Policy Update
Himanshi Singh
Background
India’s neighborhood diplomacy and South–South development cooperation have undergone a major strategic transformation over the past two decades. Central to this evolution is the paradigm of High Impact Community Development Projects (HICDPs)—formerly known as Small Development Projects (SDPs)—which operationalize India’s commitment to demand-driven, community-centric grant assistance. Unlike mega-infrastructure projects that often carry extended gestation periods and complex financing terms, HICDPs are designed to directly target grass-roots socio-economic needs in rural, semi-urban, and border regions. Grounded in India’s foundational diplomatic ethos of Vasudhaiva Kutumbakam (“the world is one family”), these initiatives prioritize local human capital, essential public utilities, and basic social infrastructure across South Asia and the Indian Ocean Region.
The year 2024 marked a pivotal milestone in the implementation of the HICDP architecture. Marking over two decades of structured HICDP deployment, India expanded both the financial caps and geographic coverage of these grant projects across partner nations, including Nepal, Bhutan, the Maldives, and Sri Lanka. By decentralizing implementation to local municipal authorities and district coordination committees, the HICDP model ensures immediate community ownership, minimizes administrative bottlenecks, and delivers tangible public goods—such as birthing centers, secondary schools, drinking water pipelines, and solar lighting—without burdening partner states with sovereign debt.
Functioning
The operational strength of the HICDP framework lies in its decentralized, bottom-up execution structure. Rather than imposing top-down developmental priorities, projects are identified, requested, and managed directly by local governments—such as Metropolitan Cities, Sub-Metropolitan Cities, Municipalities, and Rural Municipalities in partner nations.
The policy execution workflow follows a standardized tripartite model:
- Identification and Proposal: Local municipal or district bodies identify critical infrastructural gaps (e.g., lack of lab facilities in local schools, absence of birthing facilities, or inadequate grain storage) and submit proposals through their respective national nodal ministries.
- MoU Signing and Fund Dispersal: Bilateral Memoranda of Understanding (MoUs) are signed between the Embassy of India, the partner nation’s nodal ministry (such as Nepal’s Ministry of Federal Affairs and General Administration), and the specific local implementing agencies.
- Local Execution and Supervision: Project execution is entrusted to local district coordination committees or municipal bodies, ensuring that local labor, materials, and contractors are utilized, thereby stimulating the domestic local economy.
Table 1: Policy Architecture of the HICDP Framework (2024)
| Framework Dimension | Operational Mechanism | Strategic Policy Value |
| Funding Modality | 100% Non-repayable Grant Aid | Eliminates debt burdens; avoids financial conditionality. |
| Project Identification | Bottom-up / Demand-driven by local bodies | Ensures alignment with genuine community needs. |
| Executing Agency | Local Municipalities & District Committees | Fosters domestic capacity and local procurement. |
| Focus Sectors | Education, Health, Water, Agriculture, Culture | Delivers immediate social and welfare benefits. |
Source: Ministry of External Affairs (MEA), PIB Delhi
Performance
In 2024, India executed several high-value HICDP tranches across its immediate neighborhood, reflecting heightened financial commitments and expanded sector coverage.
- Nepal: In early 2024, the per-project funding ceiling for HICDPs in Nepal was doubled to NRs 20 crore (NRs 200 million). On September 27, 2024, the Embassy of India and Nepal’s Ministry of Federal Affairs signed MoUs for 12 new HICDPs worth NRs 474.00 million spanning education, health, agriculture, drinking water, and culture. Key project handovers in 2024 included double-storied school buildings and laboratory facilities at Shree Bal Janata Secondary School (Lamahi) and Shree Padmodaya Public Model Secondary School (Ghorahi) in Dang District, built at costs of NRs 17.60 million and NRs 28.70 million, respectively. Additionally, the Mangaladevi Birthing Centre at Tribhuvan University Teaching Hospital, Kathmandu, was handed over following a grant assistance of NR 44.04 million to help curb maternal mortality. Since 2003, India has undertaken over 563 HICDPs in Nepal, completing 490 projects across all 7 provinces.
- Bhutan: Under Bhutan’s 13th Five-Year Plan (2024–2029), India allocated INR 1,000 crore (Nu 10 billion) specifically for 283 HICDPs, funding critical rural bridges, urban road networks, and community agricultural bazaars.
- Maldives: During External Affairs Minister Dr. S. Jaishankar’s visit in August 2024, India formally handed over six grant-funded HICDPs covering speech therapy units, mental health centers, special education facilities, and solar street lighting.
- Sri Lanka: Grant support under HICDPs facilitated inclusive educational infrastructure, including a multi-ethnic trilingual secondary school in Polonnaruwa constructed with over 320 million Sri Lankan rupees in grant aid.
