Analysis of India as a Receiver and Provider of Foreign Aid

India receives grants (aid) from various countries and agencies for the development of specific projects. According to the data provided by the Government in the Lok Sabha in the year 2007-08 and 2015-16, India received foreign aid an average of Rs 2575 crore annually and in the year 2013-14 India received the highest aid of Rs 3384 crore. And more than Rs 6000 crore was received between 2011-12 & 2014-15 for various health related projects across India.

The assistance received from various foreign sources is utilized for the specific projects including Immunization Programme, National Vector Borne Disease Control Programme, Reproductive and Child Health-II Programme, Revised National Tuberculosis Control Programme, National Leprosy Eradication Programme, HIV/AIDS Control Programmes, and various projects for strengthening of health systems in the States. Similarly, multiple projects are funded by external agencies/countries in the drinking water & sanitation space. In the case of Gujarat earthquake in 2001, more than Rs 500 crore was received by india as external aid.

Who is providing foreign aid to India?

Various foreign governments & agencies have been extending aid to India. In 2007-08 & 2015-16, the greatest amount of aid was provided by United Kingdom at Rs 11, 362 crore followed by the Global Fund at Rs 8, 226 crore. The European Union provided Rs 2249 crore in this period while the USA provides Rs 293 crore as aid. Among the other global agencies, the UNDP provided Rs 452 crore during this period and IBRD provided Rs 390 crore.

Does India extend aid to other countries?

India provides aid to other countries for various purposes. The aid is extended under the Development Administration Partnership (DPA) under the Ministry of External Affairs (MEA). India provides aid mostly to its neighbours, east asian & african countries. In the year 2006-07 & 2015-16, India provided an average of Rs 3930 crore as aid to foreign countries. India’s aid to foreign countries increased substantially from 2012-13.

The aid is provided for various projects like housing, supply of equipment/vehicles, creation of infrastructure, educational fellowships etc. During this period, India provided aid to Bangladesh, Bhutan, Nepal, Sri Lanka, Maldives, Myanmar, Africa, Eurasia, Mongolia, Afghanistan, Latin America & other developing countries. In effect, India is a net donor of foreign aid.

Analysis

India has quietly transitioned into the role of provider in the last three years it has given more aid to foreign countries than it has received. This was informed by Minister of State for External Affairs General VK Singh in a written reply to the Parliament. “India is currently a net donor of foreign aid. In the last three years, India has provided more aid to foreign countries, than it has received, ” Singh said in response to a question on Wednesday.

Development Aid to foreign countries not only serves economic objectives but also as a strategic tool. The effort to raise the assistance it has been providing to foreign countries is part of a conscious effort on part of India to commensurate its role as an emerging power where it sees itself as one of the permanent members in the UN Security Council. In the financial year 2015-16 India gave Rs. 7719. 65 crores as aid whereas it received Rs. 2, 144. 77 crore in aid from foreign countries and global banks.

The neighbourhood is the biggest recipient of aid from India with New Delhi’s “Neighbourhood first” policy. Bhutan for years have received the biggest chunk of Indian aid with Rs. 5, 368. 46 crores in 2015-16, primarily aimed at developing hydro-electric power in the Himalayan Kingdom. In the same financial year, the second largest recipient of the assistance was post-conflict Afghanistan where India has been constructing Parliament building, cricket stadium among other things. It is followed by Sri Lanka where India is undertaking the construction of houses for rehabilitation of Tamil population displaced by nearly three decades long war.

The largest provider of aid to India in 2015-16 was the Global Fund, the international financing organisation that provide aid to fight HIV/AIDS, Tuberculosis, Malaria and other diseases they funded Rs 1477. 72 crore. The second largest donor is the European Union and the United Kingdom, the former colonial rulers of India have the balance sheet is in negative for this year.