The various source of funding , its disbursement trend, sectoral use for economic development, impediments for effective uses, shifting from MDGs to SDGs, Pillars of Sustainable Development, Blending of Financing, PPP in development are the key area discussed in this essay.
Dividend Policy and Dividend Decision Theories.pptx
Achieving SDGs in India through optimal use of development financing
1. Financing for development in India towards achievement of SDGs
ODA ASSISTANCE TO INDIA : AN INTROSPECTION
Development financing should become more varied in the future, moving beyond aid from
governments to include private investment and innovative financing while it shift its attention
simply from MDGs towards achieving the United Nation’s set SDGs.
For any developing Nation like India , ODA act as a catalyst to mobilise various financial
resources and knowledge. India, a South Asian lower middle income country, growing at a rapid
rate is a beneficiary of Official Development Assistance (ODA). The net ODA disbursement to
the country has grown from US$ 746.6 million in 2003 to US$ 2435 million in 2013. During this
time period, the annual multilateral ODA disbursement has fluctuated around an average of
US$728 million but the increment has resulted from a sharp rise in the bilateral ODA, which has
grown from US$ 253.81 million in 2003 to US$1840.54 million in 2013 and peaked at
US$2179.21 million in 2010
India, a country with globally acknowledged potential of becoming an economic powerhouse, is
strengthening its systems to fuel economic growth and development. India achieved GDP per
capita of $1050 in 2007 elevating itself from a low income economy to a lower middle income
economy (with GDP per capita between $1046 and $4125). It successfully changed its lending
rate category from International Development Association (IDA) that provides credit at
concessional rates to International Bank for Reconstruction and Development (IBRD) that lends
at market rates. In 2012, for the first time, IDA became negative for India.
India has also been successful to ensure greater fiscal discipline in the country to divert
resources from debt repayment to growth enabling investment. In 2003, India adopted the
Fiscal Responsibility and Budget Management (FRBM) Act to institutionalise fiscal discipline in
the country and 2003 was the last year when India received net debt relief grants in ODA. In
line with efforts to create a strong creditworthy economy and consequent emergence out of
fragile poor economies, the share of grant component in total ODA has been falling while the
gross loan component has been rising. Between 2008-13 India received annual average total
ODA of US$ 4007.3 with disbursement by
(1) individual countries : US$ 1450.68 million and
(2) the other US$ 2556.6 million by multilateral organizations-
(a) Japan, UK and Germany provided over US$ 300 million each = US$ 1200,
(b) ADB, IBRD, IFC, Global Fund, Bill and Melinda Gates Foundation, IDA, and EU Institutions
providing over US$ 100 million each US$ 700 .
Asian Development Bank provided the largest amount at US$ 878.64 million followed by IBRD
providing 703.3, Japan 545.7, UK 407.5, Germany 312.4 and IFC 255.5, all million US$. With the
2. average gross disbursements of US$ 3578.46 in 2008-13, India rightly invested the maximum at
33.5% in economic infrastructure and services, which will help continue the strong economic
growth momentum. With a large number of absolute poor, employing 19.3% in health and
population, 11.2% in education and 15.1% in other social sector is also justified. But it is not
able to use the high growth rates to pull greater number of people out of poverty. Also, being a
large country with a large population having large absolute GDP and large inequality, India has
tremendous potential for domestic resource mobilization (DRM) to expand its resource base.
INCLUSIVE GROWTH VERSUSES IMPEDIMENTS
India needs a lot of thinking for inclusive growth and poverty targeted expenditure. A significant
hurdle is corruption and the capacity of government sector to steer this change. India has failed
to invest in building capacity of public sector to lead the change by designing inclusive growth
sector. Mainly, private sector has led the growth momentum in India. This has also made it
difficult to crowd-in private funding to government projects due to inefficiencies of working
with incapable government sector. Multi-bi aid of average US$ 132.9 in 2008-13 by donors
through multilateral agencies and multistakeholder initiatives has also mainly diverted
resources to economic infrastructure and service, and health and population at 34.8% each,
and remaining to other social sector etc.
