Round The World

New Delhi, 3  March 2015

India Aid

MODI, A GOOD NEIGHBOUR

By Ashok B Sharma

The world will be closely watching the unfolding of the assurances given by the Modi government to its neighbourhood and the developing world. And also the new emphasis in the country’s foreign policy of maintaining friendly relations with countries for attracting investments and boosting trade so as to make India a new centre of the growth engine for the world. India is slated to emerge as a security provider in the region.

Prime Minister Modi on assuming office had said that his foremost priority is South Asia and then the extended neighbourhood. Recall his swearing in ceremony, where he had invited leaders of South Asia as a gesture of goodwill and they responded favourably.

In the extended neighbourhood, Modi diplomacy began its first debut with the changing of the ‘Look East Policy’ to ‘Act East Policy’ and roping in the remote Pacific Islands Forum to the level of summit-level talks with India. In the ASEAN bloc, the less developed countries like Cambodia, Myanmar, Laos and Vietnam (CMLV) particularly has been selected on priority for deepening development cooperation.

Last week, the Union Budget of Finance Minister Arun Jaitley amply focused on making India an attractive destination for investment and Modi’s pet theme, ‘Make in India’ programme a success. Importantly, the budgetary proposals have gone beyond to make the CMLV countries as “manufacturing hubs.” With a view to catalyze investments from Indian private sector, a project development company through separate special vehicles (SPVs) will set up manufacturing hubs in the CMLV countries. Thus, this would be a new approach that can be conveniently called ‘Make by India’ in contrast to ‘Make in India’.

However, development cooperation with CMLV countries is not new. New Delhi has been in the past helping out viz various development programmes. This time around, an attempt is being made to be a partner in their industrialization process in a defined and dedicated manner.

Vietnam is a friendly country having strategic relationship with India. It has allotted oil exploration blocks to an Indian public sector company in the South China Sea, much to the displeasure of the Chinese. At its end, New Delhi has sought to ensure that the two have stronger ties particularly by way of defence, trade and economic agreements. In fact, both the countries are lining up in particular against China in the backdrop of the US intensifying its “pivot to Asia” aimed at isolating Beijing and encircling it militarily with strategic partnerships and alliances. While Cambodia and Laos are also friendly countries, they had taken a different view over Beijing’s claim over South China Sea at the ASEAN meeting, which perhaps now New Delhi would like to influence. And what better way than reaching out more subtly with a development cooperation plan with the two.

Given that Myanmar is India’s immediate neighbour and is the gateway to South-East Asia, plans are afoot to have strong ties by ensuring land, rail and maritime connectivity through this country to other regions of ASEAN. Undoubtedly, this is the right time to deepen relationship with Myanmar when democracy is taking roots there. The setting up of manufacturing hubs will also serve India’s interest by helping its remote north-eastern States when full-fledged connectivity is established and more trading points are opened at the border. Thus, India has for starters assured Rs 270 crore as aid to Myanmar in the current fiscal year.

Among, India’s immediate neighbour, Bhutan would be the largest recipient of aid. Recall this was the first country in South Asia Prime Minister Modi chose to visit after assuming office. While New Delhi has consistently aided Thimpu and has already promised Rs 4,500 crore for Bhutan’s 11th five-year plan (2013-18) and Rs 500 crore towards economic stimulus package, the budgetary proposals for the year 2015-16 have earmarked a total corpus of Rs 6160.20 crore as aid to Bhutan. 

In terms of aid package, next comes the war-ravaged Afghanistan with a total of Rs 676 crore. India’s engagement with Kabul is crucial India. The two have strong ties based on historical and cultural links. New Delhi has played a significant role in the reconstruction and rehabilitation of Afghanistan and wants it to become a source of regional stability. However, Pakistan seeks to play spoilsport, and among others has denied land route access to Afghanistan. But that doesn’t deter New Delhi, which has now planned to reach Afghanistan by using the Chabahar port in Iran. Further, rail and road connectivity is proposed to connect to Afghanistan and beyond to the Central Asian republics.

India is Sri Lanka’s closest neighbour. However, over the past years the relationship has been somewhat choppy given Colombo’s treatment of Tamils of Indian origin in the northern and North Eastern Provinces and its inching closer to China, which has consciously made strategic and commercial investments in Sri Lanka. Modi is expected to visit the island nation later this month, and New Delhi has been busy with the ground work. It has committed Rs 500 crore aid which among others shall take into account the rehabilitation of the war displaced Tamils. Indian public sector, IRCON is executing five projects in the Northern Province which includes reconstruction of railway lines at an estimated total investment of $550 million.

Insofar as Bangladesh is concerned, Modi’s coming to power and with it the issue of illegal migrants from across the border raising its ugly head there has been growing apprehension about the future of the relationship. In a way there is a bid to assuage these feelings by continuing to extend a helping hand. New Delhi has assured Rs 250 crore as aid to Dhaka. This apart, IRCON is executing projects for construction of the second Bhairab Railway Bridge with approach rail links at an estimated investment of $40.10 million.

At a time when India and Nepal are reviewing and updating the Treaty of Peace and Friendship 1950, New Delhi has scaled up its assistance to Kathmandu to Rs 420 crore. Additionally, IRCON is executing two prestigious projects for construction of new broad gauge railway lines. The other countries getting aid packages include, Maldives, with assistance hiked to Rs 183 crore, distant Mongolia getting Rs 2.50 crore and Eurasian countries Rs 20 crore. In Malaysia, IRCON has recently completed a double tracking railway project of 98 km on a turnkey basis including electrification, signalling and telecommunication works at an investment of over $1 billion!

Looking further beyond, India has hiked its aid assistance to Africa to Rs 200 crore and is rendering development assistance through Indian Technical and Economic Cooperation (ITEC) programme. The ITEC, which is pegged at Rs 180 crore, is also extended to countries in Central Asia, SE Asia and Latin America.

Another area where New Delhi assists developing countries is through the Colombo Plan and its contribution to this fund in the current year is Rs 8.60 crore. Aid to other developing countries is pegged at Rs 83.44 crore, whereas for disaster relief Rs 25 crore is earmarked. Importantly, the budget for total technical and economic cooperation with other countries and advances to foreign governments has been pegged at a whopping Rs 9107.02 crore. It goes without saying that with these agenda in place, Modi wants to make his debut in the neighbourhood and in the developing world felt. --- INFA

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