India's soft power has now been on display for at least a couple of decades: Indian philosophy has captivated Western minds since the 1960s; Bollywood's prodigious celluloid fare has long drawn huge audiences in significant parts of Asia, Africa, and beyond; India's English-language novelists have often edged out native British writers for the prestigious Man Booker Prize; and, of course, yoga studios have become all but ubiquitous in the United States. However, even South Asian scholars and analysts have rarely thought of India's largesse as a possible source of material power, especially in the realm of foreign assistance.
With U.S. Secretary of State Hillary Clinton having visited India this week in an effort to secure its cooperation on a range of international issues, it is time to start thinking of India not as a beneficiary of the world's charity (though it still is) -- but as a major donor. Although there is no published, centralized data, or even agreement on the definition of Indian "foreign aid," if one uses the Development Assistance Committee's official definition of aid, India disbursed over $1.5 billion in traditional foreign aid in 2011 -- second only to China among developing-country donors -- even while it remained the world's largest recipient of multilateral assistance. Indian foreign assistance has not only tripled since the turn of the century -- with foreign aid by the five BRICS countries growing 10 times faster than aid by G-7 countries -- but it has also grown in terms of the diversity of recipients. India also recently announced that it will be creating its own aid agency and has built an administrative structure, the "Development Partnership Administration," within its External Affairs Ministry toward that end, though there has not yet been any budgeted increase in the diplomatic corps.
India's identity as an international donor is a downright confounding phenomenon. In the four decades between 1951 and 1992, India was the largest global recipient of foreign aid, receiving a total of approximately $55 billion. During most of the Cold War era, given its anemic growth rates and its pervasive poverty, India was acutely dependent on aid from multilateral and bilateral donors. Indeed, in the mid-1960s, there were moments when foreign assistance, especially food aid, was critical to fending off famine and widespread starvation. And yet, India started disbursing its own foreign aid as early as the 1950s.
In those days, the most meaningful form of assistance that the cash-strapped External Affairs Ministry could proffer was technical advice and training. Indian bureaucrats from various government departments were deputed abroad to help poorer governments with their professional expertise, and civil servants from developing countries were offered training in India through a program launched in 1964 -- the Indian Technical and Economic Cooperation (ITEC) program. Although ITEC was small in monetary terms, it bore fruit over the subsequent decades as many bureaucrats and politicians from other developed countries received their educational training in India. This year, for instance, 150 bureaucrats from Ethiopia are receiving Indian training. This program, of course, has also provided for good future relations with recipient countries. Take the example of Afghan President Hamid Karzai, who attended university in India and enjoys warmer relations with India than with neighboring Pakistan.
Since the 1950s, India has provided modest amounts of assistance to smaller and less-developed neighbors, especially Bhutan and Nepal. Much of it has been in the form of technical assistance, such as 50 years of support for the building of Bhutan's hydroelectric facilities in exchange for fixed-rate electricity. But now, after a decade of nearly 9 percent annual growth (it has recently slowed down somewhat), India is for the first time in a position to provide direct cash transfers and subsidized loans.
India's assistance effort is clearly enmeshed into a larger set of foreign-policy goals: ensuring secure sources of energy for an expanding economy, opening markets for India's increasingly export-oriented industrial and service sectors, and bolstering geostrategic ties with key neighbors. New Delhi's recent reluctance to ostracize Iran over its controversial nuclear program has to be understood in light of India being the world's second-largest importer of Iranian oil. The Indian government has also provided assistance to Tehran in order to expand the Iranian port of Chabahar, linking it via roads and railroads to western Afghanistan -- and beyond, to the resource-rich Central Asian republics.