Undoubtedly, economic infrastructure and social sector requires urgent attention but resilience
and faster outcomes requires strengthening of governance systems. Expenditure of ODA in
administrative governance and capacity building of public sector can help substantially crowd-in
private funds as well as domestic resources, and also from the huge black money resources.
Climate change is another area where international finance needs to flow to enable the fastest
growing developing economy take the green growth path.
In sum, the high growth rates in India are being sustained through infrastructure expansion but
need to become more inclusive and well-targeted at poverty reduction. The public sector is
clogged with administrative inefficiencies, corruption and lack of capacity, which needs urgent
overhaul. This will help mobilise substantial domestic resources for finance and crowd-in
private sector finance into development projects. The climate change threats need urgent
attention and global support to adopt a green growth strategy.
SOURCE OF EXTERNAL FUNDING AND ITS SECTORAL UTILISATION IN INDIA
To finance grants and technical assistance grants to India, the largest donor ADB lends mainly
using Ordinary Capital Resources (OCR) loans which comprised over 97% of gross
disbursements in and the rest through Other Special Funds (OSFs) 2006-13.
Out of the average annual disbursement of US$ 1346 million in 2006-13 in OCR Sovereign Loan,
the largest amount at 1. US$ 501.2 million was used in transport and ICT, 2. US$ 337.3 million in
energy, 3. US$ 218.85 in multi-sector projects, and 4. US$ 135.26 million in water and other
municipal infrastructure and services, all critical areas to maintain growth momentum. These
3. are the areas where private sector finance can be mobilised to generate a rate of return and
repayments.
Similarly, the World Bank, the second largest donor, annually disbursed an average of US$ 2620
million in 2009-14. It is the only development finance source that also explicitly focused on the
critical area of public administration and law. IBRD and IDA have together provided an average
of 1956.3 US$ million and transportation, energy and mining, education, agriculture, public
administration and law received finance of over US$ 250 million each.
Trust funds are emerging as an important financing source with rising amount of fund provided
and number of standalone projects financed by them. Between 2009 and 14, trust funds have
provided US$36.2 million with energy and mining and agriculture getting over 10 US$M. With
rising temperature, carbon emissions and flooding in coastal areas, India needs substantial
climate finance to take a green growth path. Trust funds are a potential source of such
financing. Carbon fund and Ozone Phase out trust fund have provided US$ 7.2 million in
FY2014.
SHIFTING ATTENTION TOWARDS ACHIEVING MDGs to SDGs IN INDIA
To address the shortcomings of the MDGs, and issues around global and national sustainability
requires that SDGs include not just what affects us as individuals, such as poverty eradication,
health, and energy, but also those factors that affect global society as a whole — climate
change, and food and water security. Through SDGs, we aim to address not just the pressures
on the environment and people but also the impacts that the environment and the people
living in it will face. This requires a frontal engagement with the three pillars of sustainable
development. How should these three pillars be integrated into the structure of the SDGs? This
is an important question that is witnessing a growing debate, and two approaches are being
discussed:
1. To have three separate sets of goals — social, economic, and environmental — for the three
pillars of sustainable development
2. To integrate the three pillars of sustainable development in each goal
4. ACTION PLAN FOR OPTIMAL USAGE OF EXTERNAL FUNDING IN INDIA
A strong Public Policy, Good Governance, Transparency in Tax and compliance procedure,
secure IT enabled Processes, documentation shall help effective usage of ODA in India .
Implementation of Anti-Corruptions laws, Implementation of Global Contracting Procedure
are some target area are need to be achieved by developing nations like India to help curbing
corruption. The Government in a developing nation like India always preferred to receive more
5. ODA from OECD, the World Bank, Japan, USA and other leading donor countries. But, in my
learning and experience from this MOOC , if at all the good governance be effectively
implemented in all sector by the Government and the people at-large ( by Civil Society), India
will achieve the SDGs by effective utilization of external funding like ODAs from donor
countries, Institutions etc ; the impact will be well visualized by conclusive growth.
