IndianAid

Recent reports that India is proposing to set up its own international agency to disburse foreign aid have added a new dimension to the debate around the issue of international development assistance. Over the past 60 years, India has been the largest aid recipient in the world, receiving over USD 50 billion; today, it continues to be home to the largest number of poor people of any country. As such, it would seem that the new initiative flies in the face of received economic wisdom, given that India will remain a net aid recipient for the foreseeable future. However, such a proposal is actually in line with the efforts of other large economies that nevertheless have many poor people – particularly Brazil, Russia and China – countries that are now clearly hoping to leverage their growing economic clout on the international scene.

International aid has long been a controversial issue in developing countries, with many arguing that it does more harm than good. The left in India has traditionally opposed foreign aid, that received by both the government and NGOs. In 1984, an article by Prakash Karat – then a rising star in the Communist Party of India (Marxist) and now the party's general secretary – went so far as to allege that organisations receiving foreign funds were conscious agents of the US Central Intelligence Agency. While Karat and his party have since moved on from such conspiracy theories, there remains considerable disquiet in many circles about foreign assistance and its efficacy in alleviating poverty or achieving development goals.

Over the last two decades, international NGOs have been gradually reducing the amount of funds disbursed in India, as its economic indicators have improved. With the much-ballyhooed 'India Shining' propaganda already impacting on the overseas assistance programmes for India's poor, New Delhi's promotion of its own aid agency will almost certainly portend a further dip in Western and multilateral agency assistance for India. Meanwhile, there is a growing chorus of voices in the West that governmental foreign-aid budgets be reduced. With the growing gloom on the economic front both in the US and in the Eurozone, it is a given that the amount of foreign aid being disbursed by developed countries will further plummet. It is in this situation that India, along with other large developing countries, is stepping up its own foreign-aid disbursements.

Six decades on

The decision to create a new foreign-aid agency, to be named the Indian Agency for Partnership in Development, is clearly the result of India's economic growth over the last two decades. This has given New Delhi both the cash liquidity to set up such an organisation as well as the ambitions of 'global power' status, which 'requires' India to have a development agency of its own. The Indian government must also be seeing the new development agency as a tool for the projection of soft power, as has been done by the Western countries for decades. Especially at a time when the Chinese government is reaching out aggressively with assistance to the countries of Africa, Latin America, Southasia and elsewhere, New Delhi must feel the need to do something similar, if only to keep China from having a monopoly over natural resources in the aid-recipient countries. Just as the Chinese government seeks natural resources to feed the growth of its middle class, India too does not want to lose out in the rush to feed its own middle class.

Of course, the guiding spirit behind foreign aid has never been purely egalitarian. International aid was born in tandem with the concept of 'development', a term first used in its modern sense by US President Harry S Truman in 1948. Perhaps inevitably, the objective of aid has typically been to advance the strategic interests of developed countries as much as it has been about helping the poor in developing countries. Nevertheless, some principles have been developed on aid-giving over the last half-century, as reflected in guidelines within the OECD (Organisation for Economic Cooperation and Development) countries and by the UN. These include, for instance, the ideal of providing 0.7 percent of gross domestic product as assistance, which nearly all but the Scandinavian countries have been unable to follow. There also exist certain agreed-upon principles and understandings on a whole gamut of issues, from transparency to developmental philosophy.

Simply because most of these principles and guidelines are not followed does not mean that newly emerging economies – and their newly unveiled foreign-aid agencies – should not have some openly elucidated standards. In the six decades since the term development has entered the world lexicon, the arena itself has evolved from one of activism to careerism. That history now offers some potent lessons for the new Indian exercise.

No doubt, as a developing country itself, India is ideally suited to offer assistance that can be catalytic and effective for less developed countries in other parts of the world. India is a vast land with deep poverty, extending from high mountains to desert plains to a long coastline – and with a corresponding diversity of communities. On the other hand, India has inherited a top-down model in its bureaucracy even though the Indian democracy allows a plethora of voices to be active at the individual and community levels. It will now be important for the Indian government, with humility, to evaluate the country's own experience with 'development' before bringing its largesse and formula to its aid beneficiaries.

The neighbouring countries of Southasia, from Bangladesh to the Maldives, have long been recipients of Indian assistance, channelled through India's various embassies or high commissions. The fact that there will now be a development agency would mean that, henceforth, this organisation will move the funds, which will hopefully work towards increased transparency for the Indian government as 'donor' – and increased ownership for the communities that receive the assistance, coming as it will from an agency rather than an embassy.