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COVID-19 and Foreign Policy | India must review its policy of accepting foreign aid

This is a time for India to be discriminating in accepting aid and exercising discretion can avoid regrets in future. Accepting aid with which controversial Indian origin politicians abroad are associated has its risks 

May 07, 2021 / 03:55 PM IST
Source: Reuters

Source: Reuters

Now is the time for India to review its policy on accepting foreign aid. Equally, to take a fresh look at how it disburses its substantial development assistance abroad.

When Manmohan Singh decided in the very first year of his prime ministership not to accept any more foreign aid during disasters, the rationale behind such a change in policy was never convincingly explained. Since the Congress-led United Progressive Alliance (UPA) government’s external affairs did not pivot around making the Indian people aware that theirs is a great country, the policy change defied all logic.

Soon India had to pay a price for this policy shift. At a meeting of the International Development Association (IDA), the soft loan window of the World Bank, India’s request for zero to low-interest loans for national programmes which increase economic growth, reduce inequalities, and improve living conditions, was challenged by the United Kingdom.

You cannot have the cake and eat it too, the UK delegate told Indians in words which amounted to that at an IDA meeting. If you don’t need foreign aid you would also not need soft loans from the IDA, because such credits and grants are meant for the world’s poorest countries. Your actions suggest that you are not deep in poverty any more, the British argued.

It was an embarrassing, schizophrenic moment for the Executive Director’s Office of India to the World Bank, whose biggest customer at that time was New Delhi. With some deft diplomacy, India was able to get the soft loans it had sought that year. But pressure continued to mount within the IDA against giving India easy credits and grants.


The die was cast and India was finally thrown out of the list of IDA’s borrowing countries in 2014. The World Bank prefers a more polite description of such action: it says India ‘graduated’ from the IDA seven years ago and no longer needed its soft loans. With all that is now going on, it is moot whether India will ‘reverse-graduate’ to the IDA as nine countries have done.

The Atal Bihari Vajpayee government decided during the ‘India Shining’ years that it would not accept any assistance from abroad that was below $100 million. That made sense considering India’s size and the vast amount of aid a big country would need to tackle any calamity which called for foreign assistance. It is puzzling, therefore, that the present dispensation in New Delhi, which is the ideological successor to the Vajpayee government is welcoming aid from anywhere and everywhere, that too in pittance. For a people who had come to believe in the last seven years that theirs is a country which has joined the ranks of the great powers, this can be demoralising. It can also dent faith in ‘Aatmanirbhar Bharat’, the concept of self-reliance.

Canada, for example, has offered $10 million in cash funding. Karina Gould, Canada’s Minister of International Development, said “this funding will help meet some of the most urgent medical needs like purchasing and distributing essential supplies as well as supporting vital blood and ambulance services.” India has the fourth — on some weeks fifth, marginally changing places with Russia — largest foreign exchange reserves in the world, well in excess of half a trillion US Dollars. Instead of using those reserves to buy essential supplies, the government has chosen to sit on those reserves and accept small amounts as aid from several countries. If ever there was an emergency that demanded the use of those reserves, it is now.

Accepting aid from Canada will have an opportunity cost for India. This was clear from the line-up at an announcement of medical support from Canada on May 5. Among those making that announcement in Ottawa was Harjit Singh Sajjan, Canada’s Minister of National Defence, who brought controversy during their Prime Minister Justin Trudeau’s 2018 India visit. Sajjan, a Canadian Sikh, was in part responsible for some of the damaging fallout of Trudeau’s visit.

Do not look a gift horse in the mouth, goes the proverb. But this is a time for India to be discriminating in accepting aid and exercising discretion can avoid regrets in future. In the next election, Sajjan is certain to go back to his base in British Columbia, which has an extensive Khalistani presence, and boast about how India was brought to its knees. Accepting aid with which controversial Indian origin politicians abroad are associated has its risks.

Then there is a question of propriety. When Bangladesh announced its assistance of medicines and equipment, the announcement was made by their Deputy Principal Information Officer. Countries which share a special relationship convey such gestures in conversations between their ministers, or at least between their foreign secretaries or health secretaries.

Contrast Dhaka’s announcement with how Kuwait conducted itself on aiding India. Kuwait’s Cabinet met, expressed its solidarity with India and announced their emergency medical assistance. When INS Kolkata, the Navy’s ship was loaded with oxygen tanks, cylinders and concentrators at their main port, Kuwait’s Minister for Commerce and Industry, Abdullah Isa Al Salman, was at hand to inaugurate the ocean-bridge of medical supplies so that “Kuwait and India can combat the pandemic together.”

When a Kuwaiti military plane carrying another load of medical supplies landed in Delhi on May 4, Kuwait’s Ambassador Jasem Ibrahim Al Najem was at the airport to oversee the smooth handover of the supplies to senior Indian officials.

There is dignity, even contentment, in accepting aid that is effusively given. It does not feel like charity. There are no points to be scored in such assistance as some other countries are trying to do.
KP Nayar has extensively covered West Asia and reported from Washington as a foreign correspondent for 15 years. Views are personal.
first published: May 7, 2021 03:54 pm

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