Need for an international development cooperation agency

INTERNATIONAL

• GS-2: Bilateral, Regional and Global Groupings and agreements involving India

Need for an international development cooperation agency

Context Enhancing the efficacy of India’s development cooperation endeavours has been a challenging issue for the past several decades. The country, therefore, needs to expedite work on a specialised agency for efficient delivery of outcomes.

Development assistance and lack of institutional foundation

• In the last two years, India’s assistance to other developing countries has multiplied several times.
• India’s development cooperation has five modalities — capacity building, concessional finance, technology sharing, grant and trade wherein duty-free and quota-free access to the Indian market is provided.
• India’s helpful image yields goodwill globally, but quality project delivery is yet to become the country’s USP.
• On average, India provides development assistance of $6.48 billion and receives assistance of $6.09 billion annually from key partners .
• Under Indian Cooperation Mission (ICM) — India partners for development cooperation and does not give aid like OECD members.
• India has been supporting the developmental endeavours of several partner countries in Africa and Asia, even before Independence.
• However, this process lacks a firm institutional foundation.

Efforts to form an institutional framework

• The first effort by India to shape a framework was in 2003 with the announcement of the India Development Initiative (IDI).
• Subsequently, the Indian Development and Economic Assistance Scheme (IDEAS) was launched in 2005 for managing credit lines.
• The IDI was suspended in 2007 and the setting up of the India International Development Cooperation Agency (IIDCA) never took off.
• Meanwhile, in 2018, China founded its international development cooperation agency.

Changes in concessional financing

• At this point, concessional financing in India’s development cooperation portfolio is close to 70%.
• In 2015, the government made efforts to bring in operational changes in the way credit lines work.

 Way forward

• Countries have sovereign and non-sovereign windows for promoting infrastructure financing abroad — both have their own place.
• A non-sovereign window would provide greater flexibility and bandwidth.
• To become a leading strategic investor in commercially viable and financially attractive public-private partnership infrastructure projects, the fund may build an investment ecosystem in Africa with support from leading Indian firms.
• The proposed new entity may also provide handholding to select performing Indian social enterprises to operate in other countries as well.
• Besides making an immediate economic impact, these enterprises can facilitate development partnerships between India and other countries.

Conclusion

• It is high time India restructures its development finance apparatus for deeper and effective engagement and to address the rapidly evolving newer competitive development financing landscape.