Forum for Indian Development Cooperation

18th January 2014

Indian Development Partnership:

Genesis and Evolution

Sachin Chaturvedi

• India’s own experience that India committed to the promotion of thesocial and economic development of newly independent countriesand their people, as lack of skills was realized to be a majorimpediment to realizing developmental goals.

• India launched manpower training programmes.

• India’s own experience when engineers from the Indian Institute ofTechnology (IIT) provided major technical support in rebuilding thecountry after Independence.

• Accumulated experience in skills development by being part ofseveral multilateral programmes for skills development

Genesis and Evolution

• The programmes included

- Colombo Plan, the Special Commonwealth Assistance forAfrica Programme (SCAAP),

- the US (United States) Third Country Programme and

- the Technical Assistance Programme of the UN and itsspecialized agencies.

• India established a new division within the Ministry of ExternalAffairs (MEA) to deal with these and other programmes.

• Economic and Coordination Division established in 1961,

• But soon realized that the training programmes had expanded and, asa result, the Indian Technical and Economic Cooperation waslaunched in 1964.

Genesis and Evolution

• In accordance with the philosophy of India’s foreign policy, anapproach of friendship and cooperation with the aim of peacefulco-existence became the foundation principle of India’sdevelopment cooperation policy.

• Framework of SSC and its associated values facilitate theovercoming of multitudes of problems, differences and conflictsthat might pull all the efforts for cooperation in different directions.

• Under Nehru, India had an element of idealism impacting on Indianforeign policy which was not very different from Gandhi’sphilosophy of ‘Growth for All’ and the idea of “One World”

Philosophy

• As a part of this, India articulated that the economicdevelopment of all countries is an obligation of the wholeinternational community.

• This was very much part of India’s commitment tointernationalism, wherein all countries contribute to therapid evolution of a new and just economic order underwhich all nations can live without fear or despair (Nehru1948).

Philosophy

Conceptual Framework

• Key SSC offers lessons for making flows more ‘effective’ bybeing inclusive.

• With demise of Washington consensus and less than expectedperformance of developed countries on Paris Declaration andunexpected expansion in SSC, a new context has emerged.

• Continued recession in the North and ascendance in the aidprogrammes from the South have given further fillip to this newcontext, which is yet to be fully captured at the theoreticalcanvass.

• Fundamental difference between structuralists and monetarists andSSC by character is closer to strcuturalists, would be indifferent tothe idea of stability and infact may even be closer to theassumption that growth may be accomplished even withinflationary pressure.

Learning from Principles of South-South Cooperation

* “Development compact’, works at five different levels,viz.- trade and investment,- technology,- skill upgradation,- lines of credit and finally- grants.

• The lines of credit and grants may be pooled underfinancing mechanisms.

• The engagement by the emerging economies with theother southern countries has provided major pull factorfor wider engagement across the five elements.

• Long-standing development cooperation policy of India underwentdramatic policy changes in the early 2000s.

• India asserted against the recall of aid as India went for nuclear.

• The strength was from economic buoyancy that transformed thedelicate balance of India’s dual role as a recipient and as anassistance provider (a ‘development partner’) for fellow developingcountries.

• India set a minimum ceiling for incoming aid (US$25 million), whichdrove out several smaller donors.

• Accumulation of a sizable foreign exchange reserve, resulting fromhigh economic growth and sizable expansion in foreign trade andforeign direct investment.

Recent Policy Changes

Evolution of Indian Development Cooperation Architecture: A Chronological Expose

Year Programme Purpose

1949 Cultural Fellowships Established MEA established cultural fellowships for fellow developing countries

1954 Indian Aid Mission (IAM) Launched at Kathmandu for coordinating and monitoring implementation of various Indian projects in Nepal

1964 First Agreement for Periodic Review ofdevelopment projects

This was signed with Nepal, during the visit of the Indian External Affairs Minister, to undertake a periodicreview of the progress made on Indian-aided projects

1966 Indian Cooperation Mission (ICM) The PM rechristened the IAM to ICM signifying the fact that Indian cooperation goes deeper than aid.

