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Foreign Aid & Civil Society

India’s Foreign Aid Program

India has a longstanding foreign aid program and with economic growth has come the ability to play like the big boys, even if not with them. Yet, very little information is available, so I decided to do some web research. Here is what I learnt:

Basics

  • The foreign aid program is called Indian Technical and Economic Cooperation Programme, or ITEC, and was established in 1964.
  • ITEC covers 156 countries, together with the Special Commonwealth African Assistance Programme (SCAAP).
  • Both programs are run by the Economic Division of the Ministry of External Affairs (MEA).
  • The MEA also runs the Indian Council of Cultural Relations, which provides assistance and programs to improve cultural ties, for instance through student and teacher exchange programs.
  • The ITEC’s official aid budget is roughly Rs. 500 million, annually, and over $2 billion has been disbursed since its inception.

Afghanistan as Major Recipient

ITEC is not, however, the only channel for foreign aid. Indeed, large amounts of aid is directed outside ITEC. Afghanistan is by far the largest recipient of that aid. From 2002, to 2006, $650 million had been pledged to India’s Assistance Programme for Afghanistan. The MEA and UN have a list of major commitments:

  • $100 million grant (2001-02)
  • $70 million grant to build the Zarang-Delaram Highway
  • $200,000 to the World Bank’s Afghanistan Reconstruction Trust Fund (2002)
  • $4 million grant to repair and build the Indira Gandhi Institute of Child Health in Kabul (2003)
  • $4 million grant to build the Habibba School
  • $52 million to the World Food Programme, for Afghanistan and Iraq (India is today a net donor to the WFP and IMF).
  • $25 million to build the Afghan parliament in Kabul
  • A gift of 3 Airbus airplanes to Ariana, the Afghan national carrier.

Other Bilateral Aid

Beyond ITEC and Afghanistan, significant amounts of aid are directed to Africa, much of it delivered in the form of loans, or delivered in-kind as consultancy. Some of these are offered under the India Development Initiative and include (partly drawn from IndiaDaily editorial):

  • $218 million in economic aid to Nepal (summer 2006). This is in addition to previous loan waivers for military supplies.
  • $500 million to West African nations.
  • $110 million in long-term loans to finance Indian exports to Africa. Offered through the Exim Bank, these loans funded the sale of 500 buses by Tata Motors to Senegal.
  • $40 million to Angola, for a railway project managed by RITES, Indian Railway’s consultancy division.
  • Support and upgrade of the Farkhor Air Force base in Tajikistan (since 2004). The base is India’s first permanent military presence outside India, and operated jointly with Russia and Tajikistan.

The Broader Context

These figures combined, India’s aid probably stands at over $150-200 million per year, much more than what is provided through ITEC. However, even this inflated figure hides the vast amounts that are invested through private and public enterprises. For instance, India’s oil exploration company ONGC invested $6 billion for railroads in Nigeria (2005). ONGC has also acquired oil assets in Sudan worth more than $750 million.

Even these amounts pale in comparison to China’s beneficence, only to Africa. Late last year China unveiled preferential credit of $3 billion for Africa. China has also provided loans of over $100 million to Ghana and Egypt.

Africa is all too happy to receive this aid which comes with significantly fewer conditions than World Bank, US or EU loans. However, the aid has accompanied a general increase in trade and investment flows between Africa and Asia – particularly China and India.

Fundamentally, however, it reflects a shifting balance of power in the world. India and China have the resources to play power politics, without the conditional rhetoric of ethics, development, and values.

Fore more, see a much updated article on the same subject in the Economic and Political Weekly, April 21, 2009.

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Discussion

9 comments for “India’s Foreign Aid Program”

  1. .
    A very succinct and good collection of information regarding India’s foreign aid programme. Was of immense use for my column.

    Thanks.

    .

    Posted by Aniket Alam | April 11, 2008, 7:37 am
  2. Thanks Aniket, glad to know it helped!

    Posted by Dweep Chanana | April 13, 2008, 12:46 pm
  3. [...] a foreign aid program of its own. Till recently, that program received very little attention (see this prior post). However, in recent years there have been marked shifts in the size, focus, and strategic thinking [...]

    Posted by India as an Emerging Donor | The Discomfort Zone | March 25, 2009, 2:09 pm
  4. [...] for its development. And also to Bhutan, Maldives, Bangladesh, Nepal, African countries etc. India’s Foreign Aid Program | The Discomfort Zone [...]

    Posted by International Aid to India - Page 4 - Pakistan Defence Review | November 12, 2009, 1:25 am
  5. [...] [...]

    Posted by BD-Burma Relations - Page 19 - Pakistan Defence Forum | December 12, 2009, 7:47 am
  6. [...] This post was mentioned on Twitter by Proud American and Gary Lomas, veterans-uk.ws. veterans-uk.ws said: Why are we giving India aid when it has it's own aid foreign program? http://is.gd/d6vfk [...]

    Posted by Tweets that mention India’s Foreign Aid Program | The Discomfort Zone -- Topsy.com | June 27, 2010, 7:24 pm
  7. [...] To Dr. Singh, one billion dollars in line of credit to Bangladesh seems extremely generous. Keep in mind, Bangladesh has not received a single of those billion dollars do far. Moreover, let’s compare India’s treatment of Bangladesh to its treatment of Afghanistan: [...]

    Posted by Follow-up on Manmohan Singh’s Comments about Bangladesh « In the Middle of Nowhere | July 3, 2011, 10:48 pm
  8. [...] To Dr. Singh, one billion dollars in line of credit to Bangladesh seems extremely generous. Keep in mind, Bangladesh has not received a single of those billion dollars do far. Moreover, let’s compare India’s treatment of Bangladesh to its treatment of Afghanistan: [...]

    Posted by Follow-up on Manmohan Singh’s Comments about Bangladesh | July 4, 2011, 8:15 am
  9. [...] [...]

    Posted by India to Britain: We don't need the 'peanuts' you offer us in aid - Page 4 | February 7, 2012, 9:08 pm

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