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Trump’s budget cuts could hurt Modi’s pet urban development plan

world Updated: Mar 17, 2017 22:20 IST
Yashwant Raj
Donald Trump

USTDA says it has invested in over 130 priority projects across India.(AFP)

US President announced outlines of his first budget on Thursday, with many federal government agencies facing a funding axe. Among them is the US Trade and Development Agency (USTDA), that has worked with India on Prime Minister Narendra Modi’s pet urban renewal project — the Smart Cities Mission — providing technical expertise and assistance.

Also on the chopping block was the Overseas Private Investment Corporation (OPIC), a federal agency that backs American private sector with loans, grants and insurance against political risk to invest in seemingly perilous emerging markets. It has more than 40 ongoing projects in the micro-finance and power sectors at present in India.

Though it could not be immediately ascertained how severely any of these projects and schemes will be impaired by the cuts, and how soon, some impact was anticipated. But Indians did not seem worried. An official said, “To be honest, we are not dependent on them for our schemes.”

Trump has proposed a $54 billion hike in the US defence budget to be met partly by proposing to “eliminate funding” to around 19 independent agencies such as the USTDA and OPIC, and the national endowment for the arts and national endowment for the humanities, according to the blueprint called America First: A Budget Blueprint to Make America Great Again.

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There was no response to emails and phone calls to the USTDA’s Washington and New Delhi offices requesting information about the extent of the ongoing cooperation and how much of that will continue, or be terminated, in view of the coming cuts.

The USTDA website said, “USTDA manages a strong portfolio in support of the strategic US-India partnership, introducing innovative solutions from US industry to promote sustainable development in India’s key infrastructure sectors. It has invested in over 130 priority projects across India, achieving a ‘win-win’ scenario. Its Indian partners have developed sustainable infrastructure with the help of $3 billion worth of US goods, services and technologies.”

“USTDA is leveraging its cross-cutting expertise to deliver technical assistance and pilot technologies that can support India’s goals of developing 100 smart cities.”

The agency said that Ajmer won the Smart Cities challenge with the help of “USTDA-funded assistance” and it helped Visakhapatnam launch the next phase of its efforts to become a clean commerce capital.

The prime minister launched Smart Cities Mission in 2015 but he has been discussing it with the US since 2014, during his first visit after taking office. After his next visit in 2015, the India-US joint statement talked about Andhra Pradesh, Uttar Pradesh, and Rajasthan signing MoUs with the USTDA earlier that year to develop Vishakhapatnam, Allahabad, and Ajmer as Smart Cities with the participation of US industry.

For both USTDA and OPIC, the ultimate goal remains the furtherance of American business interests abroad and to create and expand markets for American goods and services, but emerging markets such as India tend to benefit from it, and actively seek this kind of intervention.

OPIC has 42 ongoing projects in India, the oldest going back to 2009, which finances, through loans, private sector entities involved in micro-finance, solar and wind power generation, affordable housing and expansion of broadband.