For a $1 trillion economy, India’s economic diplomacy is miserly. A Mint report on Monday detailed how our bureaucrats are now undoing a $5.4 billion line of credit to African countries. This is not an isolated incident.
Africa is home to some very poor countries that badly need economic aid of every kind: cheap loans and outright money transfers being just two forms. The continent is also home to some countries with which India has old, friendly ties. Such niggardly behaviour now threatens to undo that friendship.
The line of credit suffers from all the shortcomings that at one time India used to complain about, when it was the recipient of such “help” from Western countries and multilateral institutions. The $5.4 billion line of credit has a firm commitment of $3 billion. India wants the receiving countries to purchase 75% of the equipment they source using this money from India and 25% from the local markets. This could prove to be a source of irritation. Now the Prime Minister’s Office (PMO) is looking into the reasons for the slow disbursement of money. It should.
There is another recent instance of lack of care in handling a line of credit. In January, during the visit of Bangladesh’s Prime Minister Sheikh Hasina, a $1 billion line of credit was announced with fanfare. The formal agreement came seven months later in August when finance minister Pranab Mukherjee visited Dhaka. In the meantime, Hasina, a long-time friend of India, had to bear the opposition’s barbs about the “so-called friendliness” with India.
Both cases illustrate a lack of strategic vision. Today $6-7 billion don’t count much for India with its large hoard of foreign exchange. Africa has vital natural resources that India needs for its growth. China is buying them up by not only offering generous amounts for their purchase, but by also building up infrastructure in diverse African countries from Niger to Kenya and from Sudan to South Africa. While India cannot match China’s deep pockets, the least it can do is to spend the money that it can smartly. It refuses to do so.
In the case of Bangladesh, a country confronting serious ecological problems, that now border on existential ones, it is in India’s interest to help Dhaka. With an estimated 150 million people packed in a small patch of land, the problem they pose to our eastern borders is of even greater magnitude than what we face on the western borders. Here again there is criminal neglect of opportunity in helping a government led by a political party that is friendly to India. The PMO’s review should look at these aspects of the delay, too.
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