Finally, MEA can put money where its mouth is

It’s learnt that the Agency will be headed by a Director General from the Ministry of External Affairs but would be staffed from different government departments. The Agency will also have a board to which the DG will report. The Foreign Secretary will head this board with the Commerce and Finance Secretaries being members.

What is important is that the Agency will have a separate budget and the requisite financial powers to take immediate decisions on grants, soft loans and aid in case of emergencies or disasters in other countries. Sources said the DG will have powers up to a stipulated amount, beyond which an approval would have to come from the board that will meet regularly to take stock of the progress made.

Since 2002-03 to 2006-06, the MEA’s grants in aid amounted to Rs 6315 crore while loans to about Rs 1256 crore.

The problem currently is that while the MEA does express intent for financial assistance to various countries for different political and strategic reasons, no money can be pledged without approval from the Finance Ministry. This delays matters and on certain occasions, the file pushing between the ministries concerned erodes the political relevance of any proposal.

At times, sources said, funds have to be immediately provided for making the necessary political impact. However, this is not possible under the current system unless there is political intervention from the highest levels.

Significantly, this Agency will have unique flexibility to determine rates of interest, terms and conditions as well as the objective of any loan. This power rests with Finance Ministry, but an exception is being made for the purpose of building India’s image as reliable partner on the international stage.

Much of India’s assistance programmes run in neighbouring countries, Afghanistan, African countries and some Latin American countries. Sources indicated that a “one-stop shop” would reap gains in terms of achieving valuable political mileage.