India emerging as a new face among donors

India was the largest recipient of foreign aid between 1951 and 1992. India received about $55 billion in foreign aid. Now, it seems a transformation is going to take place- India’s switch from world’s biggest recipient to donor is a part of wider change shaking up foreign aid. India seems to be on the verge of setting  up its own aid-giving body. The government is in active discussions to create an India Agency for Partnership in Development (IAPD), an equivalent of America’s Agency for International Development (USAID) or Britain’s Department for International Development (DFID). Even today, America remains the largest single donor,with $31 billion in 2010. The second in the list would be China, which gave away $25 billion in 2007. Brazil gives upto $4 billion a year of assistance. Then, in the list is Sweden, Italy or Saudi Arabia. If India gives around $ 2 billion a year, it would rank with Austria or Belgium.

The Indian government sees aid as a way of improving its ties with its neighbors.  It gave $25m to Pakistan a year ago, via the United Nations, to assist in flood relief. It has also made huge investments in hydropower in Bhutan, which have helped both countries. India would now like to do something similar with Nepal. India extends large, soft loans to curry favor with a friendly regime in Bangladesh and is paying for post-war reconstruction in Sri Lanka. With Western support, it is also building roads, a power grid and a new parliament building for Afghanistan, where India is the fifth-largest donor.

According to a new report by a non-governmental organization called Global Humanitarian Assistance, aid from non-DAC (Development Assistance Committee) countries rose by 143% in 2005-08, to $11.2 billion, before falling during the financial crisis. Aid from the BRICs (Brazil, Russia, India and China) more than doubled. The establishment donors’ aid monopoly is finished.  Moreover, aid from upstart donors is not exactly new. India has trained poor countries’ civil servants for decades, in a programme called Indian Technical and Economic Co-operation (ITEC). According to the foreign ministry sources, this year, ITEC will train 5,500 people from 120 countries. As countries and their contributions are soaring, the aid world would be witnessing genuine competition from donors all over the world.

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