India`s geo-political interests and foreign aid: Constraints to policy

Report
India's geo-political interests and foreign aid:
Constraints to policy alignment
Presented at: Australasian Aid and International Development Policy Workshop
February 13 – 14, 2014
by Rani D. Mullen
Director & Visiting Sr. Fellow, Indian Development Cooperation Research, Centre for Policy Research, India & Associate
Professor, College of William & Mary, USA
Data presented has been gathered & analyzed by the
Indian Development Cooperation Research (IDCR) group at the
Centre for Policy Research, New Delhi
with grant support by The Asia Foundation
Government of India’s Development Partnership:
Rising Rapidly
Source: Data collated by the Indian Development Cooperation Research at the Centre for Policy Research, New Delhi
based on the Expenditure Budget - Grants and Loans to Foreign Govts, Statement 11 in the Government of India
budgets. http://indiabudget.nic.in/vol1.asp
Where is Indian aid going?
Major recipients of Indian grants & loan programs in
percentage out of a total of Rs. 320 billion committed
between 2000/01-2013/14
Bangladesh
4%
Eurasian
Countries
<1%
Others
17%
Myanmar
3%
African
Countries
4%
Others
10%
Grants, 2007 - 2014
Bhutan
54%
Nepal
5%
Bhutan
49%
Maldives
4%
Afghanistan
11%
Sri Lanka
5%
Nepal
6%
Bangladesh
Eurasian
4%
Countries
0%
Myanmar
3%
African
Countries
4%
Sri Lanka
5%
Maldives
3%
Europe
and CIS
2%
Afghanistan
9%
Africa
59%
Americas
2%
Oceania
1%
India’s EXIM Bank
LOCs, 2007-14
Asia
36%
Within Asia, where are Indian LOCs going?
Indian Line of Credits in US$ millions, 2004-2013
INDIAN DEVL ASST TO SRI LANKA
Strategically important Sri Lanka has become the largest
recipient of Indian LOCs totaling over US$1.2 billion (20052012).
Domestic pressures & geo-strategic concerns will lead India
to continue engaging in development cooperation with Sri
Lanka
INDIAN DEVL ASST TO MYANMAR
90
Indian grant commitments to Myanmar,
US$ million 2007-13
80
60
50
40
30
USD Million
70
20
10
0
Myanmar: Major Sectors Receiving Indian Grants between 2006/07
– 2013/14
Industry
3.77%
Agriculture
5.68%
Multisector
8.71%
Social Welfare
2.60%
Health
2.49%
INDIA has committed > US$ 250 million in grants & US$ 300
million in LOCs to help Myanmar build capacity and
infrastructure. 73% of grants & nearly 40 % of the LOCs
Transport committed to Myanmar between 2006-13 have been in the
72.52%
transportation & infrastructure sector.
As India aspires to greater strategic & economic relevance in
the Asia-Pacific, deepening these development assistance
based ties with Myanmar – India’s only land bridge to the geostrategically important South East Asian region – will be crucial.
INDIAN DEVL ASST TO VIETNAM
Sector-wise Distribution of Indian Grants to
Vietnam (2007-2013)
Site
Preservation
7%
Others
7%
Education
7%
Trade
facilitation
6%
Information &
Communicatn
Technology
73%
Both India & Vietnam are concerned about China’s political posturing in the South
China Seas. Both countries also need to access natural resources for their growing
economies & want to ensure free & safe shipping lanes.
New Delhi and Hanoi increasingly recognize that deeper development
partnerships can be of considerable mutual benefit. In engaging with New Delhi,
Hanoi can hope for a greater degree of strategic independence. For India, closer
ties with Vietnam could allow it to boost trade with ASEAN and East Asia. It could
also allow New Delhi to better assist in countering attempts to assert dominance
in the South and East China Seas
INDIAN DEVL ASST TO PACIFIC ISLAND STATES
ITEC Scholarships offered to the PICs (2005 & 2011)
140
Number of Slots
120
100
80
60
40
20
0
2005
2011
Year
TONGA
0.40%
SOLOMON ISLANDS
4.05%
SAMOA
0.58%
TUVALU
0.58%
VANUATU
5.38%
For India, deeper development partnerships with the PISs could
prove immensely rewarding, allowing India greater access to
markets further away from it’s shores.
As India seeks to diversify its energy imports, it will increasingly
look to enhance its partnerships with countries such as the PIS.
Deeper engagement with the PIS is important for India
considering the potential for deep-sea mining and Liquefied
Natural Gas extraction, for example off the coast of Papua New
Guinea (PNG).
COOK ISLANDS
0.04%
FIJI
17.12%
KIRIBATI
0.35%
MARSHALL
9.25%
NAURU
3.95%
PAPUA NEW GUNIEA
58.16%
MICRONESIA
0.06%
NIUE
0.04%
PALAU
0.04%
INDIAN ASST TO AFGHANISTAN
• Since 2000, Afghanistan has been the second largest recipient of Indian development assistance, with its official
US$ 2 bn commitment (& nearly $800 mn in disbursement by the end of 2013) far exceeding Indian
commitments to any other country except Bhutan. Furthermore, as of 2014, India gives over 2,000
scholarships/training slots annually for Afghans to study/train in India.
• In addition to humanitarian reasons, India also provided assistance in order to establish access to natural
resources, use economic diplomacy to spearhead the entry of Indian private sector companies and services,
and support larger geo-strategic objectives of investing in a democratic Afghanistan as a counter-weight to
extremist forces in Afghanistan or neighbouring countries.
• Given the importance of Afghanistan to India’s security, energy security, trade, and larger geo-political interests,
India’s engagement with Afghanistan is only likely to grow.
Indian and Chinese aid recipients in the Indo-Pacific
Region (2005 – 2013): Increasingly both India and
China are giving devl asst to the same countries
Seychelles
Indian military engagement/investments in ports = India’s “String of Diamonds”
Chinese military engagement/investment in ports = China’s “String of Pearls”
-------- Major shipping routes
INDIA’S RISING GEOSTRATEGIC INTERESTS IN THE INDIAN OCEAN RIM AREA
Indian dev coop -- Conclusions
• Indian dev coop likely to continue rising
• Likely to see greater use of LOCs, also in Asia
• Likely to see greater use of economic diplomacy
• Yet India’s Ministry of External Affairs has large capacity constraints…
• Size of foreign service officers less than Singapore’s
• No plans for large increases in hiring
• Capacity issues: moved frequently, little training, no development specialists
• …which has already impacted the efficacy of their development
cooperation.
• Given these capacity constraints on one hand and India’s rising dev coop
and geo-strategic interests on the other, & given fact that IFIs & UN have
not accommodated India’s rising stature, India is likely to pursue BRICS
and other alt supra-natl org where they are able to play a greater role.
This also presents an opening to established donors to work together
with India in third countries.

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