India’s Aid to Foreign Countries in 2019

From a nation depending upon foreign aid to now India providing financial aid to nations as powerful as Russia through the Act Far East Policy, India has come a long way. Let’s have a look at India’s financial aid receiving nations and relations with them.
Created On: Jan 9, 2020 16:56 IST
Modified On: Jan 9, 2020 16:59 IST
India’s Aid to Foreign Countries in 2019
India’s Aid to Foreign Countries in 2019

In the realm of realist international politics, where political relationships between rising powers are often decided by economic connections, financial aid is often a key instrument of foreign policy. In most cases, it serves as long-term insurance to preserve old relationships, while in others, it acts as a direct incentive to forge new partnerships. This article is a two-part series that provides an assessment of India's budgetary aid program to countries through its Union Budget 2019-20 and the Prime Minister announcements. 

Foreign Aid Introduced in Budget 2019-20

Bhutan

Bhutan’s geopolitical and geostrategic importance to India, as a buffer to China,  makes it one of the most important countries in India's attempt to reach out to its neighborhood. Bhutan receives the highest amount of aid from India where the country donated a total of $4.7 billion between 2000 and 2017. Continuing the tradition, the Union Government provided the financial aid of Rs. 3202 crores to Bhutan in the Union budget of 2019-20.

Further, 79% of Thimphu's imports and 90% of its exports are to and from New Delhi, making India, Bhutan’s largest trading partner. India has been actively involved in financing much of Bhutan's five-year plans.

Important Committees Set-Up by Government of India in 2019

Mauritius

The tripling of foreign aid to Mauritius, from Rs 350.39 crore in 2017-18 to Rs 1,100 crore for 2019-20 is cited as a result of the decline in Bhutan’s share. The increasing funding is seen as essential because of India’s several large proposals like Metro Express, Supreme Court building and also infrastructure at Agalega Island in the country. 

Nepal

with the 2015 Madhesi crisis and the ensuing border blockade, allegedly enforced by India, relations have soured between both countries, India’s bilateral relationship with Nepal, once considered among one of India’s most trusted regional partners, has been rough. However, tense relations between the two countries have not affected India’s core aid assistance to Nepal with an aid of 1050 crores assigned for the country this year.

Maldives

As one of the first countries to recognize Maldives' independence, India has maintained a strong historical relationship with the Indian Ocean island nation. The budget in the FY 2018-19 witnessed a significant jump to Rs 440 crore and the surge continued with an estimate of Rs 575 crore in 2019–20. The importance of the country lies in its strategic geographical location located 700 km from the Lakshadweep islands and 1,200 km from India's mainland, it is a crucial geostrategic and geoeconomic nodal point.

Africa

With increased Chinese participation in Africa by focusing on resource extraction, infrastructure development, and elite level wealth creation, India is no far in maintaining at par relations with the continent countries. India’s bilateral partnership with African countries can best be defined by the spirit of developing together as equals. This year the Government allocated an amount of Rs. 450 crores to the African countries as financial aid.

Important Banking/Finance/Insurance Committees Constituted in 2019 

Myanmar

India has renewed its diplomatic push towards Southeast Asia, within the ambit of the flagship Act East Policy (AEP). Through this policy prism, Myanmar forms a critical strategic link, especially with the coming of a democratically-elected civilian government in Naypyitaw under Aung San Suu Kyi. In AEP parlance, Myanmar is India’s “land bridge” to Southeast Asia and its lucrative markets. Thus, the steady increase in India’s grant assistance to Myanmar is not a surprise. This year the Union Government assigned a budget of Rs. 400 crores for Myanmar.

Afghanistan

India’s humanitarian aid commitment to Afghanistan, which is widely praised by the international community, has tended to dominate New Delhi’s aid discourse. Geographical mapping of India’s efforts leads to the inference that Indian efforts have been spread across all provinces in the country. But, a significant part of the efforts has been concentrated in and around Kabul, intended to strengthen the state and supporting its efforts at development in the proximate region. This year India assigned an amount of Rs. 400 crores as financial aid to the neighboring nation. 

Financial Aid Announced by PM during his visits

Russia

Addressing the plenary session of the 5th Eastern Economic Forum in Vladivostok, PM Narendra Modi launched “Act Far East Policy” and announced a $1 billion line of credit for the development of the resource-rich region. 

"For the development of the Far East, India will give a line of credit worth $ 1 billion. My government has actively engaged in East Asia as part of its 'Act East' policy. I firmly believe that today's announcement will add a new dimension to the economic diplomacy of the two countries," Modi said at a packed house in Vladivostok.

Carribean

Prime Minister Narendra Modi on December 29, 2019, chaired a meeting with the member states of the Caribbean Community and Common Market (CARICOM) on the margins of the United Nations General Assembly in New York.

During the meet, PM Modi announced a $14 million grant for community development projects in the Caribbean Community and Common Market (CARICOM) and another $150 million Line of Credit for solar, renewable energy and climate change-related projects.

Important Committees formed in 2019 for Education Sector

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