Neighbourhood First in MEA’s Aid Allocation | 24 Jul 2024

Source: IE 

Why in News? 

In the recently announced Union Budget 2024-25, the Ministry of External Affairs (MEA) has outlined its development assistance plans, focusing on strategic partners and neighbouring countries. 

• It is geared towards promoting regional connectivity, cooperation and stability in line with India’s Neighbourhood First Policy. 

How is the Development Aid Distributed Among Countries? 

• A major chunk of the Ministry of External Affairs’ outlay, Rs 4,883 crore, has been earmarked for “aid to countries”. It has been allocated as follows: 
  • Bhutan: It received the highest aid at Rs 2,068.56 crore, though slightly less than last year’s Rs 2,400 crore. 
  • Nepal: It was allocated Rs 700 crore, up from Rs 550 crore last year. 
  • Maldives: It maintained a consistent allocation of Rs 400 crore, despite a higher revised amount of Rs 770.90 crore for the previous year. 
  • Sri Lanka: It received Rs 245 crore, an increase from Rs 150 crore last year. 
  • Afghanistan: Afghanistan receives Rs 200 crore, illustrating India's role in aiding the country's stability and development amidst ongoing challenges. 
  • Maldives: Maldives got Rs 400 crore despite the anti-India protests and remarks from its top leadership. 
  • Iran: Chabahar Port Project continues to receive Rs 100 crore, unchanged for the past three years. 
  • Africa: African countries collectively received Rs 200 crore, showcasing India's expanding influence and engagement with the continent. 
    • Seychelles: It receives Rs 40 crore, up from Rs 10 crore. 

What are the Benefits of Development Aid Granted to Neighbouring Countries? 

• Strengthening Diplomatic Relations: By providing aid to neighbouring countries, India enhances diplomatic ties, fostering stronger political and economic relationships. 
• Promoting Regional Stability: Financial support helps stabilise neighbouring countries, which can lead to a more secure and stable region, benefiting India's strategic interests. 
• Supporting Economic Development: Aid contributes to infrastructure projects, development programs, and other initiatives that can boost economic growth in recipient countries, creating a more prosperous region. Eg. Chabahar port in Iran. 
• Encouraging Trade and Investment: Improved infrastructure and economic conditions in neighbouring countries can lead to increased trade and investment opportunities for India e.g., Agartala-Akhaura railway project between India and Bangladesh. 
• Enhancing Strategic Influence: Providing aid allows India to exert influence and build alliances, ensuring that neighbouring countries have positive engagements with India and align more closely with its interests.  
  • Eg. Bhutan’’s favour to India on Doklam issue. 
• Addressing Humanitarian Needs: Aid often addresses urgent humanitarian needs, such as health care, education, and disaster relief, improving the quality of life in recipient countries.  
  • Eg. India launched "Operation Karuna" to provide humanitarian assistance to Myanmar during Cyclone Mocha. 
• Strengthening Soft Power: By investing in neighbouring countries' development, India bolsters its soft power and reputation as a responsible regional leader.  
  • Eg. It helps in alleviating the Big Brother syndrome among India's smaller neighbours. 

Why is the Neighbourhood First Policy Important for India? 

