GS-2: Bilateral, Regional and Global Groupings and agreements involving India
Need for an international development cooperation agency
Context Enhancing the efficacy of India’s development cooperation endeavours has been a challenging issue for the past several decades. The country, therefore, needs to expedite work on a specialised agency for efficient delivery of outcomes.
Development assistance and lack of institutional foundation
In the last two years, India’s assistance to other developing countries has multiplied several times.
India’s development cooperation has five modalities — capacity building, concessional finance, technology sharing, grant and trade wherein duty-free and quota-free access to the Indian market is provided.
India’s helpful image yields goodwill globally, but quality project delivery is yet to become the country’s USP.
On average, India provides development assistance of $6.48 billion and receives assistance of $6.09 billion annually from key partners .
Under Indian Cooperation Mission (ICM) — India partners for development cooperation and does not give aid like OECD members.
India has been supporting the developmental endeavours of several partner countries in Africa and Asia, even before Independence.
However, this process lacks a firm institutional foundation.
Efforts to form an institutional framework
The first effort by India to shape a framework was in 2003 with the announcement of the India Development Initiative (IDI).
Subsequently, the Indian Development and Economic Assistance Scheme (IDEAS) was launched in 2005 for managing credit lines.
The IDI was suspended in 2007 and the setting up of the India International Development Cooperation Agency (IIDCA) never took off.
Meanwhile, in 2018, China founded its international development cooperation agency.
Changes in concessional financing
At this point, concessional financing in India’s development cooperation portfolio is close to 70%.
In 2015, the government made efforts to bring in operational changes in the way credit lines work.
Way forward
Countries have sovereign and non-sovereign windows for promoting infrastructure financing abroad — both have their own place.
A non-sovereign window would provide greater flexibility and bandwidth.
To become a leading strategic investor in commercially viable and financially attractive public-private partnership infrastructure projects, the fund may build an investment ecosystem in Africa with support from leading Indian firms.
The proposed new entity may also provide handholding to select performing Indian social enterprises to operate in other countries as well.
Besides making an immediate economic impact, these enterprises can facilitate development partnerships between India and other countries.
Conclusion
It is high time India restructures its development finance apparatus for deeper and effective engagement and to address the rapidly evolving newer competitive development financing landscape.
