India’s Extensive Lines of Credit: A $32.02 Billion Development Assistance Program

Context: External affairs ministry has announced that India extended 308 lines of credit to partner countries amounting to $32.02 billion over the years as part of its development assistance programme. 

More on News: 

• Breakdown of the credit : 
• • About $17.06 billion to Asian countries 
  • $12.15 billion to African countries 
  • $2.81 billion to other countries
• Mechanism: Development assistance (concessional LOCs) is extended under the Indian Development and Economic Assistance Scheme (IDEAS) through the Exim Bank of India.
  • EXIM Bank was established in 1982 as a specialized financial institution to finance, facilitate and promote India’s international trade.
• Nature of Projects: About 600 projects including infrastructure, power, connectivity, agriculture, education and health 
• Neighbourhood First Policy: The LoC are concentrated primarily in India’s neighborhood in Afghanistan, Bangladesh, Maldives, Myanmar, Nepal, Sri Lanka and Bhutan.
  • Prominent examples– Parliament building in Afghanistan, Supreme Court Building in Maldives etc. 
  • Bangladesh has received the largest concessional credit given by India to any single country. 
• Global South: India provides capacity building assistance under the Indian Technical and Economic Cooperation Programme (ITEC) to partners in the global south.
  • Africa: The previous Pan Africa e-Network Project, has been replaced by e-VidyaBharati and e-AarogyaBharati Network Project, for  tele-education and tele-medicine services.
• International Collaboration: India also works with international organizations (UNDP, ASEAN, etc.) to finance joint projects and capacity building programmes. 

What is ITEC: 

• ITEC or Indian Technical and Economic Cooperation Programme is a bilateral assistance programme, established in 1964, to meet the needs of developing countries, through technological cooperation.
• ITEC is administered by the Ministry of External Affairs.
• India recently announced the Sagar Amrut scholarship for Pacific Island Countries under ITEC. 

What is Line of Credit: 

• Definition: A line of credit (LOC) is a borrowing limit that can be used whenever needed. As money is repaid, it can be borrowed again in the case of an open line of credit.
• Examples: 
  • Recently, India extended a $250 million line of credit for Kenya to modernize farming. 
  • Reconstruction of Sri Lankan Railways after the civil war has been done primarily through Indian LOCs

Source: Economic Times

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