• Terrorism and Illegal Migration: India faces terrorism and illegal migration threats, including the smuggling of weapons and drugs, from its immediate neighbours. 
  • Better relations can Improve border security infrastructure and monitor demographic changes due to illegal migration. 
• Relations with China and Pakistan: Relations with China and Pakistan are strained, particularly due to terrorism linked to Pakistan. 
  • Engaging in regional and multilateral organisations can highlight Pakistan’s role in terrorism and create a common platform for counter-terrorism under the Neighbourhood First Policy. 
• Investment in Border Infrastructure: There is a deficiency in border infrastructure and the need to stabilise and develop border regions. 
  • Improved connectivity infrastructure like cross-border roads, railways, and ports, and explore a regional development fund for such infrastructure. 
• Monitoring Line of Credit (LOC) Projects: India’s LOC to neighbours increased significantly, with 50% of global soft lending going to them. 
  • It enhances India’s influence in the region, expands Indian firms' presence and builds economic linkages with recipient countries. 
• Defence and Maritime Security: Defense cooperation is crucial, with joint military exercises conducted with various neighbours. 
  • It helps in enhancing maritime domain awareness in the extended neighbourhood. 
• Development in the North-Eastern Region: The North-Eastern region’s development is crucial for the Neighbourhood First and Act East Policies. 
  • Countries like Myanmar and Thailand can help improve connectivity, economic development, and security in the North-Eastern Region e.g., the India-Myanmar-Thailand Trilateral Highway. 
• Tourism Promotion: India is a major source of tourists for Maldives and Bangladesh and a destination for Nepali religious tourism. 
  • Tourism fosters cultural exchange, which can lead to increased interest in Indian culture and businesses, potentially boosting exports of Indian cultural products and services. 
• Multilateral Organisations: India’s engagement with neighbours is driven by regional mechanisms like SAARC and BIMSTEC. 
  • Both help India assert its leadership role in South Asia and counterbalance the influence of other major powers in the region. 

What are the Challenges in India's Relationship with its Neighbouring Countries? 

• Border Disputes: Disagreements over borders, especially with China and Pakistan, lead to tensions and conflicts.  
  • China’s growing influence in the South Asian region and its close ties with Pakistan pose strategic challenges. 
• Terrorism: Pakistan has continuously provided support, safe havens and funding to various militant groups, such as Lashkar-e-Taiba (LeT) and Jaish-e-Mohammed (JeM), which have carried out attacks in India.  
• Illegal Migration: The influx of illegal migrants from Bangladesh into India causes demographic and security concerns. 
• Trade Imbalances: Economic issues and trade barriers with neighbours like Pakistan, Bangladesh, and Nepal affect relations.  
  • Issues related to trade restrictions and tariffs have often exacerbated diplomatic tensions. 
• Water Disputes: Conflicts over sharing river waters, such as the Indus and Teesta rivers, strain ties with Pakistan and Bangladesh respectively.   
• Internal Conflicts: Political instability or disputes in neighbouring countries, like Nepal and Bangladesh, impact bilateral relations. 
• Diplomatic Relations: Issues such as the treatment of minorities in Sri Lanka and India's stance on Myanmar’s government create friction.  
  • Eg. Free Movement Regime (FMR) issue with Myanmar. 
• Environmental Issues: Natural disasters and environmental problems, like flooding in Bangladesh, require joint efforts and can affect relations.  
  • E.g. Bhutan’s concerns over the environmental impact of BBIN and tourism on its fragile ecology. 
• Regional Cooperation: Disagreements within regional organisations like SAARC and BIMSTEC can hinder effective cooperation. 

Way Forward 

• Strengthening Diplomatic Engagement: Establish and maintain regular diplomatic dialogues and high-level meetings to address and resolve issues.  
  • Develop and institutionalise mechanisms for resolving disputes, such as joint committees and arbitration panels. 
• Enhancing Economic Cooperation: Negotiate and implement fair trade agreements that address imbalances and promote mutual benefits.  
  • Collaborate on roads, railways, and energy corridors, to improve connectivity and economic integration. 
• Promoting Security and Stability: Coordinate on regional security initiatives to address common threats like terrorism and illegal migration.  
  • Establish joint task forces and intelligence-sharing mechanisms. 
• Fostering People-to-People Connections: Increase educational and tourism initiatives to build mutual understanding and goodwill among populations. 
• Addressing Environmental and Humanitarian Issues: Synergize on natural disasters and environmental problems using joint efforts and regional plans. Provide humanitarian assistance and support in times of crisis, fostering goodwill and cooperation. 
• Strengthening Regional Organisations: Actively participate in regional organisations like SAARC and BIMSTEC to address regional issues and improve their mechanisms for decision-making and implementation. 
• Addressing Internal and External Factors: Ensure that domestic policies do not adversely impact relations with neighbouring countries.  
  • Strive for balanced policies that consider both domestic and international implications aligning with the principles of the Gujral Doctrine. 

Read more: MEA's Development Aid