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 program. Under India’s ‘Neighbourhood First policy, grant assistance projects have also been initiated in collaboration with nations such as Afghanistan, Bangladesh, Maldives, Myanmar, Nepal, Sri Lanka, and Bhutan.

Neighbourhood First Policy: India Extends 308 Lines Of Credit Worth Over $32 Billion

• 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 Line of Credit 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  • Africa: The previous Pan Africa e-Network Project, has been replaced by e-VidyaBharati and e-AarogyaBharati Network Project, for tele-education and tele-medicine services.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