NEW DELHI – The recent India-Africa summit in Addis Ababa, Ethiopia, at which India’s government pledged $5 billion in aid to African countries, drew attention to a largely overlooked phenomenon – India’s emergence as a source, rather than a recipient, of foreign aid.
For decades after independence – when Britain left the subcontinent one of the poorest and most ravaged regions on earth, with an effective growth rate of 0% over the preceding two centuries – India was seen as an impoverished land of destitute people, desperately in need of international handouts. Many developed countries showcased their aid to India; Norway, for example, established in 1959 its first-ever aid program there.
But, with the liberalization of the Indian economy in 1991, the country embarked upon a period of dizzying growth, averaging nearly 8% per year since then. During this time, India weaned itself from dependence on aid, preferring to borrow from multilateral lenders and, increasingly, from commercial banks. Most foreign-aid programs – with the sole exception of Britain’s – have dwindled or been eliminated altogether.
Today, the proverbial shoe is on the other foot. Long known for its rhetorical faith in South-South cooperation, India has begun putting its money where its mouth used to be. It has now emerged as a significant donor to developing countries in Africa and Asia, second only to China in the range and quantity of development assistance given by countries of the global South.