During the past decade or so, several new trends have emerged on the global geopolitical and economic scene. Some of them have taken shape over the years, establishing new frontiers for the Indian development cooperation programme. As noted in earlier chapters, apart from an increase in funding volumes, new features and novel modalities have come to define Indian's development cooperation programmes. The new trends are discernible both on the ground, where projects and programmes are delivered, and at headquarters, where governance mechanisms and – more importantly – an institutional framework have evolved. This chapter explores some of the major shifts that have advanced the frontiers of engagement and opened up new avenues for development partnerships. It also looks at possible challenges to be addressed if resources are to be best utilised in the process.
Several new directions have influenced the profile of India's development cooperation programmes. In this regard, the effort to reach out to partner countries’ communities and CSOs, along with local governments, in the implementation of development programmes has been extremely well-received. Secondly, the establishment of the DPA is expected to ensure optimum resource utilisation for greater returns, with a due role reserved for territorial divisions in the MEA. Its efforts in consolidating country- and region-specific information and analysis will make this possible. The third major move is a greater push for S&T and the fourth, and most important, addition is the rise in total allocations and expenditure by the government (although MoF has yet to insulate these allocations).
There are areas of concern as well, which in due course may pose major challenges to the development partnership programme. At the practical level, they need to be addressed adequately and wholeheartedly so that the programmes become more enduring and resilient. First and foremost in this list is the health of Exim Bank, which is of key importance to the LoC programme. Even though the Cabinet has amended the 2005 policy to allow other public sector banks to extend LoCs, it is still the Exim Bank that dominates the field and any major default on a LoC would have crucial implications for it. It is therefore extremely important that all possible sources of potential trouble be addressed before it is too late.
Since India's Independence, almost all government ministries have operated in line with requests from partner countries. It is not only the MEA that initiates and manages development cooperation-related programmes. Line ministries, particularly those of Agriculture, Science and Technology, Health and Family Welfare, Environment and Forest, Human Resource Development and related agencies also play an important part (see Figure 3.1).
Chapter 2 included a discussion of the role of Exim Bank, an instrument of the MoF, in the new arrangements for managing credit lines. Line ministries become involved when a related demand is raised by partner countries. Socio-economic indicators show that most partner countries are at a stage where innumerable sectoral challenges dominate their policy concerns, a situation duly reflected in the nature of the demands that India faces. The line ministries’ response, however, varies depending on how they balance domestic pressures against external demands. For some, domestic demand is such that their thrust is largely towards developed countries. The Department of Biotechnology (DBT), for example, had major programmes with the South since its establishment, but this demand began to taper off from 2006 in response to a growing thrust toward linkages with developed countries. The DBT Annual Report for 2012–13, as in previous years, has nothing to report on India's engagement with developing countries. It is clear that even if MEA pushes for closer ties with a specific set of countries its intentions would remain in the realm of rhetoric if line ministries do not respond with the requisite commitment. At times, individual preferences and priorities seem to prevail for the selection of particular countries and programmes. It goes without saying that in some instances, the traction for cooperation with Northern partners and visits to those countries is extremely strong.
Reaction from line ministries also depends on the nature of any international links they may have. In that respect the policies of international institutions have important implications for the nature of the programmes line ministries develop; for instance the World Health Organization (WHO) might facilitate programmes from the Ministry of Health (MoH) to other developing countries. Similarly, FAO or International Fund for Agricultural Development (IFAD) would influence the involvement of the Ministry of Agriculture (MoA). Such influence may be direct, or through personal exposure and other indirect contacts such as seminars, workshops, or fellowship programmes.
South–South cooperation has tended to focus on production and distribution issues rather than macroeconomic questions such as identifying the key concerns of the developing world. It has prioritised and indeed – intensified industrialisation as a way of reducing inequality, overcoming under- and unemployment, and promoting skill development. This view rests on the Prebisch's proposition that sluggish growth in demand for peripherally-produced commodities and a burgeoning peripheral demand for industrial products manufactured at the centre, results in declining terms of trade for developing countries. This, in turn, makes it difficult for developing countries to generate sufficient export earnings to finance the imports they need for their development, hence causing them always to operate under threat of a current account deficit.
