What is India’s high impact development project?

During Indian Minister for External Affair S Jaishankar’s Nepal visit last week, Nepal and India signed an agreement on implementing High Impact Community Development Projects (HICDPs) with new terms and an increased amount of grants. The two countries increased the fund size for the projects to Rs 200m. The fund size was previously capped at a maximum of Rs 50m per project.

Some political leaders have expressed displeasure over the deal, saying it goes against Nepal’s national interests. What does this agreement really mean for Nepal and is there any truth to what the critics are saying? Let’s find out.

What are small development projects ?

In the 2000s, India revisited its development projects mainly in the neighborhood. Indian policymakers realized the importance of community-driven development projects, so that they could be completed within the stipulated time frame. As a pilot project in South Asia, India first launched the projects in Nepal under the name of Small Development Projects (SDPs) which gradually expanded over time. The core concept of this program was ensuring a triangular partnership between communities, local governments and the Embassy of India in Kathmandu supporting small development projects. According to a study carried out by the Research and Information System for Developing Countries (RIS), a New Delhi-based think tank, the idea is to link development projects with community and with local development efforts, and at the same time, ensure the role for local agencies. According to RIS, this program has evolved over the years and is now being extended by India in other neighboring countries like Afghanistan, Bhutan and Sri Lanka. The focus areas of the program are education, health, and cultural heritage, among others. In 2003, then Prime Minister Surya Bahadur Thapa agreed to implement such projects in Nepal. 

What are HICDPs? 

This is a continuation of the  SDPs initiated in 2003 and it is an important portfolio of development partnership. According to the Indian Embassy in Kathmandu, these grassroots projects have been implemented in the priority sector of Nepal, such as hospitals, schools, colleges, drinking water facilities, sanitation, hydropower plant and embankment and river training works. According to a research conducted by the Center for Social Inclusion and Federalism, prior to Nepal’s transition to federalism, the district development committees used to send applications to the respective ministries, such as education and health, for aid. Those ministries would then forward the applications to the Finance Ministry. But in 2020, Nepal and India agreed to a new provision. According to Nepal government’s decision of 30th September 2020, to receive aid under the Indian Embassy’s SDPs, organizations are first required to submit a proposal to the respective local body, either municipality or rural municipality. 

How many projects have been completed so far? 

Since 2003, over 544 HICDPs have been undertaken by India. Of them, 480 projects have been completed and the remaining 59 projects are still ongoing. After Nepal adopted federalism structure with the promulgation of the 2015 constitution, Nepal and India worked on how to implement the projects. Province-wise, 84 projects have been completed in Koshi, 81 projects in Madhes, 105 in Bagmati, 61 in Gandaki, 60 projects in Lumbini, 14 in Karnlai and 41 in Sudurpaschim. 

Which other South Asian countries have implemented HICDPs? 

Other South Asian countries to implement HICDPs are Bangladesh, Bhutan and Afghanistan. In 2023, India doubled its high-impact community development projects in Bangladesh. The two countries had signed the initial agreement in 2005. In Bhutan, 392 projects have been completed under the program. India and Bhutan have formed a separate committee to implement HICDPs and they review the projects on a periodic basis. Similarly, India and Afghanistan expanded these projects in 2019. 

How are projects selected? 

The Ministry of Finance has stated that funding requests from local units are first filtered by the Ministry of Federal Affairs and Local Development (MoFALD). The Finance Ministry receives project recommendations from the MoFALD, shortlists the projects on priority basis and requests the Indian government for funding. The respective rural municipality and municipality must also contribute counterpart funds of five percent and 10 percent, respectively. This provision, however, can be relaxed under special circumstances.

What is the application process for HICDPs ? 

According to the Indian Embassy in Kathmandu, to apply for HICDP funds, there is a specific format that must be followed along with submission of necessary documents, duly attested by the Nepal government agencies. The concerned local government must submit the proposal by disclosing project title, location, budget requirements and local government’s contribution, among others. 

Where are the projects implemented ? 

The CESIF research says, one could expect a higher concentration of project grants in the Tarai region bordering India. However, analysis shows India’s grants are relatively more concentrated in the northern districts bordering China than in the southern districts. Since 2019, India has funded in total 23 projects—18 education related, two health related, and three small infrastructure projects—in 26 districts bordering India, the research says. In the same period, India has funded 48 projects—23 education related, 18 health and sanitation related, two culture related and five small-scale infrastructure projects—in 15 northern districts bordering the Tibet Autonomous Region of China. 

What do the critics say about HICDP? 

Critics argue that HICDP grants India the opportunity for micromanagement, enabling the Indian Embassy to engage with local stakeholders. Political leaders are divided on the program. Senior leader of CPN (Unified Socialist) and former Prime Minister Jhalanath Khanal has vehemently opposed the decision to renew HICDP. He said that obtaining funds from foreign embassies for projects in Nepal is detrimental to the national interests of Nepal. “This goes against our independence and sovereignty. This is against our national interests,” Khanal told the media recently. CPN-UML leader Raghuji Panta also said that the agreement is against national interests. Speaking at the Parliamentary Committee for State Affairs and Good Governance, he warned that the HICDPs could lead to political meddling. He has also made a written request to Prime Minister Pushpa Kamal Dahal to reconsider the agreement, terming it a foreign interference in Nepal’s internal affairs.

What do the defenders say? 

Nepali Congress leader Bimalendra Nidhi has welcomed the agreement. He dismissed the claims that the projects are chosen solely at the discretion of the Indian Embassy. “The involvement and approval of the concerned ministries are a must to select the projects,” he said. “Various leaders and activists have already been soliciting development funds for their areas from Indian ambassadors and officials. Their opposition to the agreement now reveals their dual character.”