India Extends Development Hand

As India continues to rise, Indian diplomacy is spreading its wings globally. It’s no secret that economic diplomacy is the engine that propels a country’s relations with its neighbors, the region and the rest of the world. The Indian case is no exception, and to manage its economic aid and assistance to friendly countries, New Delhi set up the Development Partnership Administration (DPA) in January of this year.

DPA is an effort within the External Affairs Ministry to streamline the delivery process of India’s partnership projects with developing countries. India’s development projects overseas have expanded considerably in recent years, both in sectoral terms and in geographic reach. Until about ten years ago, both the size and spread of such projects was very limited. Today, in contrast, India’s footprint extends as far as Africa, Latin America and the Caribbean.

Understandably, many of these projects are in India’s immediate neighborhood, namely South Asia, which accounts for about 70 percent of India’s total commitments under grant assistance.  But India has also made it clear to beneficiaries of DPA that New Delhi doesn’t like to refer to itself as a donor, but a development partner. India responds to the development priorities communicated to it, and tailors its projects according to the recipient country’s wish list. India doesn’t impose conditions, whether political, economic or social, and the government claims that it isn’t prescriptive in the type of project that is selected for development cooperation.

The movers and shakers of Indian foreign policy have taken care to ensure that all projects under the DPA are based strictly on considerations of mutual benefit, so that they aren’t exploitative in nature. In this respect, the Indian developmental outreach program is arguably different from China’s, as the Chinese are increasingly being seen by developing countries as a merchant whose assistance comes with strings attached.

Some of the major projects that India is funding abroad under grant assistance include a housing project of 50,000 units that India is constructing in Sri Lanka, and a large transmission line project in Pul-e-Khumri, Afghanistan, which has already been completed and under budget.

An important arm of India’s developmental outreach abroad is through the Lines of Credit projects that are spread across the globe, particularly in Africa. To manage such projects, India has classified countries as heavily indebted poor countries, low-income countries and middle-income countries, based on World Bank classifications.

DPA is an effort to put together under one umbrella all aspects of project implementation, from conception to formulation, to monitoring implementation and impact assessment. The biggest share of assistance has generally gone to Bhutan as India is implementing a number of hydroelectric power projects there. Development assistance to Bhutan from April to December 2011 was Rs.869 crore (about $157 million). For the full year 2010-11, Indian developmental assistance to its immediate neighbors was Rs.167 crore for Nepal, Rs.90 crore for Sri Lanka, and Rs.74 crore for Burma.

India’s development partnership projects aren’t the preserve of any one ministry, but DPA functions under the External Affairs Ministry because the reality is that it’s not possible to separate the political relationship with a country from the economic projects that are being implemented there.