Rephasing global development finance, Pg6

Context: 

• With shrinking global development finance and rising debt burdens in the Global South, India is recalibrating its international cooperation strategy by focusing on balanced modalities and Triangular Cooperation (TrC).

Key Highlights:

• India's development assistance rose from $3 billion (2010-11) to $7 billion (2023-24).
• Core modalities include capacity building, technology transfer, market access, grants, and concessional finance.
• Lines of Credit (LoC) under the IDEAS scheme are now facing scrutiny due to global liquidity and debt crises.
• Official Development Assistance (ODA) from traditional donors has declined sharply to $97 billion, nearly a 45% drop from 2023.
• The investment gap for achieving SDGs rose to over $4 trillion in 2024.
• Triangular Cooperation (TrC) is emerging as an alternative framework involving North-South-South partnerships.
• India is engaging in TrC projects with countries like Germany, U.K., U.S., EU, and others across Africa, Asia, and Latin America.

Detailed Insights:

• India is shifting from reliance on concessional LoCs (subsidised by absorbing interest rate differences) due to volatility in capital markets and partner countries' reduced repayment capacity.
• The shrinking ODA pool and geopolitical disruptions have impacted global development funding, especially in least developed countries (LDCs).
• Platforms like the Development Assistance Committee (DAC) of OECD continue to dominate development finance norms, often with conditionalities.
• India proposed a Global Development Compact (GDC) at the Voice of Global South Summit 2024 to harmonise aid modalities with partners.
• Triangular Cooperation (TrC) facilitates collaboration between a traditional donor, an emerging economy, and a beneficiary country, promoting cost-effective, locally relevant, and inclusive development.
• Countries like Indonesia, Brazil, Germany, and Japan have demonstrated successful TrC implementation across Africa and ASEAN.
• India and Germany’s 2022 Joint Declaration of Intent on TrC has led to active projects in Cameroon, Ghana, Malawi, and Peru.
• TrC enables progress in areas such as digital connectivity, education, health, energy, and infrastructure, highlighting its intersectoral multiplier effect.

Key Concepts Involved:

• Lines of Credit (LoC): Concessional loans offered by India to partner countries under IDEAS to fund development projects.
• Official Development Assistance (ODA): Government aid aimed at promoting economic development and welfare in developing countries.
• Triangular Cooperation (TrC): A development cooperation model involving a traditional donor, a pivotal South country, and a beneficiary country, enabling mutual learning and co-creation.
• IDEAS: The "IDEAS" scheme, stands for the Indian Development and Economic Assistance Scheme, is a program by the Indian government to provide financial assistance and support to developing countries.