1. India’s Growing Role in South-South Cooperation

• India’s development assistance to Global South has almost doubled from ~$3 billion in 2010–11 to $7 billion in 2023–24.
  
  
• Modalities include: Lines of Credit (LoC), capacity building, technology transfer, grants, concessional finance.
  
  
• India’s model is based on demand-driven partnerships, not donor-recipient hierarchy.
  
  

2. Budgetary Red Flags

• Ministry of Finance raised concerns over LoCs in the 2025–26 pre-budget process.
  
  
• Highlighted increasing NPAs and potential credit losses.
  
  
• Difference in interest rates was absorbed by Government of India, increasing the fiscal burden.
  
  

3. Global Context – Development Finance Crisis

• Decline of US aid (USAID) and French Development Agency
  
  
• OECD’s DAC shows sharp fall in ODA (official development assistance).
  
  
  • ODA forecast to fall to $97 billion (a 45% cut from 2021–22 levels).
    
    
• Shrinking resource pool is affecting least developed economies the most.
  
  

4. India’s Strategic Shift

• India now emphasizes flexible, concessional finance via LoCs and grants.
  
  
• Also explores alternative modalities through:
  
  
  • Global Development and South-South Cooperation (GDC)
    
    
  • Trilateral Cooperation (TrC) with countries like Japan, Germany, Brazil
    
    
  • Asian Development Bank, AfDB partnerships
    
    

5. Trilateral Cooperation (TrC)

• TrC bridges divide between Global North & South.
  
  
• India–Japan and India–Germany TrC pilot projects in Africa and Asia.
  
  
• TrC currently estimated at $670 million to $1.1 billion.
  
  

6. India’s Results-Based Approach

• Focus on digital connectivity, energy access, health, and infrastructure.
  
  
• India joined G20’s Joint Declaration on digital infra & health systems.
  
  
• TC projects in countries like:
  
  
  • Africa: Cameroon, Ghana, Malawi
    
    
  • Latin America: Argentina
    
    
  • Asia: Sri Lanka, Myanmar
    
    

7. India as a Thought Leader

• Advocates demand-led, co-owned and context-specific development.
  
  
• Emphasizes capacity building and institutional development.
  
  

📌 UPSC Mains GS2 Question (2025-Style)

Q. India’s development cooperation with the Global South is undergoing a significant transformation in the face of a shrinking global aid landscape. Examine how India is repositioning itself as a leader in global development finance through new modalities and partnerships. (15M, 250 words)