With $1.6 Billion In Its Pocket, How India Is Using Foreign Aid To Make A Point

Posted on July 8, 2016

By Cordis Paldano:

For the first time in nearly 69 years of India’s Independence from the United Kingdom, this year we will not be receiving any aid from our former colonial masters. On the contrary, we, who have been the biggest recipient of foreign aid for decades, are now an international donor in our own right, providing around $1.6 billion annually in economic assistance to poorer nations. This is not a contingent development but rather a reflection of India’s growing stature in the world today.

Indian PM Modi Meets With President Obama At The White House
Since independance, India has received the highest amount of foreign aid from the US. Source: Dennis Brack-Pool/Getty

Foreign aid may be ostensibly allocated for moral reasons such as poverty alleviation or disease eradication, but at no point is the donor or the recipient oblivious of the underlying politics of ‘giving’, which, be it at the village level or in the global arena, remains the means par excellence of preserving authority. By the same token, to accept aid is to be indebted to the donor, a debt which is partially repaid by acknowledging one’s inferior position in the hierarchy with respect to the donor. Is it any surprise then that the biggest donor in the world today is the United States, which doles out money primarily not to the poor nations of sub-Saharan Africa but rather to Afghanistan, Israel, Jordan and Pakistan which are countries that are of significant military interest to the USA? In a similar vein, France directs nearly all of its aid resources towards maintaining its sphere of influence among its former colonies in West Africa on whom it wields unparalleled diplomatic and military influence.

It would be a mistake to take the moral high ground here and assume that unlike western countries, the financial assistance provided by India was somehow more altruistic. Much of the aid that we provide is restricted to South Asia where we are increasingly asserting ourselves as a regional power and the two biggest recipients of Indian aid are Bhutan and Afghanistan which, in itself, reveals the political motivations that underpin our developmental assistance policy. For decades, Bhutan has remained the single largest benefactor of Indian aid, in return for which we maintain a stranglehold on the foreign policy, defence and commerce of our much smaller neighbour. Afghanistan on the other hand, is the stage where India and Pakistan are playing out the ‘great game of the 21st century‘ and so it is no wonder that India’s pledge to rebuild Afghanistan has reached a total of $2 billion . This money is being used to build dams, roads, democratic institutions and public/military infrastructure with a view to stabilise Afghanistan, reducing its dependence on Pakistan and strengthening ethnic groups that are inimical to the Taliban, which in turn is backed by the Pakistani state apparatus.

Foreign aid, which is the voluntary transfer of resources from one country to another, often poorer country, does come with strings attached, but it is also an indicator of the closeness of relations between the two countries. Similarly, falling aid levels are in all likelihood, symptomatic of trouble brewing in the relationship. Following India’s displeasure at Nepal’s new constitution and the ensuing blockade imposed on the Himalayan nation, India, in its budget this year, has decided to slash the aid given to its neighbour from Rs. 420 crore rupees to Rs. 300 crore , at a time when Nepal is desperate for resources, given that it is still recovering from the devastating earthquake of the previous year.

There continues to be complications in the purchasing of Rafale fighter jets from France. Source: Arvind Yadav/Getty

If aid, as you say, is inherently self-interested and used to apply pressure on the recipient, then why, the naysayers ask, did India snub the UK in 2012 and award a £13 billion deal to France to supply fighter jets? Readers will remember that this came at a time when the UK had committed to providing 1bn£ in aid to India over a period of four years and that India’s decision subsequently led to a diplomatic row and to the eventual cessation of British aid from this year onwards. Andrew Mitchell, the then British International Development Secretary had justified the aid being given to India by clearly stating that, “the focus is also about seeking to sell Typhoon [fighter jets].”

In order to understand why the Indian government did not buckle to British pressure, we must understand the nature of the aid industry and its evolution since the end of the Cold War. A significant proportion of the aid that India received prior to liberalisation went into public sector projects intended to build and bolster a young nation. However, foreign donors today are more interested in promoting Western democratic models of governance and so, aid is nowadays routed through Western consultancies and charities, working in tandem with local civil society groups and NGOs. This interference is often seen by recipient nations as an attempt by the West to reshape foreign societies to suit its own needs and is no longer viewed favourably in a decade that has seen emboldened civil societies toppling several regimes around the world. India’s rejection of British aid is, therefore, unsurprising and was in fact, soon followed by an expulsion of USAID by Bolivia, Ecuador and Egypt.

Incidentally, India delayed finalising the deal with France, thereby giving hope to the British that the lucrative order was still within their reach and in the process, managed to wrangle substantial concessions from both sides. This was precisely the same strategy that India had adopted during the Cold War years, refusing to align with either of the superpowers that continued to woo India with technical and financial assistance, leading to India becoming the largest beneficiary of foreign aid in the world over the past seven decades.

To conclude, not all assistance is nefarious, and in an age marked by increasing economic inequality, it is imperative for countries to show solidarity with one another and provide aid that is delinked from commercial and military objectives. But in a world where even the offerings made to Gods have underlying expectations, is disinterested aid even possible?

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