India's Strategic Foreign Aid: 'The China Factor' in India's Foreign Aid Allocation

Abstract

Foreign aid is known to be the primary means through which governments assist each other. Beyond the altruistic incentives for such help, however, there is self-interest involved. Consequently, foreign aid is not always directed towards the states who need it the most, but rather to those, who can contribute to the donor’s strategic considerations. India is one of the emerging countries, which over the past three decades has been expanding its foreign aid in scale and scope. The rationale behind such foreign policy move by New Delhi is argued to be improving India’s international standing. Its biggest rival China, however, is rapidly expanding its own influence and is stepping into India’s strategic space. In this paper we argue that ongoing emerging power rivalry with China is a key determinant in New Delhi’s foreign aid allocation decisions. we analyse India’s foreign assistance for the period 2015-2020 and look for the ‘China factor’ in its allocation strategies. The cases of the Maldives and Mauritius provide evidence for the main argument and show India as a ‘reactive donor’.