Reviewing Indian aid

  • Economic assistance can be used to prevent migration by rebuilding rural economies

Jan 30, 2019-

India has used economic assistance as a major instrument of its foreign policy, mainly in the larger pursuit of building and consolidating national power. Theoretically, aid is given under two circumstances, namely when there is a trade gap (export minus import) or a foreign exchange gap and when there is a resource gap (savings minus investment).

Despite the fact that India itself has had huge trade and resource gaps, it consistently doled out economic assistance to countries across the continents. Besides strategic and political stability objectives, the pursuit of economic and commercial interests has played a very critical role in determining the direction, contents and nature of its foreign aid policy. 

In the five years between 2011-12 and 2015-16, India extended total economic assistance of Rs290.68 billion to countries across Asia, Africa and Latin America. Bhutan, with a hefty share of over 65 percent, constituted the most vital target recipient followed by Afghanistan (10.3 percent), Sri Lanka (6.03 percent), Nepal (5.08 percent), Bangladesh (4.29 percent) and African countries (3.55 percent). Over the last two decades, situations in India’s neighbourhood have steadily changed, both because of major structural changes on the domestic front triggered by political reorientations, economic reforms, strategic concerns and newer varieties of international alignments. 


Plethora of players

Traditionally a predominant partner, India has formidable challenges before it, both to enhance the efficacy of its economic assistance and to economically integrate the neighbourhood. The foremost challenge is coping with the multiplicity of players these countries have seen in the last two decades or so. Even in an essentially inward looking country like Bhutan, that remained highly insulated from the outside world for most of the 20th century, the presence of a multiplicity of multilateral and bilateral aid donors and development agencies is highly conspicuous. 

On the other hand, in Nepal, the number of national and international non-governmental organisations has steadily increased from 37 in 1987 to 393 in 1992-93 and to a staggering 39,759 in 2017. The longitudinal profile of these organisations does vividly indicate their ability to influence the local and national decision making process. Besides bringing in the finance, technology, ideology and knowledge, they also bring diverse development approaches, invisible non-developmental agenda, and more critically, a political culture that may be alien to indigenousness. Most of them work at the community and micro topography level. 

Prof Abul Barkat of Dhaka University, in his monograph on ‘Economics of Fundamentalism’ in Bangladesh, captures how external agencies and non-governmental organisations are funding fundamentalism in the name of foreign aid. India’s traditional instruments and institutions may not be able to cope and harmonise with these deeper intrusions made by economic assistance. Therefore, regaining and consolidating the once vibrant Indian constituency, as reflected in the media, should be a key task of Indian diplomacy in the neighbourhood. 

Another major challenge is how India repositions its instruments of diplomacy, mainly to integrate traditional economic assistance with the larger issues of democracy, good governance, reforms and newly emerging non-traditional security threats including terrorism and trafficking of small arms, narcotics and even human beings. Will the traditional mode of foreign aid operations suffice to achieve fundamentally changing objectives of the neighbouring countries? How much of strategic reorientations could India undertake to effectively tackle these unorthodox challenges? Does India have the adequate wherewithal and capabilities in the existing system to carry out this new economic assistance operation? 

As India enters into higher growth regimes that start trickling down as visibly tangible development benefits and pull factors in the 15 border states (out of the total 29 states), an increasingly critical challenge would be in the sensitive arena of cross-border migration from neighbouring countries. It has already generated ugly conflictual dynamics in many states in the north-eastern region of India. There are already serious protectionist reactions like border fencing, closing down of gates, deployment of paramilitary forces and legal clampdowns including National Registration Certificate. How do Indian policymakers connect their policy to tackling the ‘push factor’ dimension of these migrations and relate them to India’s economic assistance? 

Bangladesh’s most important export items till the mid-1980s used to be jute, fish and tea that constituted over 60 percent of its total exports as against today’s hardly 6-7 percent. This had been Bangladesh’s comparative advantage. They kept Bangladesh’s rural economies intact and robust. The gradual decay of these three crucial rural sectors, including due to the sharp erosion in its international competitive edge and synthetic substitutes for jute, have had a debilitating impact. It led to large scale displacement of rural folks from their traditional livelihoods, and they mostly headed towards Dhaka. Many of them were absorbed in the garment factories, and a significant populace crossed over to India. Depending upon the ideological underpinning of the concerned governments at the state and national levels, these Bangladeshi migrants are called ‘infiltrators’, ‘economic immigrants’, ‘refugees’ and ‘illegal immigrants’. Some political parties even win elections making these migrants an election issue. 

How can Indian economic assistance be used as a preventive instrument for this influx from Bangladesh by rebuilding the rural economies in Nepal and Bangladesh? The stronger the rural economies in the neighbouring countries, the higher the possibility of retaining these potential migrants in their own traditional habitats and reducing migration-triggered conflict within India. This will also go a long way in mitigating internal migration to cities like Kathmandu, Thimphu, Dhaka and Colombo. In fact, the cost and time involved in managing migration-triggered conflicts like in Assam, Arunachal Pradesh, Manipur and Meghalaya, including border fencing, deployment of security forces and the destruction caused, could be used more productively in reconstructing the neighbourhood economies. It is physically impossible to make the 4,096-km India-Bangladesh border, 1,751-km India-Nepal border and 699-km India-Bhutan border absolutely opaque and migratory movement-proof. 


Refocusing on infrastructure

Given all these compulsions and considerations, India’s aid policy requires a thorough review. It has to re-emphasise infrastructure projects, both between India and the neighbouring countries and to other parts of Asia and other regions. Capacity building and setting up varieties of modern institutions is another area where Indian economic assistance needs to be focused. India must also diversify the instruments and channels of aid operationalisation by reintroducing planning, monitoring and evaluation institutions like the Indian Cooperation Mission of the 1960s. The time has come to make full use of civil societies, non-governmental organisations, the private sector, professionals and even state government agencies in the operationalisation of aid projects. 

The National Dairy Development Board, that transformed the rural dairy sector in India under its Operation Flood Programme, could be mobilised to replicate its strategies and actions in milk-deficit Myanmar and Afghanistan. India could also consciously integrate its aid programmes with investment and trade, and also locate these ventures in areas which have been traditionally neglected, like north-eastern Sri Lanka, western and far western Nepal, western and southern Bhutan and the Chittagong areas or even the southern areas of Bangladesh. These areas have emerged to become zones of full blown conflicts and, in some cases, potential conflicts. 

Lama is a senior professor at the School of International Studies, Jawaharlal Nehru University, New Delhi.


Published: 30-01-2019 07:39

User's Feedback

Click here for your comments

Comment via Facebook

Don't have facebook account? Use this form to comment