ON SUSTAINABLE DEVELOPMENT GOALS (SDGS)
Despite money shortages, ambitions for development have grown. The Sustainable
Development Goals (SDGs) adopted by UN members follow the Millennium Development Goals
(MDGs) agreed in 2000, and will continue the MDGs’ core aim of reducing poverty and its
impacts. But the 17 SDGs will also emphasise broader aspects of economic development, such
as human rights, gender equality and the environment.
To attained sustainable development many probable strategies can be useful.
Input Efficient Technology can be reducing the exploitation of resources. So this technology may good
for sustainable development. Via Using of Environmental friendly Sources of Energy, such as LPG and
CNG which are eco-friendly fuel, we can reduce the greenhouse gases from the earth. Delhi Transport
Corporation’s initiative to CNG Buses in Delhi is the one of the best effort to reduce CO2 and other
harmful gases.
Government should pay attention on Integrated Rural Development Programmes. Through this the
burden and interdependency on cities for employment can be decrease. To focus on renewable sources
of energy like solar and wind for energy needs. It will be beneficial for the country like India, where is
enough sun light, to Convert Sun light into solar Energy and Solar Energy in Electricity. It will create an
atmosphere for green development.
For attaining the sustainable development it is necessary for the government and society to control on
the Tragedy of Commons. It means to stop the maximum use of easy available resources. With above
these government should stimulate the organic forming and recycle the wastes. Last but not least, it is
responsibility of citizens to encourage the awareness to conserve the natural assets for inter-
generational equality.
BLENDING WITH OTHER FORM OF FINANCE FOR ECONOMIC ACTIVITIES
Interest in Official Development Assistance has increased markedly over the last decade. This
has been generated in large part by international attention towards the MDGs. In fact India
need ODA, but also needs to mix instruments. The amount of ODA is very limited compared to
other financial flows to or within developing countries. One way to maximise the effects of
limited ODA is to use it as a lever – “blending” it with other forms of finance, or using it to
catalyse further economic activity. A more diverse development cooperation strategy aims to
take advantage of synergy between ODA and non-ODA finance. In particular, it envisions a
6. greater role for public-private partnerships, as well as roles for local government, universities
and research institutions.
RESOLVING THE TIED VS. UNTIED AID CONUNDRUM: PUBLIC-PRIVATE PARTNERSHIPS
Public-Private Partnerships (PPP) are an excellent tool to bring the best of both worlds
together: through PPPs, the local government owns the project but can build on the private
sector’s know-how and ability to take over risk, while donor countries are confident that the
project will be conducted to some degree in accordance with industry best practices and
international standards they want to see enforced. Other types of PPP schemes can involve the
provider of ODA directly funding a given development project, yet due to the untied nature of
the funding and partner selection process, moral hazard can be greatly reduced.
INVOLVING CIVIL SOCIETY IN PLANNING PROCESS
The role of civil society will be very important for the success of such goals, and therefore, it is
important to mainstream them into the planning process. It is also necessary to have clear
means of implementation for the SDGs, which can be the building blocks including financing,
governance, and availability of technology.
CONCLUDING REMARK:
Quality of growth is fundamentally important point. Growth can widen disparities in a country
like India, and one of the biggest threats is environmental destruction at global level. Now
reduction of poverty as set a target MDG is not only suffice for a developing nation like India
rather focus towards achieving all 17 SDGs including development in Climate change area, clean
energy, reduction of carbon foot print, etc. are equally important for real development of a
region/ country. The emphasis on importance of robust growth – in particular preparedness for
natural and other disasters. There are some SDGs that really require something beyond
financing mainly, about values – universal rights, human rights, dignity, justice, gender,
democracy.