportunity for the MEA to work with India’s private for-profit and not-for-profit sectors that have amassed expertise in a range of developmental issues.

The Indian government’s increased commitment to foreign aid over the past two years is a welcome change, but one that may be hostage to fiscal crises and change of leadership. How well foreign aid can be used to extend Indian interests abroad will depend entirely on how well we choose to administer and deploy it out of India. [Full article: Infographic: Foreign aid going out of India, December 20, 2013.]

The data story is a part of my ongoing research on aid flows out of India, some of which should be out in January 2014.

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Reaping what we sowed

On July 30, the lights went out all over North India, but that statement hides as much as it reveals. For many people in India, power supply (let alone uninterrupted power supply) is a distant dream. Many others prepare for outages in private, investing in diesel generators, inverters and more.

It is much harder, however, to build contingencies for something like the Delhi Metro. With Delhi crying out for power,

A Delhi Metro official said they received hydel power from Bhutan on a priority basis, and added that Delhi Metro was amongst the emergency services, including the Prime Minister’s residence and the All India Institute of Medical Sciences (AIIMS), that were provided power. [When the lights went out

Apart from re-allocating power from the eastern and western grids, power bought from Bhutan helped India’s ailing infrastructure in a time of great need.

Much as we need to thank Bhutan for this, Indian foreign policy efforts over the last decade have played a crucial role in enabling this to happen. India has helped Bhutan set up three hydroelectric projects that are currently operational: a 1020 MW project at Tala, a 336 MW project at Chukha and a 60 MW project at Kurichhu, adding up to a total of 1,416 MW. July 30 was a day when India’s foreign aid efforts abroad overtly showed its benefits.

Bhutan is one of India’s close strategic and economic partners, and has been the single largest recipient of foreign aid going out India in the last decade. Apart from funding (and helping construct) hydroelectric power projects, India has also helped Bhutan in setting up cement industries, electricity transmission and distribution networks, highways and more. Below is a graph of annual estimates of development assistance provided to Bhutan by India, at constant and current prices. In 2008, Dr. Manmohan Singh visited the country, a year after India and Bhutan’s ‘Treaty of Friendship’ was renegotiated and signed. Aid efforts appear to have been stepped up since then.

India’s energy needs are increasing rapidly, but domestic ability to match that need has been insufficient. While India has found it difficult to set up hydroelectric power projects in Arunachal Pradesh, in Bhutan it finds a willing partner. Together, they are targeting 10,000 MW of power generation by 2020, with Indian plans of buying about half of it, or 5,000 MW of power for domestic consumption.

The 5,000 MW will constitute a small but essential step towards India’s goal of energy sufficiency.

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