1969 Joint Commission (JC) at Afghanistanestablished for project reviews. Laterexpanded to other countries

Entrusted with (a) identifying resources and capabilities for undertaking projects of mutual interest and (b)exploring possibilities for expanding trade including land transit trade arrangements.

1961 Economic and Coordination Division(ECD)

A new Division was established at MEA to coordinate technical cooperation among other MEA programmes

1964 Consolidated Training programmelaunched as ITEC

Indian Technical and Economic Cooperation Programme (ITEC) launched as a part of the Economic Divisionfor which a special cell was formed.

1980 New Economic Cooperation Wing(ECW) launched at the Nepal mission

Economic Cooperation Wing was established at the Nepal mission, subsuming ICM

1994 Special Volunteers Programme (SPV)launched

India launched a special programme targeting 10 countries in Asia and Africa to assist in developmentprogrammes of partners countries

1995 Establishment of ITEC Division ITEC; SCAAP and Aid to Disaster Relief (ADR) hived off from the Economic Division to provide greater focuson Indian economic diplomacy. Later subsumed in the Technical Cooperation Division

2003 India Development Initiative (IDI) Budget Speech announcement for supporting fellow developing countries.

2004 IDEAS Lines of Credit (LoCs)Launched

India Development and Economic Assistance Scheme (IDEAS) launched to provide Lines of Credit by theEXIM Bank.

2005 Development Partnership Division A new Division created for better delivery of development projects. This was later merged with TechnicalCooperation Division.

2007 India International DevelopmentCooperation Agency (IIDCA)

Budget Speech announcement for setting up of IIDCA as one-stop shop for coordinating all projects, lines ofcredit, technical cooperation, deputation of experts and training of foreign nationals in India

2012 Development Partnership Administration(DPA)

A new division within the MEA established for coordinating India’s development assistance.

• However, the recent institutional changes are not completelyunprecedented.

• A long series of institutional innovations have been attempted atvarious levels and at different points of time for experimenting ondelivery mechanisms and also for bringing the idea of impactevaluation and assessment into the development partnershipprogramme of India.

• What emerges clearly is the lack of consistency in these efforts. Theinstitutional arrangements, which have often led to changes andrearrangements—sometimes within a year or so—have affectedperformance and commitment.

• The concerned divisions within the MEA dealing with planning (atthe headquarters) and delivery (at the end of missions) have alsogone through several changes.

Genesis and Evolution

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* Budget speech (2003-04) suggested a change in India’said policy:

“a stage has come in our development where weshould now, firstly, review our dependence on externaldonors.

Second, extend support to the national efforts of otherdeveloping countries, And, thirdly, re-examine the lineof credit route of international assistance to others.

Having fought against poverty as a country and apeople, we know the pain this burden imposes.”

New Focus in India’s DC Policy

12

* Later, in the Annual Budget of 2007-08,announced the setting of the IndiaInternational Development Cooperation Agency(IIDCA) in February 2007.

“107. In keeping with India's growing stature in international affairs,we must willingly assume greater responsibility in promoting developmentin other developing countries.

At present, India extends development cooperation through a number ofMinistries and agencies and the total sum is about US$ 1 billion perannum. It is felt that all activities relating to development cooperationshould be brought under one umbrella.

Accordingly, Government proposes to establish the India InternationalDevelopment Cooperation Agency (IIDCA). The Ministries of ExternalAffairs, Finance and Commerce and other stakeholders will berepresented on IIDCA. “

New Focus in India’s DC Policy

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• This is for dealing with developmentcooperation with other countries.

• India has believed in the imperatives ofSouth- South Cooperation since itsindependence.

• Project based bilateral funding to a new trendof regional focus.

