Union Budget 2019 India: Analysis reveals some notable facts: the MEA budget, from being close to 0.1% of India’s GDP in 2012-13, declined to 0.08% in 2018-19.
By Anil Wadhwa
Union Budget 2019 India: As the stature of India rises internationally, its diplomacy, implemented through the Ministry of External Affairs (MEA), needs a higher budget outlay for the projection of its geo-strategic objectives, win friends for much needed technology and investments at home, create a peaceful environment for uninterrupted growth, promote its exports and create favorable conditions for its businesses abroad. Despite limited resources at its disposal, the MEA has done a commendable job in fulfilling its objectives. In the recent budget, Rs 17,884.78 Crores has been earmarked for the MEA for 2019-20, an increase of Rs 2873.78 crore over the previous fiscal year when the allocation was Rs 15,011 crore against which the Ministry spent Rs 15, 582 crores. This is also an increase over the interim budget for the Ministry which was 16, 061 Crores. The budget head of “Aid to countries” has seen an increase of Rs 2037.79 crores – from Rs 5,545 Crores in 2018-19 to Rs 7,582.79 Crores in 2019-20. Notably, this increase of nearly 15% for the MEA has come after several years of a stagnant or shrinking budget.
Analysis reveals some notable facts: the MEA budget, from being close to 0.1% of India’s GDP in 2012-13, declined to 0.08% in 2018-19. The most important component of the MEA budget over the past several years has been an aid to its immediate neighbors. Of these, Afghanistan and Bhutan consumed a major chunk. Chinese inroads into Nepal, Myanmar, Bangladesh, Maldives and Sri Lanka in India’s immediate neighborhood made New Delhi sit up and realize that this requires not only a major beefing up India’s defense capabilities, especially the naval arm which guards its sea lanes of communication, but also developmental projects with an important economic impact which will ensure a higher level of Indian engagement and continued influence in these countries and further afield.
Bhutan continues to retain its prized place as India’s largest aid recipient with an allocation of Rs 2801.79 Crores. The shadow of the Doklam standoff with China still looms large, and Prime Minister Modi, during his visit to Bhutan which is due shortly, is expected to open and discuss high capacity hydropower projects and a multi-specialty hospital which will be supported by India. As compared to the last financial year, aid to neighboring Nepal has also increased to Rs 1,050 crores from Rs 650 Crores. Aid set aside for Afghanistan has gone up from Rs 325 Crores to Rs 400 Crores, allocation to Bangladesh remains unchanged at Rs 175 Crores, and aid to Sri Lanka has seen a marked increase to Rs 250 Crores from Rs 150 Crores. The bridgehead to India’s Act East Policy- Myanmar – has also seen an increased allocation from Rs 280 Crores to Rs 400 Crores.
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Areas which have received greater focus in recent years are the Indian Ocean Island and littoral countries as well as Africa, due to their geopolitical importance. Mauritius is the second largest recipient of Indian aid with Rs 1,100 Crores – up from Rs 350 Crores – due largely to India’s mega proposals – Metro Express, Supreme Court building and also infrastructure at Agalega island. Allocation to the Maldives with a friendly new government where India seeks to neutralize the overwhelming Chinese dependence developed during the Abdulla Yameen government has seen a significant increase in aid allocation from Rs 125 Crores to Rs 576 Crores, even as India spent Rs 440 Crores at the revised budget stage. The African continent has seen a doubling of allocation from Rs 220 Crores to Rs 450 Crores.
Two target areas of Indian aid of geo-strategic importance which has seen a decline of allocations are the Chahbahar port and Seychelles. Eyebrows have been raised on the decrease in aid for Chahbahar to Rs 45 Crores this year as opposed to Rs 150 Crores set aside last year. Although India Ports Global limited took over operations at Chahbahar’ Shahid Beheshti port in December 2018, this important project still faces headwinds due to US sanctions on Iran, which has kept away suppliers and service providers, and slowed down Indian port development work there. Seychelles, another important geostrategic partner of India in maritime security and cooperation, has received an allocation of Rs 100 Crores, down from Rs 300 Crores – indicating perhaps, slow progress in the Assumption island joint naval strategic facility.
Allocation to the Secretariat of BIMSTEC has gone up to 8 crores from 5 crores, signaling India’s desire to strengthen the Organisation, faced with a dysfunctional SAARC. On the soft power front, while Nalanda University will get an increased allocation of 220 crores, up from Rs 200 Crores, South Asian University will receive 317.50 crores, down from the previous year’s allocation of Rs 375 Crores. The budget of the Indian Council for Cultural Relations (ICCR), the body set up to project India’s soft power has also taken a cut despite recommendations from the Parliamentary Standing Committee on External Affairs for the setting up of new Cultural centers across the world.
The establishment expenditure earmarked for the ministry is a modest 5487 crores, marginally up from 5253 Crores in the previous financial year, which includes expenditure on headquarters, embassies, and missions, and passport and emigration. A decision to open 18 new diplomatic missions in Africa over four years was taken in 2018, of which five have recently opened in Rwanda, Djibouti, Equatorial Guinea, Republic of Guinea and Burkina Faso. Finance Minister Sitharaman said that it is proposed to open four new missions in 2019-20. In her words, this will “not only increase the footprint of India’s overseas presence, but also enable us to provide better and more accessible public services, especially to the local Indian community in these countries”. Under the head “Passports and Emigration”, an allocation of 1620.95 Crores is a major increase from last financial year’s allocation of 1059.60 crores. This is because of legislation on a new Emigration bill, MEA’s investment in setting up a voluntary register for emigrants and putting in place systems for evacuation of Indian nationals in case of need has been pending since 2011. This may also initiate the process of manufacture of e- passports so that a travel document with advanced security features can be rolled out in the near future – identified as a priority by the new External Affairs Minister S. Jaishankar.
The increase in allocation is still inadequate for the effective execution of India’s foreign policy. In 2017, the Parliamentary Standing Committee on External Affairs expressed its concern that “inadequate, delayed, withheld and reduced funding have constituted severe obstacles to the execution of Indian foreign policy in recent years”. The MEA is short staffed, and its personnel needs to be beefed up in keeping up with the need of the times and the footprint of Indian engagements across issues. Additional financial resources will also ensure that Indian diplomats deliver comprehensively in the national interest of the country.
The author is former Secretary (East), Ministry of External Affairs and Ambassador to Poland, Oman, Thailand, and Italy. Currently, he is a Distinguished Fellow with the Vivekananda International Foundation, New Delhi. Views are personal.