Who funds the rebuilding of Kerala?

Some political commentators have questioned the Central government’s refusal to accept aid by foreign governments notably United Arab Emirates (UAE) that had signaled a generous financial envelope. In questioning the Central government stance, they offer the following arguments.

Let the people of Kerala not get hurt twice: first, on account of the natural calamity that has killed over 300 people and dislocated nearly 10 lakh people and, second, on account of depriving them of the foreign aid that some countries are wanting to give. By refusing to accept government aid being offered by other countries, isn’t the BJP-led Central government hurting the interest of Kerala — a non-BJP ruled state?

Refusing foreign aid is fine if the Central government were to provide adequate financial assistance to rebuild Kerala. But the financial envelop of over Rs 20,000 crore estimated by the state seems far in excess of what the Central government can possibly provide. Wouldn’t then it be prudent to supplement it with foreign aid that will help the state recover sooner?

One of the key reasons cited for the refusal of foreign aid is that the country is adopting the same position it did during the 2004 Tsunami, that hit the Tamil Nadu coast and the Andaman and Nicobar Islands, and the 2013 flooding in Uttarakhand. In both these cases, the Central government had refused aid from foreign governments.

Whatever may have been the rationale for such a policy then, one can surely revisit its relevance now. Hasn’t the Modi government shown propensity to change archaic laws and policies and taken pride in doing so?

Even if the policy rationale remains sound, the government can certainly make an exception this time, given the special relationship that exists between Kerala and UAE — nearly 80 per cent of Indians live and work in UAE are from Kerala. Refusal of foreign aid may have been consistent with India’s image of emerging economic powerhouse of the world.

And the government might be conscious of not denting this image by accepting foreign aid. But is it fair to ask the people of Kerala to bear the disproportionate burden of this image-building? Aid from foreign governments is a voluntary, humanitarian assistance, which can be a source of additional funding for Kerala.

So, the Centre must accept foreign government aid. This line of reasoning does appear convincing at some level.

Arguments on the other side
Now let’s look at the other side of the story that is no less powerful and convincing. It’s true that the size of financial assistance announced by the Modi government thus far is small in relation to the amount of loss incurred by the state but it is only an interim assistance. The Centre has said that more Central assistance would be made available after the assessment of damages is complete. Further, the Centre was prompt in giving in-kind assistance (food, water, medicines and other essential supplies) too and has not shied away from pressing special forces/agencies from helping the affected people.

Is it fair to say that the Centre is discriminating against non-BJP ruled states when the Modi government’s thrust on development is guided by Sab Ka Saath, Sab Ka Vikas (collective efforts, inclusive growth) philosophy?

It’s also true that the Centre has politely declined government aid from foreign countries for strategic reasons but it has welcomed any assistance to the Prime Minister’s Relief Fund and the chief minister’s Relief Fund from Non-Resident Indians, Persons of Indian Origin and international entities such as foundations.

Further, those who have seen the functioning of the Modi government would know that his government wants to convert every crisis into opportunity. It seems that the Modi government wants to use this opportunity to bring different constituencies — be it India Inc., professionals from different fields, high net worth individuals, private foundations, non-governmental organisations and so forth — together in this moment of crisis. Indeed, people from different walks of life have contributed for the flood-affected victims, just as different state governments, both rich and poor, have expressed their solidarity by making their contributions.

Even if half the total Corporate Social Respons-ibility funding — funding that the corporates are supposed to spend annually by law on social causes — gets channelled into rebuilding Kerala, there should be no dearth of domestic funding. Indeed, PM Modi’s remark that the entire nation is with the people of Kerala in their hour of need is indicative of his government’s thinking. Foreign aid by governments is a loose assistance that may hinder this process of collective domestic effort. So, India’s refusal of foreign government aid is in the best national interest.

So, the arguments on both sides are quite compelling and reflect two very different perspectives. Whether Kerala gets adequate assistance and who provides that assistance, only time will tell.

In the meantime, some commentators have been critical of the Modi government. Clearly, they jumped the guns when they should have exercised restraint. They are mistaken if they believe that it is their criticism that really moved the Modi government. The ball is still up in the air!

A development economist, formerly with the Bill & Melinda Gates Foundation and the World Bank.