• Absence of IIDCA – coordination andassessment is a major challenge

• DPA – the new addition

Focus in India’s DC Policy

According to the decision taken at the first India-Africa ForumSummit, Indian Government will be setting up 21 institutions inAfrica

– India Africa Institute of foreign Trade (Kampala, Uganda)

– India Africa Diamond Institute (Gaborone, Botswana)

– India Africa Institute of Educational Planning and Administration(Bujumbura, Burundi)

– India Africa Institute of Information Technology (Ghana)

Institution Building

Institution Building– Government of India approved a USD 30 million line of credit to

Angola for setting up an Industrial Development Park

– An amount of 700 million dollars will be made available byGovernment of India to establish new institutions and trainingprogrammes in Africa.

– A MoU was signed with the Central African Republic for settingup an IT Centre for Excellence in Bangui

– A multi member team of Indian customs officers providedsupport for developing capacities to undertake customs valuationto Ethiopian revenue and customs authority

– Capacity in Tanzania to deal with cyber crime

– Specialised courses and institution creation by the Indian Instituteof Foreign Trade in Kampala, Uganda.

– Five human settlement institutions to support low cost housing(Zambia, Kenya, Togo, Mauritania and the DRC)

Indian Experience with Small Development Projects:

Lessons from Nepal

Key Development Partners for Nepal

256.11

184.42

112.5492.6158.69

50.7348.45

42.38

233.74

Donor-wise disbursements for 2010-11(US$ million)

World Bank Group

Asian Development Bank

United Nations

United Kingdom

Japan

India

USAID

European Union

Other

Source: Ministry of Finance, Nepal (2012)

202.85

135.07

129.63

110.9952.89

50.36

398.01

Sector- wise disbursements for 2010-11 (US$ million)

Education

Local Development

Health

Road Transportation

Drinking Water

Electricity

Other

Source: Ministry of Finance, Nepal (2012)

Local Developments Sectors

0

20

40

60

80

100

120

140

160

180

200

ADB India World Bank Group

United Kingdom United Nations Others

181168

122

101

65

162

US$

mill

ions

Total Commitments-Ongoing Projects

Source: Development Cooperation Report, Fiscal Year 2010-11, Ministry of Finance, Nepal (2012)

Local DevelopmentDisbursing projects in the sector for 2010-11

Donor Agency Total Committed (US$ million)

Disbursed in 2010-11 (US$ million)

Social Safety Nets Projects World Bank 48.09 25.09

Nepal Rural Access

Programme Phase II

DFID 54.86 22.12

Small Development Projects India 168.12 12.86

Rural Reconstruction and

Rehabilitation Sector

Development Program

ADB,DFID,OPEC,Switzerl

and

140.95 10.40

Local Governance and

Community Development

Program

ADB,CIDA,Denmark,DFID

,Norway,Switzerland

158.12 9.24

Source: Development Cooperation Report, Fiscal Year 2010-11, Ministry of Finance, Nepal (2012)

• The Small Development Projects directlyimpact local communities and supportsocial-economic development, providelivelihood,

• India is now implementing such projects inAfghanistan, Sri Lanka, Bhutan andMyanmar.

• The Project Monitoring Committees overseethe implementation to ensure that there isno cost and time overrun.

SDP: Key Features

• MOU signed between GOI and GON in November 2003and renewed in June 2006 and August 2008 Projects costing less than NRs. 5 crores ($ 0.7 Million) Based on local needs; through participation of

community and local bodies of GON Development directly reaching the beneficiaries, no

overheads; direct involvement of stakeholders Low investment, no overheads Short gestation period; simple and transparent

modality

Focus of SDP• Schools, multiple campuses, nursing campuses; Other

specialised training institutes; Libraries; Gifting ofbooks, gifting of school buses

• Primary health posts, maternity centres, hospitals,gifting of ambulances/medical vans/medical equipment

• Rural electrification, micro hydro projects• Rural/Urban roads, bridges• Canals (for example, Rajkulo in Lalitpur)• Rural drinking water projects, cold storages• River Training Projects• Reforestation/ afforestation• Developmental training for GON’s senior bureaucrats.