This view also ties in with India's own experience of skill development. Nehru's original initiative in inviting China and Indonesia to send students to India for technical training programmes expanded sufficiently to warrant a new, enlarged programme that consolidated India's fellowship and training programmes under the ITEC banner. By 2014, ITEC was offering 10,000 training slots to 167 partner countries; the slots were spread over nearly 270 courses in 47 different institutions regarded as centres of excellence in their areas of work.
Experience of this kind was useful in informing India's commitment to the Initiative for ASEAN Integration (IAI), a programme of the ASEAN Secretariat that aims to reduce the gap between advanced and new members from the Cambodia, Laos, Myanmar and Vietnam region (CLMV). India's involvement came in response to a call from the ASEAN Secretariat for its partner countries, including India, to take special measures to help narrow the development divide and promote national competitiveness through intra-regional cooperation.
Indian interest in the CLMV region is very clear; Delhi has already been engaged with CLMV countries at the bilateral level and was keen to respond to the call from ASEAN heads of state and governments at their 2003 summit conference that led to the launch of the IAI. The specific mandate for a programme resembling the one that India had already begun came about in 2003 with the declaration of the ASEAN Concord (known as Bali Concord-II). This declaration stressed deepening and broadening ASEAN cooperation through a technical and development cooperative effort that could address the development divide.
The process of decolonisation began soon after the end of World War II and India was one of the first countries to gain independence. Many other developing countries that gained independence in the 1950s and 1960s faced a common problem: to eradicate poverty and bring the fruits of economic and social development to their people. It was this shared challenge that inspired early initiatives to promote SSC. India was one of the leaders of this movement, which essentially was based on Third World solidarity. Countries of the developing world not only cooperated in sharing their modest capabilities and resources with each other on the basis of mutual benefit, but also created forums through which they could work to create a more level playing field from which to promote their interests in the international economic order. The NAM became an influential vehicle for that purpose while the G-77 emerged as a key grouping of developing countries that worked on promoting the economic and trade interests of developing countries at the UN and in negotiations with the economically developed countries of the West. The G-15 was formed by NAM as a means of engaging the G-7 developed countries in a dialogue over reform of the international economic order. Nevertheless, while initiatives of this kind were successful in achieving some benefits for the developing world the essential structure of the global economy stayed mostly unchanged and the demands of NAM and the G-77 remained in the realm of rhetoric. There was certainly some progress in promoting economic cooperation among developing countries but it was limited in both scope and scale. The SSC could serve only as a modest supplement to the much more important role played by the ODA bilaterally as well as multilaterally, from developed to developing nations.
With the end of the Cold War around 1990, NAM itself lost much of its traction. The sense of solidarity that marked its early years became less evident as conflicts between the developing countries themselves became more numerous and frequent. There was also a growing divergence in the rates of development achieved by different countries. The oil crisis of the early 1970s paved the way for the emergence of a group of affluent oil-exporting countries that had little in common with the majority of poorer nations.
There can be no serious discussion of India's development cooperation programme without mention of Nepal. The commonalities emanating from the historical, geographical and cultural links between India and Nepal have been well reflected in various aspects of Indian development cooperation programmes. Grant-based support has been supplemented with development finance, concessional loans, access to technology and – most important – capacity building, different combinations of which have been leveraged in furtherance of this deep and multifaceted relationship. Soon after India's independence, Delhi came to an agreement with the Nepalese Government for the continued employment of Gorkha troops in the Indian Army, and a draft treaty of commerce and friendship between the two countries was formulated and concluded in 1950. India sent a scientific and cultural mission to Nepal in the summer of 1949, marking the beginning of India's contribution to building technical capabilities in its neighbouring country.
