Dr Bharat Jhunjhunwala
India is slowly but surely emerging as a global power. Prime Minister Modi must be congratulated for taking India’s engagement with other countries to a higher level. Need is to place this engagement on sound foundations. In particular, we must fulfill the commitments made otherwise the entire effort will take on a negative complexion. But India is constrained with a funds crunch. Budget allocations for the Ministry of External Affairs have been reduced in the recent past. Projects such as transport projects in Nepal and Bangladesh and constructing Afghanistan’s Parliament building and setting up educational institutes in Africa have been delayed because of funds crunch. A delayed commitment is as bad as an unfulfilled commitment and will undo the efforts of the Prime Minister to build bridges with the world.
Then there is the problem of China. Reportedly China’s foreign aid budget is about USD 200 billion per year in contrast to India’s budget of less than USD two billion per year. Benefits of this small amounts of financial aid is further compounded by the doubtful impacts of such aid. Global donors often impose conditions that manpower and materials under the aid program will be procured from the Donor country. For example, Britain may give assistance to set up a power project in India but put a condition that turbines will be purchased from that country. It is estimated that about one third of the aid money is sent back to the Donor Country. This leads to accusations of peddling commercial self-interest in the garb of aid. China is being repeatedly accused by developing countries on this count. China often provides “aid” in projects that are designed to extract resources of the host countries for export to China. For example, aid to develop a iron ore mine in Africa is seen as an effort o reduce the cost of iron ore imports for China. Similarly, investment in a port has two objectives: to help the host country make exports; and to enable China to extract the minerals of the host country. India would be subject to similar accusations in providing aid for setting up hydropower projects in Bhutan. It may be alleged that India is trying to secure electricity in the name of aid.
Foreign aid often finds its way into the pockets of the leaders of the recipient countries. An official working with the African Development Bank told me of a story doing rounds in her office. A Minister from an African Country once visited the grand mansion of his counterpart in an Asian Country. He asked, how was the Asian Minister doing so well? The Asian Minister took him to the window as said, “Well, you see that bridge? We got aid to make this bridge. I sliced away a clean 40 percent from the outlay.” Some years later the Asian Minister visited his African counterpart. This time the Asian Minister asked, how was the African Minister doing so well? The African Minister took him to the window as said, “Well, you see that bridge? We got aid to make this bridge. I sliced away good money from the outlay.” The Asian Minister replied, “But, I do not see the bridge.” “Exactly,” said the African Minister, “there is no bridge! I pocketed 100 percent of the aid money.” So giving financial aid may not help the recipient countries much after all.
We face four challenges. One, the amounts of financial aid provided by us is miniscule in comparison to the global assistance. Two, we are unable to fulfill even these small commitments due to financial constraints. Three, our financial aid will be seen as peddling of our commercial interests. Four, corruption in the recipient country will bleed the money. There is a need for India to rework our foreign aid policy in the light of above. Instead of giving money, let us give them skills. There is a Chinese saying, it is better to teach a man how to catch fish, than to give him fish to eat. Likewise we must institute an ambitious program to impart skills. We have available a large army of unemployed educated people in the country. These must be deployed to assist other developing countries.
Many poor countries do not have good school and university teachers. On the other hand, lacs of educated unemployed are looking for jobs in India. We can put in place a program to supply teachers from India and subsidize their salaries. This will generate jobs for Indian nationals as well. We must invest resources in providing education in other developing countries much like the missionaries did in India. Government of India can assist NGOs in setting up schools in other developing countries.
The developing countries today live in a hostile world dominated by a handful of developed countries. They simply do not have the resources, knowledge and skills to negotiate their way through the maze of organizations like the World Trade Organization, World Intellectual Property Organization, International Court of Justice, United Nations Commission of Human Rights, the Internet Corporation for Assigned Names and Numbers, and the like. India must establish offices in all developing countries where technicians, scientists and lawyers may assist the host countries in understanding the workings of these organizations and taking a stand. We will be able to silently plant our ideology in the host countries. This will help India emerge as the center of a coordination of developing countries.
Governments of the developed countries are hugely influenced by the domestic public opinion which, in turn, is molded by the media. Global media space is dominated by channels like CNN and BBC. However, Russia has launched Russia Today and China has also launched a global news channel. The Government must establish a similar channel that reaches the developing country perspective across the globe.
We must establish a program to translate necessary textbooks and documents in various languages. We can translate basic textbooks into languages of African countries. We can translate documents of the World Trade Organizations and make available to various countries. These works can be done from India and translated material can be sent electronically.
We do not have much money to give aid. But we have skills. Our workers are willing to work at much lower salaries than being paid by many developing countries to their teachers. We should mold the world by providing our skills in the form of aid.
(The author was formerly Professor of Economics at IIM Bengaluru)
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