India falters again on Mongolia

New Delhi: In what could be a setback for foreign policy, India seems to have again failed to capitalise on China’s northern neighbour Mongolia’s desire to break free of its economic dependence on Beijing.

In the Union Budget for fiscal 2017-18 presented earlier this month, New Delhi allocated only a meagre Rs 5 crore as foreign aid for Mongolia under the allocation of the ministry of external affairs (MEA) for the strategically-located central Asian nation that had embraced India so warmly during Prime Minister Narendra Modi’s visit there about two years ago.

Contrast this with the foreign aid announced in the 2017-18 budget for Nepal (Rs 375 crore), Afghanistan and Mauritius (both Rs 350 crore each), Seychelles (Rs 300 crore), Maldives (Rs 245 crore) and Myanmar (Rs 225 crore).

The figures show that grants to be given by New Delhi even to tiny Indian Ocean-rim countries such as Maldives, Mauritius and Seychelles far outstrip that for Mongolia.  

But contesting this perception, government sources said India had already announced a line of credit of $1 billion (Rs 7,000 crore to be handled by the finance ministry) to Mongolia during Mr Modi’s visit. But the fact remains that a line of credit is not a grant (foreign aid) and usually needs to be paid back eventually by a recipient.

India’s loss appears to be China’s gain. Mongolia, enthused by Mr Modi’s visit in May 2015, and the close ties fostered by Buddhism had then declared India as its “third neighbour” (China and Russia being the other two).

Mongolia had stuck its neck out by inviting the Dalai Lama to visit in November last year, a move that angered Beijing and led to imposition of an economic blockade via levies on Mongolian goods-laden trucks entering China.

A financially-crippled Mongolia had appealed to India for help, but New Delhi replied that the Mongolians could use the line of credit that had already been announced.

The renewed offer seems to have failed to impress the desperate central Asian country, which then had to capitulate before Beijing. Mongolia vowed not to let the Dalai Lama visit again, following which China lifted the harsh economic blockade it had imposed.    

Late last year, before it capitulated to Beijing, Mongolian ambassador Gonchig Ganbold, who had met MEA officials in New Delhi, was quoted as telling a newspaper, “It’s important India raises its voice against China’s unilateral measures which are hurting our people, especially when severe winter is upon us.”

Silence, he had said, could be construed as giving China a “pass” for its behaviour. But India had appeared to be too circumspect in its reaction for fear of offending Beijing.