Despite India's generous contribution to Nepal's economic development, there have always been differing Nepalese perspectives on the nature and value of this assistance. While in the early years Nepalese assessments were generally positive, more critical voices began to emerge, especially after 1960 when the Nepalese monarch assumed political control and adopted a more nationalistic posture. In that climate of increasing assertion of national identity and political autonomy, Indian involvement in Nepal's development began to be seen by elements in Nepal as undermining the country's independence. While such political rhetoric was often negative, in practice Indian assistance continued to be sought and indeed increased steadily. Nepal's political transition to a democratic secular republic in 2008 did not bring any significant change as regards development cooperation. Jain (1959), Mansingh (1983) and Mihaly (2009) each captured some facets of the relationship. Not least, it is clear that in private conversations, the significant contribution made by India in Nepal's economic development is profusely applauded but in public pronouncements, entirely opposite views of the Indian role are projected. Nepalese leadership has not been able to get over this ambiguity.
During field work in Nepal, these two streams in perceptions were tangible and polarisation of perceptions was clearly evident when meeting people in different settings. We had gone there with details of the amount of money that the Indian Government has spent in creating infrastructure and encouraging skills and entrepreneurial capacity.
India's development cooperation efforts began soon after the country gained its Independence in 1947. Indeed, the first recorded instance was somewhat earlier, dating from the pre-independence interim government formed in September 1946, when Jawaharlal Nehru, India's first Prime Minister, established a fellowship programme for trainees from China and Indonesia.
Although India was a pioneer in such initiatives between developing countries, there has been very sparse documentation or public debate on the genesis and evolution of its development assistance programme.
In the early years after independence, India played an active role in promoting decolonisation across the world. From its own experience it was aware that the political independence of the newly emerging, or ‘developing’, countries could be sustained only if they were also masters of their economic destiny. India's political leadership fashioned a dual approach to meeting this challenge. On one hand, the UN became a platform to mobilise an international consensus behind the proposition that economic and social progress in developing countries was an international responsibility to be implemented collectively through multilateral action. On the other hand, there had to be parallel emphasis on development cooperation between developing countries themselves, bilaterally as well as multilaterally through the UN. Newly-emerging countries should not be entirely dependent upon economic assistance from the developed world; they must also pool their own resources and capabilities to help each other. It was this process that became known as ‘South–South Cooperation’ (SSC) of which India was an early and enthusiastic proponent as well as practitioner. Propagated domestically as one aspect of solidarity and common ground between poor and developing countries, Indian assistance to the developing world found tacit political acceptance and support.
India worked very hard in multilateral forums to forge an international consensus on the principle that developed countries had an international obligation to support development in their former colonies and in newly-emerging countries, not as charity or a dole-out to the poor but rather as a partnership for peace and prosperity. It is for this reason that India has never accepted the donor-recipient relationship that has come to characterise overseas development assistance (ODA) in general; instead it has hewed to the idea of development partnership, whether for North–South or South–South cooperation.
Pragmatism is key to the genesis and evolution of Indian development cooperation policy, which reflects the broad principles informing New Delhi's general foreign policy: sovereign equality and a belief in friendly relations with all countries, particularly its neighbouring states. Its guiding principles are a commitment to the promotion of human freedom, opposition to colonialism and the creation of equitable conditions for peaceful and harmonious socio-economic development of all countries. From its inception as an independent state, India has advocated global peace, disarmament and development through various forums that address the problems of developing countries, including the NAM, the G-77 and the G-15. In addition, it has engaged with numerous regional and sub-regional groupings that have been formed in the recent past, motivated largely by trade and investment interests.
As the Indian nationalist leader Mahatma Gandhi said, juxtaposition of peace and prosperity is not a mere contrivance for advocating moral precepts; rather, the two are indissolubly linked. Through various international platforms and at meetings of the UN, India has taken the position that national development across developing countries was an outcome of the efforts of respective national governments but also of the behaviour of the global community in general. This imposes major responsibilities on nations to ensure that their economic processes are guided by a moral purpose and directed towards desirable ends by political will. In regard for internationalism countries should commit to the rapid evolution of a new and equitable economic order under which all nations can live without fear or despair. Against this background, India's international role was well captured by independent India's first Prime Minister, Jawaharlal Nehru, addressing the Constituent Assembly on 15 August 1947:
The service of India means the service of the millions who suffer. It means the ending of poverty and ignorance and diseases and inequality of opportunity … And so we have to labour and to work, and work hard, to give reality to our dreams. Those dreams are for India, but they are also for the world, for, all nations and peoples are too closely knit together today, for any one of them to imagine that it can live apart. Peace has been said to be indivisible, so is prosperity now, and so is disaster in this One World that can no longer be split into isolated fragments.
