India And Foreign Aid

Written by Subhash Agrawal | Updated: Jun 19 2003, 05:30am hrs
The governments recent decision to curtail foreign aid, or more correctly, to withdraw itself from the administrative and legal requirements of receiving bilateral aid, has created many ripples. The Nordic countries are upset, and Holland is furious. One European Ambassador is reported to have even obliquely threatened his countrys vote against any future World Bank aid to India. Considering that India is a recipient of nearly $20 billion of aid at current price over the last 50 years, much more than FDI in the same period, the event was poorly managed and showed a lack of finesse.

First, it was clearly a political rather than an economic decision. Development aid exports the values of donor nation often welcome, but not always and also serves as an instrument of foreign policy. The Indian decision removes those shackles. But it should have been handled at the ministerial level, by External Affairs rather than Finance. Second, there was too much blatancy and not enough finesse. What else is the reason to keep the Dutch out and the Germans in, if not to openly rebuke the former for habitual sermons on everything in India. The same purpose could be achieved by devising general guidelines with enough bureaucratic twists and turns.

Be that as it may, this is also a belated and very welcome step. And not just because it reduces the level of anti-India noise by pesky countries or because it reduces administrative costs or because it lessens official interference in social work.

India has almost two million NGOs. You read that correct, two million thats almost one for every 100 families, or one for every city block or village. Thats a lot of do-gooders and $20 billion is a lot of do-good money, except good is difficult to find in India except in isolated pockets. Bihar is much the same as it was 50 years ago, the barometer of social evils and caste-consciousness in the country is about the same, and perhaps less people have drinking water today than at independence. With two million NGOs, it is not as if India lacks the institutional capacity, so where has all that money gone

Its gone into lavish offices, laptop computers, slick presentations, foreign junkets and a whole cyclical NGO work culture of propose-present-procure-publish. There is an international NGO based in Delhi which perhaps rivals CII in terms of the money spent on publishing glossy reports.

The real problem with foreign aid is what it has unintentionally done, which in the case of India is, pampering an army of careerist NGOs who blow up negative statistics to get funds, and then write fancy reports and arrange finely-scripted visits to some village project. Over years, an elite strata of NGOs has formed that somehow has become a favourite of large Western donors. These have emerged as the good NGOs. But in reality theirs is the paranoid style, full of selective facts and sometimes a blatant political agenda if not downright personal aggrandisement.

Sadly, sincere foreign aid donors have been giving generous funds to a whole class of insincere middlemen who have entrenched themselves on top of the NGO hierarchy. This has also led to degradation of contemporary public discourse and a culture of unaccommodation. Many of these powerful NGOs think they can do no wrong, and even if they are wrong they are never unsure.

It is this arrogance, and that too a subsidised intellectual pretense, that upsets many people in India, and not just the government. It may be wrong to generalise, but generalise we must if only to correct a good thing gone horribly wrong. Of course, there are some international groups involved in great and crucial humanitarian tasks, such as Oxfam or Medecins sans Frontieres. And of course, there are many good NGOs in India. But the truly great ones, like H D Shourie, Baba Amte, Bunker & Aruna Roy, M C Mehta, need no foreign funds and yet their contribution is far greater than all the other millions combined.

In India, or anywhere for that matter, NGOs are not a substitute for an activist or responsive government. The real value of civil society is to propel rulers to become more responsive. Foreign donors should have been able to read the signs for some time, as civil society, whatever that means in India, has increasingly become a victim of its own greed and power-gluttony.

The author is an analyst of Indian political and business trends and the editor of India Focus, a political risk report for international investors