The recent India-Africa summit in Addis Ababa, Ethiopia, at which India's government pledged $5 billion in aid to African countries, drew attention to a largely overlooked phenomenon—India's emergence as a source, rather than a recipient, of foreign aid.
For decades after independence—when Britain left the subcontinent one of the poorest and most ravaged regions on earth, with an effective growth rate of 0 percent over the preceding two centuries—India was seen as an impoverished land of destitute people, desperately in need of international handouts. Many developed countries showcased their aid to India; Norway, for example, established in 1959 its first-ever aid program there.
But, with the liberalization of the Indian economy in 1991, the country embarked upon a period of dizzying growth, averaging nearly 8 percent per year since then. During this time, India weaned itself from dependence on aid, preferring to borrow from multilateral lenders and, increasingly, from commercial banks. Most foreign-aid programs—with the sole exception of Britain's—have dwindled or been eliminated altogether.
Today, the proverbial shoe is on the other foot. Long known for its rhetorical faith in South-South cooperation, India has begun putting its money where its mouth used to be. It has now emerged as a significant donor to developing countries in Africa and Asia, second only to China in the range and quantity of development assistance given by countries of the global South.
The Indian Technical and Economic Cooperation Program (ITEC) was established in 1964, but now has real money to offer, in addition to training facilities and technological know-how. Nationals from 156 countries have benefited from ITEC grants, which have brought developing-country students to Indian universities for courses in everything from software development to animal husbandry.
In addition, India has built factories, hospitals, and parliaments in various countries, and sent doctors, teachers, and IT professionals to treat and train the nationals of recipient countries. Concessional loans at trifling interest rates (between 0.25 percent and 0.75 percent, well below the cost of servicing the loans) are also extended as lines of credit, tied mainly to the purchase of Indian goods and services, and countries in Africa have been clamoring for them.
In Asia, India remains by far the largest single donor to its neighbor Bhutan, as well as a generous aid donor to Nepal, the Maldives, Bangladesh, and Sri Lanka as it recovers from civil war. Given Afghanistan's vital importance for the security of the subcontinent, India's assistance program there already amounts to more than $1.2 billion—modest from the standpoint of Afghan needs, but large for a non-traditional donor—and is set to rise further.
India's efforts in Afghanistan have focused on humanitarian infrastructure, social projects, and development of skills and capacity. Five Indian medical missions provide treatment and free medicines to more than 1,000 patients a day, most of them poor women and children. The Indian-built Indira Gandhi Centre for Child Health in Kabul is connected through a telemedicine link with two super-specialty medical centers in India.
A million tons of Indian food assistance provides 100 grams of high-protein biscuits to two million of Afghanistan's six million schoolchildren, a third of whom are girls. Indian engineers, braving attacks that claimed several lives, built a 130-mile (218-kilometer) highway from Zaranj to Delaram in southwest Afghanistan, opening up a trade route to the Iranian border. Indians braved the 3,000-meter heights to run a power-transmission line from Pul-e-Khumri to Kabul—giving round-the-clock electricity to the capital for the first time since 1982. India is currently engaged in building the Afghan Parliament building, a visible and evocative symbol of democracy.
India has also commissioned 100 small development projects (mainly quick-gestation, small-scale social-sector projects), and pledged further funds for education, health, power, and telecommunications. Of course, some in Pakistan see nefarious designs behind this assistance, but the ultimate objective is straightforward: to build indigenous Afghan capabilities for effective governance, reflecting India's commitment to regional stability in the face of terror and violence.
In Africa, India's strength as an aid provider is that it is not an over-developed power, but rather one whose own experience of development challenges is both recent and familiar. African countries, for example, look at China and the United States with a certain awe, but do not, for a moment, believe that they can become like either of them. India, by contrast, comes across as a land that has faced, and is still surmounting, problems rather like those confronting its beneficiaries. If India can do it, many Africans reason, perhaps we can learn from them.
Moreover, unlike China, India does not descend on other countries with a heavy governmental footprint. India's private sector is a far more important player, and the government often confines itself to opening doors and letting African countries work with the most efficient Indian provider that they can find.
Similarly, unlike the Chinese, Indian employers do not come into a foreign country with an overwhelming labor force that lives in ghettoes, or impose their ways of doing things on aid recipients. Instead, they recruit, hire, and train local workers and foremen, and leave behind enhanced capacities. Whereas China's omnipresence has provoked hostility in several African countries—a presidential candidate in Zambia even campaigned on an explicitly anti-Chinese platform—Indian businesses have faced no such reaction in the last two decades. Indeed, Uganda, where Idi Amin expelled Indian settlers in 1972, has been actively wooing them back under President Yoweri Museveni.
Finally, India accommodates itself to aid recipients' desires, advancing funds to African regional banks or the New Economic Partnership for Africa's Development (NEPAD). Its focus on capacity development, its accessibility, and its long record of support for developing countries have made India an increasingly welcome donor. This could not have been imagined even 20 years ago, and it is one of the best consequences of India's emergence as a global economic power.
©2011 Project Syndicate. Republished with kind permission.
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