India’s Aid Diplomacy


For India which was once the world’s biggest remote guide beneficiary, with some USD 55 billion received by the nation in the vicinity of 1951 and 1992, the change from beneficiary to benefactor comes as the nation tries to reclassify its part in the global world.

For a considerable length of time, as India made its random change from being a British colony to a financial powerhouse, in the past, it depended vigorously on help from prosperous countries and universal establishments. For example, in 1958, Britain offered India some GBP 40 million as external aid, as India attempted to formulate a country and execute its second five-year financial arrangement. English Treasury authorities attributed progress to the “long haul issues of Indian improvement” while granting the aid. Certainly, as of late, India has increased its spending on social welfare rehabilitative programs, besides promoting massive internal agendas, which funds a sustenance sponsorship framework for lifting its millions out of destitution.

Foreign aid is considered as a vital element for financing the formative projects of the creating nations. At present, it is considered as an essential instrument of the outside approach of States. It goes about as a noteworthy source of remote trade income for developing nations. This role of the remote guide may be advantageous to specific nations but might not be helpful for other countries. This parameter may be watched with respect to topographical condition, monetary strategies, political arrangements of the decision, tip-top bureaucratic effectiveness which is a part of the foundation, the level of financial improvement and level of mechanical progression. These can all be termed as a part of the conditions by which an outside guide needs to evaluate capacities. In India, this outside guide has financed more than 8 percent of the local ventures and around 15 percent of imports.

In any case, what is now much more significant is the way in which India now monitors and ventures itself as a worldwide influence and a collaborator to developed countries like Britain, whilst dismissing the conventional model of rich countries helping poor ones. “Aid is past, trade is future,” Former Foreign Minister Salman Khurshid had said sometimes ago. India needed to be seen fundamentally as a guide giver and not as a beneficiary of outside help. The aggregate sum of delicate advances that India has submitted in the previous 14 years is about USD 24.2 billion in more than 60 developing nations. The guide program of India was tied down in the Non-Aligned Movement and the Group of 77 at the United Nations.

In spite of so many years of development, more than 400 million individuals in India live on under USD 1.25 a day (approximately Rs. 80), and the nation’s unhealthiness figures are among the most exceedingly terrible on the planet. India has had some accomplishment with its welfare programs, however it spends just 0.9 percent of its GDP on human services, among the least in the World, and 3 percent on training. The key test for Indian exchange approach is the means by which it seeks to restore the doomed multilateral exchanging framework tied down in the WTO.


India has had one of the lowest rates of growth of all developing countries and remains one of the poorest countries in the world after almost 45 years of financed aid and centrally planned development. Foreign aid has directly financed and sustained India’s centralized planning and control framework and, thereby, financed the growth of one of the non-communist World’s largest and most inefficient public-sector undertakings. In 1988-89, 101 of the nation’s 222 biggest public sector organizations recorded misfortunes and added to five times as substantial, which in relative terms, can be identified as the U.S. spending shortfall.

India asserts that its guide is more need-based, than the aid from wealthier contributor nations, as its financial and political structure is nearer to that of other creating nations. If so, India ought to give more guide to nations that are nearer to India in terms of financial improvement. We test this expectation experimentally. In the meantime, many speculate that India may be progressively utilizing outside guide as an instrument to access foreign markets for its merchandise and ventures, prepare for Indian speculation abroad, and secure access to regular assets. A large portion of India’s guide is given inside its neighborhood. Despite the fact that India today has helped programs running in every single World area, its guide portion is still to a great extent focused on South Asian nations. It may be mentioned that 89.7% of aggregate guide was given by the Ministry of External Affairs in the 2008-2010 period. The conspicuous special case is Pakistan, reflecting political pressures between the two nations. The emphasis by India on nations in their surroundings helps to evaluate and assess the lesser aid amounts contributed by the poor nation giver. Yet, this, additionally promotes the aspirations of India as a territorial power.

Overview of India’s Aid Program:

The causes of Indian advancement help goes back to the Colombo Plan of 1950, which was defined in Sri Lanka by a gathering of Commonwealth nations including India, with the target of giving help to creating nations keeping in mind the end goal to raise their separate expectations for everyday comforts. Alongside the Colombo Plan, India began giving guide as stipends and advances. The essential focus of India in its initial days after achieving autonomy was to help neighboring nations, specifically Bhutan, Myanmar, and Nepal.

