A contrasting tale of aid assistance

China’s is predatory, India’s is benign, but needs reforms

India gives assistance but does not take advantage is the message Prime Minister Narendra Modi sought to convey at the inauguration of the Mauritius Supreme Court building. Mr Modi underlined that Indian development assistance comes without conditions and is not influenced by political or commercial considerations. While this is a mild exaggeration, there is nonetheless a sharp contrast between the nature of Indian aid and the more rapacious assistance provided by China. This difference, whose core element is transparency regarding the aid project’s finances, is something New Delhi needs to propagate as international aid becomes increasingly strategic in nature.

China’s international assistance programme has a black box at its centre. Bribing governments, imposing debt levels that constrain sovereignty, and attaching strings that include military access are par for the course when it comes to Beijing’s assistance. There is also evidence that Beijing’s supposed price advantage is largely mythical, especially if one includes life cycle costs. China has already taken things to the next level. Its Digital Silk Road and similar projects demand the alignment of a recipient country’s standards and rules for data or infrastructure with those of Beijing’s. This gives China a long-term hammerlock on that country’s future.

India’s response has to be manifold. One, India needs to introduce an element of rules-setting in its own aid programmes, though legitimate ones drawn from multilateral agencies. Two, it needs to become more cooperative about aid. China does not lack money power. But its aid programmes are no match for the combined funding provided by Japan, the United States, India and other like-minded countries. Three, assistance protocols have become infected by the agendas of non-governmental organisations. This has made projects by multilateral financial institutions difficult to implement. As one African leader noted, it takes five years to do the World Bank’s paperwork to build a road, more time than the Chinese take to survey and build the road. India needs to take the lead in propagating a more streamlined aid process. Finally, New Delhi has made its own assistance increasingly more structured and transparent. However, it needs to begin to hard sell its unique accomplishments such as using biometric identity to better target welfare systems or promoting digital payments through smartphones.