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Sharp Rise In Allocation For Myanmar In Indian Budget

Overall outflow of India's development assistance has increased from Rs 7,450 crore in 2013-14 to Rs 8,970 crore in the 2016-17 budget, writes Sachin Chaturvedi

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The proposed Union budget of 2016-17 has seen the sharpest increase in assistance to Myanmar as compared to other regions of the world. The budgetary allocation has seen a jump from Rs 165 crore in 2013-14 to Rs 400 crore in 2016-17. This is major support from India to CLMV countries under growing linkages with ASEAN. African countries are another beneficiary of the recent allocation. The proposed increase is 15.11 per cent as compared to the figure of Rs 251.92 crores in 2013-14. This Budget has kept a provision of Rs 290 crores.

Bhutan continues to be the major recipient of India's assistance with more than 70 per cent of India's foreign assistance budget earmarked for the last Shangrila. The budgetary allocation for Bhutan for 2016-17 stands at Rs 5,490 crores.

Unlike earlier, in case of Bangladesh operative quantum is coming more from lines of credit. Bangladesh has an existing LoCs of $862 million and another $2 billion are in the pipeline. In the current budget Bangladesh has been given Rs 150 crores. Bangladesh would continue to enjoy duty free tariff preference access under the existing provisions.

Interest of PM Narendra Modi in the Latin American (LAC) countries is also visible in the budgetary allocations. Assistance to LAC stands at Rs 15 crores which is a major jump from Rs 5 crores in 2013-14. Central Asia and Mongolia also seem to be new priority areas. Mongolia sees a CAGR increase of 35.12 per cent from 2013-14 figures apart from LoC of $1 billion.

As it seems Lines of Credit has emerged as a major instrument for India's development cooperation programme, where the government, through Exim Bank raises the international capital and extends the collected capital to other developing countries at concessional rate. The government absorbs the difference. This year a new line of expenditure has emerged under which Rs 500 crores has been earmarked for interest equalization support for Indian companies is mentioned. Overall outflow of India's development assistance to other southern partners increased from Rs 7,450.55 crores in 2013-14 to Rs 8,970.40 crores as proposed in the Budget presented by the Finance Minister on the 29th February, 2016.

Most of India's development assistance to countries goes to her neighbours. In terms of quantum, the highest proposed flow of assistance during 2016-17 is earmarked for Bhutan (Rs 5,490 crores - 72.5 per cent of total development assistance given to countries), followed by that to Afghanistan (Rs 520 crores, around 7 per cent) and Myanmar (Rs 400 crores, a little more than 5 per cent). The annual growth of flow of development assistance to Bhutan between 2010-11 and 2016-17 is more than 22 per cent, while that to Afghanistan and Myanmar have been around 14 per cent and 20 per cent respectively.

While most of the assistances are for non-plan activities, Afghanistan, Bhutan and Myanmar have been receiving considerable support from India for planned activities to generate productive assets. The highest flow of assistance goes to Bhutan, growing at an annual rate of 44 per cent. Those to Afghanistan and Myanmar grew annually at 10.7 and 23 per cent respectively.

The extent of assistance through ITEC support also increased significantly through these years - from Rs 120 crores in 2010-11 to Rs 180 crores in 2015-16, while the interest equalization support for credit arranged by Exim Bank increased from Rs 127.77 crores in 2010-11 to Rs 577 crores in 2016-17.

(The author, Sachin Chaturvedi, is director general of the Research and Information System for Developing Countries (RIS), New Delhi)

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