Rethinking global development funding

• India has increased its development cooperation with the Global South, doubling the flow of quantum from around $3 billion in 2010-11 to around $7 billion in 2023-24.

• The main instrument of this engagement is the extension of lines of credit (LoC) under the Indian Development and Economic Assistance Scheme (IDEAS).

• India has expressed concerns over rising sovereign debt levels across the Global South, leading to a red flag from the Ministry of Finance on credit lines.

• The concept of a Global Development Compact (GDC) was articulated during the third Voice of Global South Summit (VoGS) in 2024, implying a balance between all modalities of engagement with the Global South.

• India has to refocus on LoCs as an instrument of engagement, as it was largely borrowing from global capital markets and providing resources to partner countries at a concessional rate of interest.

• The shrinking of Official Development Assistance (ODA) and debt crisis are causing a profound decline in the flow of global development finance.

• The investment needed to achieve the Sustainable Development Goals (SDG) by 2030 has surged from $2.5 trillion in 2015 to over $4 trillion in 2024, making borrowing costlier and less predictable.

• Triangular Cooperation (TrC) has emerged as a powerful mechanism to bridge the divide between the Global North and the Global South.

• TrC projects have shown that addressing physical infrastructure can advance social progress, such as improving regional energy grids.

• India’s G-20 presidency has expanded collaborations involving countries such as Germany, the United States, the United Kingdom, the European Union, and France, illustrating how leveraging technical, financial, and human resources can deliver results in third countries.