Reporting another Foreign Trade Policy in April 2015, Prime Minister Narendra Modi’s Government said that it wished to build India’s offer of worldwide exchange figure from 2.1 percent to 3.5 percent and twofold fares to USD 900 billion by 2019-20. The approach tries to incorporate the administration’s Make in India and Digital India activities. Usage of India’s real plans i.e. the Smart City Project, Make in India, Skill India Program, and Digital India, will all require remote direct speculation and a complete rebooting and restoration of India’s assembling division. The Modi Government has made a decent beginning. In 2015, India attracted more outside direct speculation in terms of Foreign Direct Investment (FDI), than China and the United States, tripling green field FDI, which came to an expected USD 63 billion. Indeed, India turned into the main nation in the World for green field FDI, overwhelming the United States figures of USD 59.6 billion and of China’s USD 56.6 billion.


The Trans-Pacific Partnership (TPP) is a trade agreement among twelve Pacific Rim countries namely Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam. The agreement was expected to be completed in 2012 and after protracted negotiations, it was ultimately signed on February 4, 2016.

India could be pleased about sending out additions of more than USD 500 billion a year, which is a 60 percent increase as compared to other nation, to joining an extended TPP or taking an interest in the exhaustive Free Trade Area of the Asia Pacific that APEC is currently considering. The national salary of India would grow by an incredible 4 percent which is more than USD 200 billion. As a result, India could additionally expand its fares by taking an interest in the major multilateral transactions on administration, ecological products, and the government obtaining benefits, which is now occurring at the WTO.

According to Government figures, India’s credit extensions remained at about USD 10 billion as of April 2014. From that point forward, another USD 14.2 billion has been included with 52 new credit extensions. This measure of USD 24.2 billion, in any case, does exclude the USD 10-billion delicate credit that Prime Minister Narendra Modi offered to African nations at the third India Africa Forum Summit in 2015. The way that India has credited out capital adding up to about 1% of its present GDP is a reasonable marker of the power of ‘help’ as a discretionary apparatus. The chart below illustrates the above account:

India will probably give help to nations at a comparable formative stage. India trusts that it is in a superior position to comprehend the formative needs of its companions. The nation contends that it “possesses aptitudes of labor and innovation more proper to the geological and biological conditions and the phase of mechanical advancement of a few creating nations”. This is as per the statements composed on the website pages of a few Government offices. India’s political and business self-interests assume an uncommon part in its guide portion choices. Like different suppliers of “South-South Cooperation,” India has never shied far from saying that its guide gives a “shared advantage.” Indian guide is generally observed as an instrument to access foreign markets for its merchandise and ventures, to pave a smooth way for Indian speculation abroad, and furthermore to obtain and strengthen India’s position to be offered a perpetual seat in the United Nations Security Council. India utilized guide as an outside strategy instrument when it apportioned help to the Maldives over a political and speculation debate. Our exact outcomes affirm that business and political self-interests command India’s guide distribution.

India’s experience with regional trade agreements (RTAs) has been less than satisfactory because of the lack of competitiveness of its manufacturing sector and the lack of innovation and investment in sectors such as textiles, garments, and pharmaceuticals. This has resulted in little enthusiasm for adopting a more activist trade policy posture within the government, think tanks, and the trade policy community.

India faces huge difficulties in the region of exchange strategy. The worldwide monetary lull, expanding protectionism, the slowed down user exchange bargains, that could not be resuscitated in time and maybe became more critically have had their own particular residential distractions. For India to accomplish its approach destinations, the administration and industry, especially the assembling part, it must get ready for circumstances and more prominent engagement in a developing multilateral exchange field. The needs of India ought to incorporate accepting arrangement measures to comply with worldwide gauges and supporting the World Trade Organization (WTO) to relaunch multilateral transactions.

The genuine test in India, as is in a few different nations, is the absence of full comprehension of the advantages of exchange advancement, strategy loss of motion, and subsequently the absence of political will. India cannot serve its monetary advantages by staying apathetic or thoroughly opposing worldwide exchange approach improvements and the uber exchanging coalitions that may create and propel growth.

Be that as it may, with the Indian economy proceeding to hint at speedier development contrasted with its companions, MEA authorities trust that credit extension responsibilities will keep on rising. In this manner, setting up the correct approach as of now becomes noticeably pivotal. The accomplishment of the new rules will just wind up noticeably if clear activities begin to be done according to a plan. “We need to effectively elevate our delicate advances to an ever-increasing number of nations. In any case, we should be sure that we will get great organizations and that our believability to actualize ventures isn’t hurt,” said a senior authority in the context of growth and development of India in the matter of giving aid.