Different facets of the development compact add colour to the India-Africa relationship. Hardly any element is missing from the diversity of the engagement, including capacity building, technology sharing, investment, trade and development finance. All are present in various proportions and in a very different ordering in various countries. The most striking element in this diversified relationship is that which has evolved in Ethiopia and Mozambique. As an example the value chain (or more commonly in business literature ‘supply chain’) approach for supporting the sugar industry is a unique experiment in the bilateral partnership with Ethiopia; it brings support across the board for expanding the sugar sector in keeping with national development priorities. In the case of Mozambique, financing a solar panel production unit is a marked departure from the way India has previously supported projects in the realm of advanced technologies; it has provided not only capacity for domestic rural electrification but also scope for export of the panels. In this chapter, we explore these two case studies at length, while enumerating broad features of the India-Africa partnership.
It may be noted that the Indian Diaspora has been very important in shaping the evolution of India's development cooperation policy in some specific contexts, and has been key to linkages with Africa. India has the world's second largest Diaspora (almost 22 million in 2012) spread across 205 countries in almost every major region on the planet; nearly three million are in Africa. This aside, Indian engagement with Africa is centuries-old and from the beginning had very different connotations from those now generally assumed, by the Western media. Resource extraction was not the only reason for involvement. India encouraged African countries to promote indigenisation of their economies. The idea was to support the absorption of concepts such as self-help and self-reliance, which had guided India's own development trajectory. Nowadays engagement in agriculture tends to be termed a ‘land grab’ but, in fact the, history of the India's agricultural partnership began in 1952 when at the request of the Ethiopian Government, Delhi put forward a permanent settlement scheme for Indian agriculturists in Ethiopia. As a part of this scheme eight Indian peasant families were sent to Ethiopia in October 1953 and almost 40 hectares of land was allotted to each family.
The logic for India's development cooperation programme arises out of the pains that India itself endured during colonial rule as a result of which India appreciates the needs of developing countries facing the challenges of reconstruction.
India's cooperation with neighbouring countries has always been on the basis of sharing skills, knowledge and culture – what in modern parlance is called ‘soft’ power. In his seminal work The Making of Greater India, H. G. Quaritch Wales observes that from the first to the eighth century AD, Indian art and culture was dominant across almost all countries in South-East Asia. These included Java, Sumatra (today part of Indonesia), the Malay Peninsula (modern Malaysia), Central Siam (now Thailand), Burma (Myanmar), Ceylon (Sri Lanka), Champa (Vietnam) and Cambodia. ‘So far as we know, this intense Indian grip on [part of South-East Asia] was purely cultural…there was never any Indian military conquest or annexation’. The dominance, Wales suggests, came about through three main Indian cultural waves (in addition to several smaller ones) led by three major dynasties: the Guptas (300 to 500 century AD), the Pallava (550 to 750 AD) and the Pala (750 to 900 AD). Their cultural messages were informed by both Buddhism and Vaisnavism.
India's philosophy of values in particular has embraced the idea of daanam (giving) across and through various scriptures: this is essentially the principle of sharing material possessions with others as part of one's dharma or duty. Daanam is not merely for the rich; it is viewed as a necessary societal responsibility for each and every individual at different times in life. The Hindu scripture Bhagavad Gita sets out a threefold division of daanam. The seventeenth chapter states that those who give such charity without the slightest expectation of any reciprocal benefit are situated in sattva guna (the mode of goodness) and will offer daanam at an auspicious time and place to a supatra (right recipient). Expecting a return on daanam, or giving grudgingly, is said to be raja guna. The third category is tama guna, which is neither sacred nor is given at the right time to a right person.
