Has UAE given Rs. 700 Cr donation or Loan for Kerala? Know the reality

There is lot of debate and discussion on Indian Government refusing to accept “foreign aid” of Rs. 700 crores from Government of UAE. Here there are many things that need to be considered before reacting: 1) Many foreign countries have offered “aid” or “financial aid” or “financial package” and only one country i.e. Maldives has offered “donation” (2.) There is lot of difference between words “aid” or “financial aid” or “financial package” and the word “donation” (3)  Donation comes without any strings attached and is a non-recourse transaction in which money given by any foreign nation or agency need not be repaid or returned (4) Financial aid or financial package comes with strings attached and in many cases in can be a soft loan with a ballooning repayment liability, that too, in a foreign currency. In other words its a ponzi scheme dressed up as an aid. (5) In the National Disaster Management Plan 2016 unveiled by Modi Government, there are two clauses in Chapter Nine (Page 145 of the said National Disaster Management Plan 2016)

Clause 9.2: Accepting Foreign Assistance: As a matter of policy, the Government of India does not issue any appeal for foreign assistance in the wake of a disaster. However, if the national government of another country voluntarily offers assistance as a goodwill gesture in solidarity with the disaster victims, the Central Government “MAY” accept the offer. The Ministry of Home Affairs, Government of India is required to coordinate with the Ministry of External Affairs, Government of India, which is primarily responsible for “REVIEWING” foreign offers of assistance and channelizing the same.
Clause 9.3: Accepting Multilateral Assistance: In the case of an offer of assistance from UN Agencies, the India “WILL” accept the offer only if the government considers it necessary, based on various factors. If accepted, GoI “WILL” issue directions to the respective Ministry or State Government to coordinate with the concerned UN agency. Any financial assistance offered by UN financial institutions involving foreign exchange will require the approval of the Department of Economic Affairs, GoI. India “WILL” allow UN agencies and international NGOs already operating in the country at the time of the disaster event to continue their humanitarian assistance to people in the affected area in coordination with the relevant Central Ministries/Departments and the State Government as per applicable norms and protocols.ndmp 2016This highlights three things: (1) The word is “MAY” in Clause 9.2, which means “expressing possibilities” . The NDMP(National Disaster Management Plan) does not use the word “WILL” which means “expressing inevitable events”. In other words, the intent of this plan is that the Central Government will consider the offer and if it is really a donation or a a really affordable financial package or aid or soft loan then the Central Government will accept it, otherwise the Central Government will reject the offer. (2) In the same Clause 9.2, the Government has made it clear that the Ministry of Home Affairs is primarily responsible for “REVIEWING” foreign offers of assistance.” This means that the offer by foreign governments will be accepted only after reviewing the same. Note the word “REVIEW” which means “a formal assessment of something with the intention of instituting change if necessary” (3) However, in Clause 9.3, Government has expressly made it clear that any assistance from United Nations Agencies and Financial Institutions, “WILL” be taken. There is no ambiguity here as the word used is “WILL”.

In other words, while Government may be vary of Ponzi Schemes carrying a mask of “aid” offered by foreign governments, it does not suspect any financial assistance coming from UN or World Bank which would be offering more equitable and affordable terms. That is why Government of India will willingly accept any offer made by World Bank or United Nations Agencies and it is clearly mentioned in Clause 9.3. Also underlying meaning and intent of Clause 9.2 is that Indian Government will compare offer made by foreign country on any “foreign aid” or financial aid or financial package with terms offered by World Bank and if the foreign country offers a better term than World Bank and United Nations, then Indian Government will accept the same. Otherwise, the Indian Government will reject the said offer by foreign government.

This could be the reason why Indian Government headed by Congress in 2004 to 2014 could have rejected any foreign aid and financial aid or financial package (and not donation) coming from various foreign countries. This was applicable in all cases of natural disasters and catastrophe from Tsunami in 2004 to Uttarakhand Floods in 2013, and probably all other natural disasters between these two natural calamities.

It is worth noting that in 2013 Congress Government took a US$ 250 mn aid from the World Bank for reconstruction of Uttarakhand, while it rejected aid offered by foreign governments. I am sure a lot of thought and deliberation would have gone in this and Congress Government would have taken a sagacious and sane decision of refusing aid from foreign governments and accepted aid from World Bank because of economical reasons which could include many factors including affordability and repayment terms.

The underlying meaning of Clause 9.2 and 9.3 of NDMP 2016 is that the Indian Government will prefer financial aid and financial assistance from World Bank or United Nations but may reject offers of financial aid and financial assistance offered by foreign governments.

In wake of the controversy stirred by Kerala CM P. Vijayan making allegations that UAE has offered an “aid” (and not a “donation”) which is rejected by Modi Government, there are four things that P. Vijayan and Left Front need to clarify: (1) Is this offer of Rs. 700 crore made by UAE Government a pure “donation” like the “donation” made by Maldives or is it a “financial aid” or “financial package”? (2) If this offer of Rs 700 crores is a “financial aid” then P. Vijayan and Left Front must put forward all clauses and terms of this “aid” which includes interest and repayment terms and hidden clauses and devils in fine print that include ballooning repayments, etc. (3) Get the same things stated by Left Front led Kerala Government asked for in points 1 and 2 above, confirmed by UAE Government, so that we know that whatever the Left Front Government in Kerala has stated is true and endorsed and affirmed by UAE Government. (4) A formal agreement to the effect, documenting all the terms and clauses of “donation” or “financial aid” must be made between UAE Government and Kerala Government and put in public domain for general public to review and comment.

Once Left Front Government in Kerala does what is stated in aforementioned four points, we can understand the facts of the case and decide whether it is a controversy of donations being rejected or is it an unaffordable aid that is rejected. This will also enable and ensure that the controversy and confusion is laid to rest and in case Modi Government has erred in rejecting the foreign donation (and not a foreign aid) from UAE Government, then we can blame and reprimand Modi Government and side with Left Front’s Kerala Government and demand that Modi must allow UAE to “donate” money for rehabilitation and reconstruction of Kerala. However, in absence of P. Vijayan Government failing from transparently and honestly providing aforementioned information, we can safely believe that Left Front is making false noises and creating fake controversy to further its political agenda against Modi Government. Read here what what central govt has done for kerala.

Credit: Sumeet Mehta

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