Prime Minister Modi has indicated that good relations with neighbours and other Asian countries are the basis of India’s economic thrust in the near future; his economic diplomacy agenda will require substantial financial expenditure. Neelam Deo, director at Gateway House, comments on the increase in the Ministry of External Affairs’ (MEA) budget and the announcement of a Project Development Company to take forward India’s Act East policy.
Statement:
“The MEA’s budget has increased from Rs. 12,620 crore to Rs. 14,955 crore. While this represents a nominal increase of 18.5%, it is largely a restoration of the earlier MEA allocation. The question now is whether it can finance India’s ambition to play a larger global role, the possibility of which seemed brighter through Prime Minister Modi’s energetic foreign engagements with numerous developed and developing countries.
The importance that this government has accorded to India’s neighbourhood also necessitates a greater financial outlay to countries in the region. While Technical & Economic Cooperation with Other Countries and Advances to Foreign Governments has been increased by 25%, this is again only restoring earlier cuts and clearly inadequate for the ambition to integrate neighbouring economies into the large and more rapidly growing Indian economy.
Wanting to take the Act East policy forward is commendable, but the implications of the announced Project Development Company that will set up manufacturing hubs in Cambodia, Myanmar, Laos and Vietnam, are not yet clear. All of them are small-ish economies with desperate need for foreign investment, but without ecosystems that can support a sophisticated manufacturing sector.”
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