In contemporary times, India began sharing its resources through bilateral and multilateral assistance programmes early in its life as an independent nation.
[W]hen Northern economies were booming, the South could reap some advantages in linking itself with Northern markets. If the North is now entering a period of structural readjustment to much lower levels of growth, the developing countries must increasingly look to themselves and to each other to sustain their momentum of development.
Since the early 1980s, the slowing growth of OECD economies has been a major concern for development economists. The leading World Bank economist and author of the Human Development Index, Mahbub-ul-Haq, enumerated the advantages of SSC in its various facets in ‘Beyond the Slogan of SSC’, a paper published in 1980. Quoting Professor Arthur Lewis, he articulated the need for the South to organise its countervailing power on political, economic and intellectual fronts in order to maximise domestic agricultural development, enhance import substitution and explore South–South trade opportunities. The tenor of his argument seems close to the Singer-Prebisch theory of unequal exchange, echoed in the work of the US sociologist Immanuel Wallerstein. M. Haq stressed that all the diplomatic skills and rhetorical eloquence, taken together, offered no substitute for tough decisions needed within the South.
According to him, such decisions were essential because developed countries were expected to adopt protectionist trade policies to safeguard their domestic employment and therefore developing countries needed to think beyond their previous reliance on those countries so as to ensure their own economic growth. For that, the South had to overcome weaknesses in its negotiating stance. Within a year, another paper with the same title appeared, this time by Arturo Goetz (1981), an economist who at one point had been with the UN Food and Agricultural Organisation (FAO). In his paper, Goetz pointed out that weaknesses in the proposals from the South were largely because the idea of SSC was based on the myth of an aggregate ‘South’, which no longer held water and should have matured out of the sloganeering stage.
The question now presents itself of whether or not in the twenty first century, SSC has overcome the fears and apprehensions of the 1980s or moved beyond them. How has the South responded at political, economic and intellectual levels? In what ways has high economic growth in emerging economies of the South influenced patterns of SSC? Is there a lexicon that captures the full nuances of SSC?
In the early 1990s, India was one of the first to establish diplomatic relations with most of the countries that had emerged from the Russian Federation to form the Commonwealth of Independent States (CIS). The political associations with the new CIS countries gave a further fillip to their bilateral ties with India, which were already natural enough, given the shared linguistic and cultural heritage that enriched India's long-standing relations with many of them. With the turn of new millennium, India further consolidated its connections with most CIS countries.
Several studies have identified a growing concern with energy supplies as the prime driver behind the expanding Indian footprint in this resource-rich region. Discussions with several experts in these countries, however, indicate that geo-strategic considerations are far more important to India. For instance, Tajikistan shares more than 1,000 km of largely porous border with Afghanistan and also shares a border with the Pakistan-occupied Kashmir (POK), as does China. India therefore has to pay serious attention to the activities of China and Pakistan in this region and in particular, closely monitor responses from Afghanistan when NATO forces eventually move out. Delhi has already stated more than once that its priority is to ensure that Afghanistan emerges as an economic and commercial bridge between South and Central Asia; only peace and prosperity can prevent its becoming a hub of terrorism and extremism.
Against this backdrop, it is hardly surprising if development cooperation priorities are closely connected to bilateral commitments with both development and strategic motivations. Indeed, in some cases it seems that it is strategic considerations that have driven at least some components of major assistance programmes to the region. In the recent past, however, India has consolidated its engagement into a pan-regional approach, more or less on the lines of its policy in Africa. Various features of ‘development compact’ have also emerged in the past few years as India plans to connect with the countries of Central Asia (Kazakhstan, Kyrgyzstan, Uzbekistan, Turkmenistan and Tajikistan) in what appears to be a ‘Connect Central Asia’ policy.
As part of this policy India has begun to set up a Central Asia e-network with its hub in New Delhi and spokes in the five Central Asian capitals.
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