India is shifting its focus in development finance due to concerns about rising debt in the Global South and the inefficiency of traditional aid. The Triangular Cooperation model is gaining attention for its cost-effective, inclusive, and partnership-based development approach.
India’s Development Engagement So Far:
- India’s financial support to developing countries has grown from approx. $3 billion (2010-11) to $7 billion (2023-24).
- Main instruments:
- Lines of Credit (LoC) under the Indian Development and Economic Assistance Scheme (IDEAS).
- Capacity-building, technology sharing, market access, and grants.
- India raised concerns at G-20 about increasing debt burdens on poor nations.
Shift Away from Lines of Credit (LoC):
- India borrowed from global markets to offer concessional loans to other nations.
- Rising global financial uncertainty has made this model less reliable.
- Partner countries are now struggling to repay loans due to liquidity crises.
- India is reconsidering LoCs and focusing on balanced use of various aid methods.
Declining Global Aid and Rising Debt:
- Traditional donors (e.g., USAID, UK’s FCDO) are cutting down their aid budgets.
- ODA (Official Development Assistance) is expected to drop from $214 billion (2023) to $97 billion.
- Many developing countries are facing severe debt pressure.
- The funding needed to meet SDG targets has doubled from $2.5 trillion (2015) to over $4 trillion (2024).
Emergence of Triangular Cooperation (TrC):
- What is TrC? It involves collaboration between:
- A donor country (Global North),
- A pivotal partner (e.g., India), and
- A beneficiary country (Global South).
- Focus: Joint solutions, mutual respect, local needs.
- TrC has proven effective in projects across Asia, Africa, and Latin America.
- Estimated TrC funding ranges from $670 million to $1.1 billion.
India’s TrC Partnerships:
- India signed a pact with Germany in 2022 to implement TrC projects in Africa and Latin America.
- Countries like Cameroon, Ghana, Malawi, and Peru have benefited.
- Focus areas include energy, health, education, and digital infrastructure.
- India also partnered with the UK under the Global Innovation Partnership (GIP).
Conclusion:
India must adapt to the evolving global financial landscape by embracing flexible and cooperative models like TrC. These efforts ensure better outcomes, minimize risks, and promote inclusive development.
