Onderstaand artikelen zijn gepubliceerd in / Published in: The Economic Times , 13-6-2003      

Should New Delhi turn away aid?

No, the govt has delusions of grandeur

Praful Bidwai
Columnist & commentator

Our policy-makers suffer from delusions of grandeur. As if entranced by 5.5-6% GDP growth, they have narcissistically decided that this wretchedly poor country must suddenly transform itself from an aid recipient to aid-donor. They are pre-paying Rs 7,491 crore in bilateral debt and will accept aid from only six countries (US, UK, Germany, Japan, EU and Russia). Others, who have provided total assistance of Rs 500 crore annually over the past six years, can disappear. The money is no small beer: it's half the Central health budget. What makes this more extraordinary is that over the last 10 years, India has become more aid-dependent. External assistance has increased about 2% times to Rs 25,000 crore-plus, twice the entire Central HRD budget.

There is a serious ethical problem here. A government that can't provide a bare minimum of public services to its people, especially the underprivileged, has no moral right to staunch the flow of funds. Even you assuming some money is wasted in administration costs and bureaucratic sloth, it represents a net inflow, which a poor country cannot ignore. India's rank (124 out of a total of 173) in UNDP's Human Development Index is an embarrassing and sobering reminder of "jobless", "ruthless, "rootless" growth.

The choice of the six donors is extremely strange. They include the US, which has given a measly annual average of Rs 97 crore over the past 6 years, but excludes the Netherlands (average aid of Rs 220 crore). There is evidence of political pique here: the Dutch were among the leading European critics of the government's handling of the Gujarat pogrom. And this government wants to toady up to America. One wonders if the real reason for restructuring aid isn't to starve NGOs and people's organisations of funds because they are doing quality work, which the government cannot control or stop except by such devious means. Is it simultaneously also to help sinister sangh parivar groups, like the Vanavasi Kalyan Kendra, which have received millions of dollars from US- and UK-based corporations for tribal "welfare", but used it to promote communal hatred?

Should New Delhi turn away aid?

The world needs us more than we need it

Ashwani Mahajan

Though external aid plays an important role in supplementing domestic efforts in provision of infrastructure and civic amenities, there is a general feeling in the country that the aid received also comes with conditionalities. Earlier these tied up aid with conditions to buy from a given country or a set of countries, or tying up with a specific project and so on. After the new economic policy came into force, donors have been trying to force legal, administrative and legislative changes: external forces are trying to change our economic policies. The World Bank has been playing a key role in this regard. Recently, while clearing aid for water and sewage projects in Delhi, the Bank imposed conditions like private sector participation, introduction of commercial principles in water supplies and constitution of a Delhi Water Regulatory Commission to ensure private profits. The Bank insisted that the PSU, HUDCO, should keep away from the project.

Recently, there have been changes regarding the quantum and break-up of aid. Unfortunately, over the years percentage of grants in the total external assistance has gone down from 30% in 1979-80 to only 13.8% by 2001-02. The process got accentuated due to formation of Aid India Consortium by the major donor countries and institutions. So external assistance received is no longer as beneficial as it used to be 20 years ago. There has been a gradual shift in government policy towards foreign assistance. This has happened due to piling up of foreign exchange reserves, thanks to the extraordinary performance of our software sector and blind policy towards FDI (today’s reserves might disappear if investors start repatriating profits suddenly.) The government is now trying to retire overseas debt. The recent directive to restrict number of donor countries is another step in this direction. We have to come out of the mindset of inevitability of foreign capital and foreign assistance. The world needs us more than we need it. Along with limiting the number of donor countries the government should also come out boldly to accept foreign assistance on our own terms rather than accepting the conditions imposed by "so called" donors.


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Landelijke India Werkgroep / India Committee of the Netherlands - 15 juli 2003