Key Projects• GIFTING OF AMBULANCES AND BUSES

Since 1994, over 282 ambulances and 54 buses presentedacross 68 districts in Nepal (As of 31 December 2010)

• EYE CAMPSSince 2001, assistance to Nepal Netra Jyoti Sangh forcataract and trachoma surgeries through country-wide eye-camps. So far, almost 4.25 lakh patients have been examinedand more than 75,000 surgeries performed in these camps,with total Indian assistance of NRs. 13.79 crores ie $1.8Million (appx)

• Since 2007, a new School Eye Health Care Programme hasalso been launched. More than 18000 students have beenprovided with optical devices with assistance of NRs 2.67Crores ie $ 0.35 Million (appx)

OVERALL ONGOING PROJECTS(Including Large and Small Projects)

DURING 2003-2010

• 405 projects (December 31 2010) • Total outlay: over NRs.5807 Crores

ie $ 784 Million (appx).• Education, Health, Community

Development, Infrastructure

Flood Control and River Training

• India has been providing assistance toNepal for strengthening and extension ofembankments for river training and floodprotection works along Lalbakeya,Bagmati,Kamla Trijuga, Lakhandehi,Sunsari, Kankai and Kaligandaki rivers inNepal- Nrs. 102 Crores ie $ 13.2 MillionAppx

India’s Aid to Nepal (Sector-wise SDP)

2010-11 2011-12

Sector No. SDP US$ ‘000’ No. SDP US$ ‘000’

Education 21 7571.54 29 9761.36

Infrastructure Development

5 1920.56 11 4127.91

Health 5 1855.73 6 2537.16

Other 7 2172.75 3 1203.02

Source: Various Issue of Maitree (Maitree is the monthly publication of Embassy of India, Kathmandu)*data from august onwardsNote: Small Development Projects (Projects costing less than NRs 5 crores)

Afghanistan• In November 2012, the Indian Cabinet approved the third phase of the

Small Development Projects in Afghanistan. The outlay on the thirdphase of the Small Development Projects in US$ 100 million.

• The projects will be implemented over a period of four years throughlocal Afghan Government Bodies, Community Organizations, Non-Governmental Organizations, Charitable Trusts and Education andVocational Institutions.

• The money is to be spent over three years, as assistance for community-based small development projects, so that the programme’s reach isextended to 34 provinces.

• The programme’s focus is on local ownership and management ofprojects in agriculture, health, education, rural development, vocationaltraining, sanitation and drinking water.

• The Small Development Projects were earlier implemented in twophases: the first in July 2006 comprising 50 projects worth US$11,216,179; and the second in June 2008 comprising 51 projects worthUS$ 8,579,537. Most of the projects in the two phases have beencompleted.

Scaling Up

• India’s assistance to Bhutan in the 10th FiveYear Plan for 2011-12 is for Rs. 400 million.

• Similar amount is allocated for Sri Lankawith focus on fishing, small and mediumenterprises development, communityempowerment

3030

Strength and Challenges• BICS has launched major programmes for establishing

linkages with other developing countries under the South-South framework,.

• Factors helping in establishing strong linkages among thelarge developing countries and other developing countries- Common nature of factor endowment in southern

countries- Ability to provide cost effective professional services- Appropriate size of plants- Ability to scale down production as per the

requirements

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Strength and Challenges• The fact that India focused on technical cooperation in a major way

reflects on the desire to share comparative strength with otherdeveloping countries.

• India should consider for enhancing geographical focus of ITECtraining programme and diversification of thematic areas to focus onprogrammes which may provide not only trained manpower to absorbadvances in technologies in national economies but also help indeveloping integrated and sustainable approaches to minimizeadverse environmental implications.

• Focusing on capacity building for production and value addition.

• Enabling adoption of appropriate technology.

• Institutional set up and global linkages.

• A5/O5/BICS should come together for an arrangement.

• Strengthen multilateral systems.

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Challenges before India

• Institutional set up and global linkages.

• Contribution towards strengthening of multilateralagencies and related systems.

• Delhi Process (2013)- Evidence Collection; Impact assessment.- OECD DAC Agenda- Approach towards DCF and TDC

• India must consider a Policy Statement: White Paper- Quantums and Impacts- Insulating Budget- Greater CSO/ Media Engagement