The Fortune and Future of Development Assistance in India


The term ‘India Development Assistance’ was used in the 2003 budget speech by Finance Minister Jaswant Singh, it was the time when the government of the time was presenting India to be a ‘shining’ State, the speech went on to further talk about how India would be able to help others countries that require financial help in any form. However, those words were put into practice in 2007 with the establishment of India International Development Cooperation Agency to establish a centralized network as an authority over India’s outgoing development assistance. Major breakthroughs were made when the Ministry of External Affairs had set up the Development Partnership Administration (DPA) under the Economic Relations Divisions in 2012. The DPA aims to consolidate all aid-related matters and structure it into a single administrative department which will also overlook all aspects of development assistant policy. However, it is not a formulating agency but more of an implementing kind.

The DPA focuses on 3 methods: grant assistance, line of credit and capacity building. Grant assistance is a non-repayable amount usually given by the government for the development of various areas. One of the biggest project is the Sri Lanka housing project aimed at the construction and repair of 43,000 houses in the North-East region of Sri Lanka. This project follows the characteristics of direct transfer of cash to the citizens. Cash grants include Rs. 550,000 for complete reconstruction of the house and Rs. 250,000 to repair a house. Similarly built is the Salma dam project that is located in the Herat province of Afghanistan, the damn has the capacity to produce 42 MW of energy, the total cost of the project came near Rs. 1775 Crores which is 400% higher than the original cost. There are some other development assistance program like various connectivity activity near the Indo-Nepal border, building of educational institutes in Myanmar and hydropower projects in Bhutan. The other area of focus is giving Line of Credit (LOC) to various countries, it is said that the DPA has approved around $10 billion worth of LOCs in Africa since 2003. Other major receivers for LOCs include Sri Lanka, Bangladesh and Myanmar.

The ITEC factor

For capacity-building, the Indian Technical and Economic Cooperation (ITEC) is the body that spearheads India’s development assistance program (from 1964). ITEC is usually used for cooperative programs in the regional and inter-regional context, ITEC activities range from Association of South-East Asian Nation (ASEAN), Bay of Bengal Initiative for Multi-Sectoral Technical and economic cooperation (BIMSTEC), Mekong-Ganga Cooperation (MGC), African Union (AU) etc. The ITEC program offers civilian training and around 12,000 scholarships that are given to all partner countries for attending various training courses in India. These courses range from various subjects including media, health, yoga, project management, rural development etc. ITEC also offers Line of credit to least developed countries that aim to promote bilateral cooperation. ITEC provides a holistic environment for conducting study tours and project related cooperation.

Looking at ITEC we can identify four features for the current development partnership model:

1) There exist a blending of development instruments with commercial instruments i.e. coming together of grants and export credits, trade and investment. This is called as development compact where all the necessary parameters are conceptualized into a comprehensive format for solving the development needs of States.

2) Development projects are often seen as a mutually beneficiary factor for the sender and the receiver country. Earlier Line of Credit (LOC) was used for financial exchange, but now export credit is used because it is a better alternative as a financing mechanism for developing countries.

3) Development projects are not based on poverty alleviation but on growth, this includes working with various sectors like IT, agriculture, energy, education, science and technology. This allows for partner countries to receive immediate benefits in terms of infrastructure and economic investment.

4) The role of private sector is very crucial as public private partnership (PPP) has invested around $35 billion in Africa and other LDCs. The PPP as a development tool is being explored by DPA to combine development partnership with commercial assets to have an enhancing development importance.

There is a major policy of DPA to move towards a public outreach program, this is done as a way of letting people know about DPAs initiative. It is necessary to spread awareness about the activities of DPA as it is working in various sectors like health, roads, IT, power etc. It is seen as a cross sectional and cross regional platform that is bound to expand exponentially in the coming years. There are plans for DPA not to remain in its entirety in the public sector but move in the realm of private sector too. If the role of private players increase then there is bound to be greater investment in expanding India’s development footprint abroad.

Too much for an emerging economy?

While India has managed to break away from the traditional aid giving notion which was followed by the Western Countries, where there is a crisis of donor fatigue and India is seen as a rising economy ready to help out any country in need. However, India is still a developing country and its aid programs do not match if compared to other giant economies. Another area of contentious is that the South Asian Association for Regional Cooperation (SAARC) has remained a non-starter and is going through a hiatus since 2016, while India can’t be blamed entirely but its main development aid has not increased any chance of regional cooperation and today SAARC remains the lowest integrated region in the globe. Another question is often raised that India’s approach towards development is seen as an attempt to counter China’s sphere of influence. India’s aid policies are co-incidentally linked with China’s aid policy too, especially when it comes to Africa and South East Asia. To counter China’s String of pearl strategy India has theorized the diamond of necklace strategy that broadens India’s sphere of influence in the Indian Ocean.

It has also been noticed that India’s aid giving platforms do not receive adequate attention it deserves. At the start of 2019, the US president Donald Trump had made some insensitive comments about India not doing enough for the Afghanistan and just making a library. However, India has contributed to building Afghanistan’s new parliament along with countless road and infrastructure development projects have taken place. The Indian government must make sure that world is well aware of India’s contribution when it comes to giving aid.


India, which was seen as a leader of the G-77 or the Non-Aligned Movement has been a propagator of development of the downtrodden and other least developing countries. India today is the 5th largest economy in the world, it plays an essential role in bridging the gap between the core and the periphery countries. It has grown in ranks and has attained an international reputation of being in the good books of many countless countries. Its development programs in South Asia, Africa and South-East Asia is entering a new realm of South-South cooperation. India’s aid policies are not unilateral or even bilateral but they are based on demand and doesn’t discriminate otherwise. India’s unique approach in the realm of aid and development will go down as an important aspect in history and should create new forefronts in the field of IR and other related academic disciplines.




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Soham Joshi

Soham Joshi

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