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India’s aid to neighbours takes a hit, MEA scrambles to organise funds

The scale down in the funds is considerable when it comes to countries in the neighbouring areas, despite the government’s pronounced neighbourhood first policy.

india Updated: Sep 07, 2016 17:33 IST
Jayanth Jacob
Ministry of External Affairs
The Ministry of External Affairs has to look at new ways to arrange for funds to meet commitments to neighbouring countries made at the highest levels.(HT File Photo)

India’s aid to foreign countries has come down considerably this year forcing the ministry of external affairs (MEA) to look at new ways to arrange for funds to meet commitments to neighbouring countries made at the highest levels.

Such financial assistance for technical and economic cooperation is devised for earning goodwill and expanding India’s strategic footprints abroad. It has remained a key foreign policy objective of all the governments.

But the consistent fund crunch has created a difficult situation. The funds earmarked for the programme this year is Rs 7,907.87 crore or 54% of the ministry’s total budget of Rs 14,662 crore as against the allotment of Rs 8,949 crore, which was 60% its budget of Rs 14, 996 crore, last year. The year before, it was 63% of the total budget of the ministry.

The scale down in the funds is considerable when it comes to countries in the neighbouring areas, despite the government’s pronounced neighbourhood first policy.

For example, the funds allotted for Afghanistan this year is Rs 520 crore against Rs 682 crore in 2015-16. Bangladesh will get an assistance of Rs 150 crore which was Rs 213 crore last tear. And the cut is acuter for Sri Lanka. The island nation which will get Rs 230 crore Indian assistance this year against Rs 500 crore it got the last year.

Bhutan, the largest recipient of Indian assistance will get Rs 5,490 crore against Rs 5,612 crore last year. One country that saw a rise in assistance includes Myanmar Rs 400 crore this against Rs 154 crore last year.

In strategic terms, the sharp cut also comes at a time when China is pumping in more investments in the countries neighbouring India.

As it struggles to cope with the crunch, MEA is looking at ways to raise funds from other ministries. As a first step, the MEA has begun the process of tapping into the funds of the defence ministry.

“Different ministries such as the defence, railways, road transport and shipping are involved in the process of extending financial assistance to foreign countries. And tapping their resources earmarked for these projects would be an ideal way to meet the shortage in funds,” an official said.

According to officials, these funds would be used for training of defence personnel, gifting of equipment and other defence-related machinery. For example, India has robust defence cooperation with countries including Sri Lanka.

Most of the projects are announced to countries when high-level visits such as those of the prime minister, president, vice-president or the foreign minister take place. And not honouring these commitments in time brings a bad name to the country’s reputation.