Announced with much fanfare in January, a US$8 million grant from New Delhi for Guyana to buy a ferry from India as well as other funding is now “curtailed” due to a slash in the country’s Ministry of External Affairs’ (MEA) budget.
In January, it was announced that India would grant a Line of Credit (LoC) of US$50 million to Guyana for the East Bank Demerara-East Coast Road Link Project, as well as US$8 million to assist in the acquisition of an ocean ferry vessel. The announcement was made during then President Donald Ramotar’s six-day official visit to India and was highlighted by him on several occasions during the recent general election campaign. Ramotar is now out of office after losing the May 11 general elections.
At the time of his India visit, the Government Information Agency (GINA) reported that India’s Prime Minister Narendra Modi informed Ramotar of the loan during bilateral discussions.
However, Indian newspaper, The Telegraph reported on Thursday that MEA documents now list the project as “curtailed” because the total foreign office budget for aid to Latin American countries this year is only Rupees 30 crore (about US$5.1 million). The Ministry of External Affairs is entrusted with the task of formulating, implementing and managing the foreign policy of India.
The newspaper reported that a drastic mid-year cut in its budget in December and a near-freeze on a funds hike in the February budget have forced India’s foreign office to quietly shelve several key promises. The MEA faced a reduction of 14.3 per cent of its budget by the country’s Ministry of Finance even though it had asked for increased funding. The external affairs ministry is also scrambling for funds to clear bills run up on many other overseas projects.
Kitty
“The foreign office is now planning to write to the finance ministry to create a separate kitty for international commitments made by the Prime Minister, President and other senior government representatives…this fund can then be replenished on priority to avoid national embarrassments,” the newspaper reported.
According to a report by the Standing Committee on External Affairs presented to India’s Lower House of Parliament on April 28, which was seen by Stabroek News, also affected by the slash in the budget is the overhaul of the Information, Communication and Technology (ICT) system at the Caribbean Community (Caricom) Secretariat and an Information Technology Centre of Excellence here.
The committee said that it was “really concerned” that a very small component of funds have been allocated under ‘Aid to Latin American countries’ and this has been reduced drastically. “The Committee note that during the recent visit of the President of Guyana, the Prime Minister had conveyed the Government of India’s decision to give US$10 million Line of Credit which had been approved by the Inter-Ministerial Standing Committee,” the report said.
“However, sanction of Line of Credit of US$8 million had been held in abeyance pending availability of funds. The Committee are concerned at the ministry’s own admission that in (the) absence of funds under the ‘Aid to Latin American countries’ budget, this politically important project cannot be implemented despite (the) announcement at Prime Minister’s level. The Committee disapprove such approach of the Government on the issue of funds and recommend that due priority should be given to the projects announced at the highest level especially when it relates to strategically important countries,” it asserted.
ICT
The Committee also took note of the “status regarding implementation of another politically very important project” pertaining to assistance to upgrade and overhaul the ICT system of the Caricom Secretariat, which was originally set up by India, the implementation of which is also dependent upon the availability of funds in the financial year 2015-16. “The Committee, therefore, recommend that the Ministry must take up the project on priority basis particularly, in view of the political significance of the project and budgetary requirement of only Rs. 15 crore over the span of two years,” the report said.
While originally, a US$50 million LoC had been announced for Guyana during Ramotar’s visit, information supplied by India’s MEA to the Committee referred to a US$10 million LoC and US$8 million grant to the Government of Guyana to purchase an ocean ferry from India. “The LoC component of US$10 million has already been approved by the Inter-Ministerial Standing Committee. However, sanction of the LoC has been held in abeyance pending availability of the grant component,” the report said.
The Ministry also noted that the proposal for the US$8 million grant was submitted to the Standing Finance Committee for approval. The proposal is to disburse the grant component over two financial years – US$3 million to be disbursed in 2015-16 and the remaining amount of US$5 million to be disbursed in 2016-17 from Aid to Latin American and the Caribbean (LAC) budget. “In absence of funds under the Aid to LAC budget this politically important project cannot be implemented despite announcement at PM’s level,” the Ministry said.
Former Minister of Transport Robeson Benn had said that government has already submitted a design for the passenger ferry vessel which he had said would serve the North West District in Region One.
The committee report also noted that during his interaction with South American leaders on the margins of BRICS Summit in Brasilia in July 2014, Modi had extended an offer to set up IT Centres of Excellence in South American countries.
The ministry said that proposals for setting up eight such centres has been approved and Memorandums of Understanding are under consideration of the various governments. “If adequate funds are not made available in the FY 2015-16 not a single Centre of Excellence can be set up,” it warned while noting that Modi had promised Ramotar that the first such centre will come up in Georgetown.
The ministry said that it therefore needs funds for this financial year for setting up at least one centre in Guyana.
As it relates to the ICT system at the Caricom Secretariat, the MEA noted that the Indian Government had set this up in 2004-05. It said that the Secretariat has asked New Delhi for assistance to upgrade and overhaul the system. “Project is politically very important as it impacts the working of Caricom …,” the Ministry said while adding that the processing for the project has already started but implementation will depend on availability of funds in the financial year 2015-16.
The Telegraph reported that foreign secretary Subrahmanyam Jaishankar had articulated to the Parliament standing committee on external affairs, at a hearing on March 24 on the budget cuts that “there has not been such reduction in allocations” in recent years and hinted at the possibility that has now turned into reality – the postponement of the delivery of commitments.
The newspaper reported that Jaishankar’s testimony stated that foreign minister Sushma Swaraj had written to the finance ministry articulating these concerns – but with little effect. “Many of the promises that the foreign office currently has no funds for were made at summit-level meetings involving Modi and the recipient nation’s head of state or government, making delays and postponements even more embarrassing,” the newspaper said.