Table 2: Key Regional HICDP Performance Highlights (2024)
| Partner Country | 2024 Financial / Project Commitment | Key Delivered Milestones (2024) |
| Nepal | NRs 474M for 12 new MoUs; NRs 200M cap per project | Inauguration of Dang District schools; TUTH Birthing Centre |
| Bhutan | INR 1,000 Crore (Nu 10B) for 283 HICDPs | Rural bridges, urban roads, and market bazaar upgrades |
| Maldives | Multi-sectoral grant facilities | Handover of 6 facilities (Speech therapy, Mental health, Special ed) |
| Sri Lanka | Targeted social infrastructure grants | Trilingual multi-ethnic school in Polonnaruwa (SLR 320M+) |
Source: Ministry of External Affairs (MEA), PIB Delhi, and Research Report on HICPD Performance Report (2024)
Significance
The policy impact of the HICDP model is evident across human, social, and geopolitical dimensions:
- Grass-roots Human and Social Welfare: By directly financing facilities like birthing centres, eye hospitals, drinking water pipelines, and secondary school science labs, HICDPs address basic human security needs. In health, facilities like the Mangaladevi Birthing Centre directly contribute to reducing maternal mortality rates in underserved areas.
- Economic Empowerment and Local Capacity: Because projects are executed by local municipal bodies, funding flows directly into local wage employment and domestic material procurement. The construction of agricultural collection and grain distribution centers (such as in Bajura, Nepal) strengthens local food security and rural commerce.
- Strategic Trust and Non-Conditional Partnership: HICDPs represent a transparent alternative to debt-trap diplomacy. Provided entirely as non-repayable grant aid, these projects generate immense goodwill at the grassroots level, reinforcing India’s standing as a reliable, first-responder development partner.
Emerging Issues
Despite their proven success, HICDPs face structural challenges that require ongoing policy adaptation:
- Maintenance and Operational Longevity: While India funds initial construction and equipment procurement, local municipal bodies often face budget constraints in maintaining facilities, servicing lab equipment, or staffing medical units over the long term.
- Geographic Dispersion and Monitoring: Managing hundreds of small-scale projects across remote mountain districts or dispersed island archipelagos creates logistical hurdles for monitoring execution timelines and quality standards.
- Inflationary Pressures on Cost Estimates: Rising prices of construction materials and transport in remote border regions can lead to cost overruns beyond initial project budget allocations.
Way Forward
To optimize the HICDP model for the coming decade, policymakers should consider the following strategic enhancements:
- Integrating Operation and Maintenance (O&M) Protocols: Embedding a multi-year maintenance budget and technical training component into initial grant agreements to ensure asset longevity.
- Digital Monitoring Platforms: Expanding the use of GIS-tagged real-time project tracking dashboards to ensure transparent and timely execution across remote project sites.
- Synergizing HICDPs with Digital Public Infrastructure (DPI): Linking physical infrastructure (like community schools and health posts) with digital assets, such as solar-powered computer labs and tele-medicine modules (e-VBAB), to maximize service delivery.
References
Embassy of India, Kathmandu. (2024, September 27). Signing ceremony of MoUs of 12 HICDPs projects in education, health, agriculture, drinking water and culture sectors in Nepal. Ministry of External Affairs, Government of India. https://www.indembkathmandu.gov.in/media-detail/644
Embassy of India, Thimphu. (2024, March 23). India-Bhutan development cooperation: Release of funds for High Impact Community Development Projects. Ministry of External Affairs, Government of India. https://indembthimphu.gov.in/listview/Mzg3
India News Network. (2024, May 27). India completes two High Impact Community Development Projects in Nepal’s Dang District. https://www.indianewsnetwork.com/en/20240527/india-completes-two-high-impact-community-development-projects-in-nepal-s-dang-district
Ministry of External Affairs. (2024, August 10). Transcript of press briefing by External Affairs Minister Dr. S. Jaishankar during his visit to the Maldives. Government of India. https://www.mea.gov.in/lok-sabha.htm?dtl/38993
Ministry of External Affairs. (2026, May 25). Question No. 814: India’s diplomatic and economic relations. Lok Sabha Question & Answer, Government of India. https://www.mea.gov.in
About the Contributor: Himanshi Singh is a research & editorial intern at the Impact and Policy Research Institute (IMPRI). She holds a postgraduate degree in political science and international relations. Her research interests include foreign policy, strategic studies, public policy, national security, diplomacy, and global governance, with a particular focus on India’s external relations and evidence-based policy research.
Reviewer: Divya N & Tanisha
Acknowledgement:
The author sincerely thanks the IMPRI Editorial Desk for invaluable mentorship and guidance during the development of this policy update. Special thanks are also extended to fellow interns for their thoughtful inputs and support throughout the research process.
Disclaimer:
The views expressed are those of the author and do not necessarily reflect the official policy of IMPRI. All information is based on publicly available official government publications and is compiled solely for academic and research purposes.
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