As the global landscape changes rapidly over time and the balance of power keeps tipping towards Asia, India’s role as a major stakeholder in the region could not have been more significant. As the world’s largest democracy and one of the largest economies, we find India to have a very interesting opportunity that it can capitalise upon: shaping global development through aid.

Illustration by The Geostrata
It is worth noting that this opportunity is not unique to India - it is no secret that China has led the world in distributing aid all across the Asia-Pacific and Africa, not to mention China’s ambitious Belt and Road Initiative (BRI), under which China spent about $1 trillion in ten years (between September 2013 to February 2024) for development purposes.
However, what makes India different is its democratic system, which in turn leads to greater transparency.
Additionally, India has historically paid adequate attention to the viability of developmental projects before granting aid to lower-income countries. For instance, India rightly turned down Sri Lanka’s request to build the Hambantota Port, as India found the project unviable.
China agreed to take up the project, and spent about $2.19 billion on building the port. To nobody’s surprise, the port has failed to work commercially for Sri Lanka so far.
While India’s international aid distribution mechanism has worked well, it is now important for India to maximise its impact.
That would require India to frame a comprehensive policy for distributing aid while also dedicating a separate aid-disbursal body, similar to China’s CIDCA (China International Development Cooperation Agency) to improve India’s aid-disbursement mechanisms.
WHY IS A POLICY FRAMEWORK NECESSARY?
Since independence, India has chosen to focus on soft power and cooperation, thanks to its association with the Non-Aligned Movement (NAM). However, India has not been able to codify developmental aid as a policy, which has therefore limited its effectiveness. A well-meaning developmental aid policy would be beneficial for India to orient its aid efforts with its strategic goals such as strengthening regional cooperation, building alliances across critical regions and countering rival powers, such as China.
Moreover, developmental aid is very beneficial in building trust and goodwill between nations, thus securing bilateral partnerships in the process which will be highly useful for India in the long run. Thus, developmental aid can satisfy lower-income countries’ immediate need for infrastructure, while contributing to India’s strategic objectives.
Additionally, India’s role as a developmental aid donor is not limited to infrastructure only. India will need to continue providing help and aid in global humanitarian crises, and a developmental aid policy would give India the tools and mechanisms required to help countries in dire need of aid without any sort of delays.
In the process, India can grow to be a responsible, empathetic power, keeping the spirit of multipolarity alive. Perhaps one of the most important reasons why India needs to have comprehensive policy is that India will be able to assert itself as an important power in promoting global development.
This is something China has done before, as explained in the previous section.
In order for India to compete with China and other global powers, India must change its approach from ad-hoc and project-based initiatives for its immediate neighbors to actively engaging with nations beyond South Asia, which includes Southeast Asia and even the Caribbean, where India’s contribution in developmental aid has been quite limited.
Expanding India’s developmental aid policy would be integral to engaging with other countries more holistically, in the process making India’s aid disbursal mechanisms transparent, predictable and impactful as well.
BENEFITS OF A SEPARATE AID-DISBURSAL BODY
Currently, one of the biggest roadblocks in India’s current system of aid-disbursal is that there is a lack of coordination among departments in the Ministry of External Affairs in order to provide proper aid while fulfilling all requirements and ascertaining that aid is delivered properly and ethically. It is here where the need of a separate aid-disbursal body comes in, as it could address these problems by bringing all functions of the aid-disbursal process together.
The body will solely be responsible for planning, executing, and monitoring all projects and programs that India has provided developmental aid for, while also streamlining the process so that there are no bureaucratic problems and the quality of distribution, which includes monitoring projects in terms of budget and the timely transfer of aid, is also maintained.
Additionally, the creation of an aid-disbursal system ensures the hallmarks of the identity of India as a responsible power is maintained - transparency and accountability. The current issue of allocating the aid budget to the Ministry of External Affairs is that there are often overlapping responsibilities for the ministry, which in turn leads to some difficulty in tracking how funds are going to aid projects and how these funds are helping recipient countries.

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By establishing an aid-disbursement body, much like how CIDCA and USAID (United States Agency for International Development) operate independently from their country’s respective foreign ministries, there is no overlapping of duties.
Instead, there is a standardised procedure for approving aid projects, allocating funds, and monitoring these projects so that the ministry is able to have a more accurate understanding of how aid projects are improving India’s image, and what could be done to correct any irregularities in the process. Additionally, recipient countries would certainly find it reassuring to engage with a country with efficient aid-disbursement measures, which can further build trust and cooperation between India and benefactor countries.
IS THIS ENOUGH?
While the advantages of creating a developmental aid policy and subsequently constituting an aid-disbursement body make a strong case, it will be remiss for us to not make these arguments simply at face value. There are some more measures that need to be taken in order to efficiently run such a body.
It is imperative for the political leadership to understand that providing developmental aid is not an optional, friendly gesture but a very important paradigm for India to pursue if it truly wishes to promote the ideals of “Vasudhaiva Kutumbakam” (The World is One Family) on an international level.
Consider this: China allocated about $5 billion for developmental aid purposes in 2020, while India allocated less than a billion dollars for developmental aid. Even in comparison to percentage of GDP, China outspends India with a pretty significant margin (0.00036% of China’s GDP to 0.00022% of India’s GDP).
Therefore, the first recommendation would be to make sure that the body is able to operate with a fixed budget that is not subjected to budgetary cuts annually. The budget towards providing aid must be left solely to the aid-disbursal body, who will make decisions accordingly, with the approval of the Ministry of External Affairs. Maintaining a stable budget for the aid-disbursal body to ensure long-term financial commitments are necessary so that the body can plan and execute projects well in advance, thus maintaining consistency.
Another important recommendation would be for the developmental policy to make sure to prioritise collaborating with local partners and experts in recipient countries in order to make aid projects possible.
This is because sometimes developmental aid fails to generate positive outcomes either due to not understanding the local context, or aid money falls into the pockets of a country’s corrupt leaders, as evidenced by the World Bank’s policy research paper released in February 2020 regarding the “capture” of foreign aid by the elites in recipient countries.
Local partnerships are necessary in order to ensure that these developmental aid projects are sustainable, while also giving some form of accountability to the country responsible for managing the infrastructure once it is built. This makes aid more effective, reduces India’s burden in making sure the aid project is successful, and uses local expertise to prevent any risks in understanding the local compulsions to make sure aid is delivered in a culturally sensitive way, almost guaranteeing the success of such aid projects across the world.
BY ABHINAV POLUDASU
TEAM GEOSTRATA
Such a well analysed article