Indian Express Editorial Analysis
21 October 2021

1) How to deliver abroad

GS3: Issues related to the Indian Economy


Context:

  • The authors talk about enhancing India’s development cooperation.

Editorial Insights:

What’s the matter?

  • The rapidly evolving geopolitics forces India to enhance the efficacy of its development cooperation.
  • Though over the years India has earned the benevolent image, the project quality is not up to the mark.
  • For the past several decades, enhancing its development cooperation has been a challenging issue.
  • Therefore India needs to expedite work on a specialized agency for proficient delivery of outcomes.

Looking into India’s development assistance evolution/Progress:

  • Over the years, India’s assistance to other developing countries has multiplied several times.

    • As per official data, India provides development assistance of $ 6.48 billion receives the assistance of $ 6.09 billion annually.

    • India has been supporting the developmental endeavors of several of the African & Asian countries.

      • But the process lacks a firm Institutional foundation.

  • Evolution:
    • In 2003, India’s first effort to shape development cooperation came with the announcement of the India Development Initiative (IDI).
    • Further in 2005, the Indian Development & Economic Assistance Scheme (IDEAS) was launched for managing credit lines.
    • Later, created a new development partnership division within the External Affairs Ministry.
    • In 2007, the then regime suspended IDI & announced the setting up of the International Development Cooperation Agency (IIDCA).
  • Indian mechanism in this regard:

    • India’s development cooperation has converged to an all-encompassing integrated framework that has 5 modalities:

      • Capacity Building,

      • Concessional Finance,

      • Technology sharing,

      • Grant &

      • Trade wherein duty-free & quota-free access to the Indian market is provided.

    • India’s most partnerships involve one of these modalities or some combinations.

      • For instance, in the Mozambique case, the support for solar panel production was through 3 modalities like capacity building, line of credit for infra & a grant element.

    • At this juncture, concessional financing in India’s development cooperation portfolio is 70% which amounts to $ 2.23billions.

    • In 2015, the govt has made some reforms:

      • to bring in operational changes in the way credit lines work.

      • Strived block fly-by-night operators,

      • Promote the most competitive Indian firms that are being identified with a transparent bidding & tendering process.

    • Ways to promote infra financing abroad:

      • Countries use sovereign & non-sovereign windows for promoting infra financing abroad.

        • For instance, The DEG & KfW Development Bank in Germany, World Bank, the private sector windows of Asian Development Bank & African Development Bank are notable examples.

      • Such a non-sovereign window would provide greater flexibility & bandwidth.

      • In addition to green fields, the fund is used for brownfields to complete the projects within the timeline.

    • Significance of new entity for Development Cooperation Assistance:

      • To become s leading strategic investor in commercially viable areas.

      • To make public-private partnership infrastructure projects financially attractive.

      • The fund will help in building an investment ecosystem in Africa.

      • The proposed new entiry also provides a handholding to select performing Indian social enterprises to operate in other countries.

      • Along with the economic impact, it can facilitate development partnerships between India & other countries.

      • It can support partner countries in combating natural disasters, political & humanitarian crises & in building social infra.

      • It gels with the increase in the scope of development cooperation following higher economic growth & rising trade & investment flows to emerging markets.

      • It will help the countries where the official development assistance is seemingly inadequate & ineffective in addressing myriad developmental concerns.

Concluding Remarks:

It is high time for India to restructure its development finance apparatus for deeper & effective engagement & to address the rapidly evolving newer competitive financing landscape.