By Avner Pariat
Meghalaya has been a recipient of substantial Externally Aided Projects (EAPs). A Google Search defines them as “Funds provided by international financial institutions (like the World Bank, ADB) or foreign governments to developing countries for large-scale infrastructure, social, or environmental projects, acting as crucial additional development finance where domestic resources fall short, often with concessional terms (low interest, long repayment) and channelled through the central government to state agencies, helping build key assets like metros, roads, dams, and rural development.” The first one that came to my attention (and I think that of most people’s) was the Supporting Human Capital Development Project, a $100 million dollar loan issued by the Asian Development Band (ADB). Since then, we have had numerous other funders such as the World Bank, JICA, KfW Development Bank and the list goes on. Yet, beneath the official narratives of growth and connectivity, a troubling pattern emerges. There is mounting evidence that these EAPs are acting not as levellers, but as engines of inequality, exacerbating the very divides they aim to bridge. This article seeks to examine three critical pathways through which this occurs in Meghalaya: Elite Capture, Skewed Employment, and the hidden burden of Repayment Obligations.
In Meghalaya’s unique socio-political ecosystem, where traditional tribal systems (clanship, syiemship, nokmaship) hold significant sway, the phenomenon of “elite capture” is particularly potent. EAPs, which channel vast resources through state and local governance structures, are exceptionally vulnerable to this dynamic. Elite capture occurs when the benefits of development – especially in the form of infrastructure contracts and land acquisition – are systematically diverted by a powerful minority. In Meghalaya, this often manifests in several ways.
First, the tender processes for lucrative contracts (construction, supply, and consultancy) under EAPs frequently favour established businesses, often belonging to influential clans or political families. This sidelines smaller local entrepreneurs, concentrating wealth and economic power. Is it any wonder that big “professional” construction companies are now in a feeding frenzy throughout the state? This creates a politically undesirable situation in the long run where favoured contract winners can aid and abet the political capture (via electoral bonds, campaign funding) of the electoral mandate. Is it any wonder that big firms like Grant Thornton, KPMG, etc get large sums of money per year for “consultancy” while local talent is never optimised and instead languishes within the government departments? This design has serious flaws and is why India has such a bad Gini Coefficient score (used to measure inequality).
Second, the critical stage of land acquisition can also be manipulated. Projects in road connectivity, water supply, or tourism infrastructure may be slated for areas where local elites (MLAs, MDCs, local heads, bureaucrats) have landholdings or commercial interests, rather than in the most needy or remote villages. When determining who receives the benefits of EAP funding, local figures in authority prioritize their kin or supporters, leaving out the landless, women-headed households, or the marginalized. Through this, the elites reinforce their power with modern financial clout, creating a self-perpetuating cycle of patronage and exclusion. The intended beneficiaries – the poor, the working classes and the socially vulnerable – watch on as the machinery of development rolls by, serving interests other than their own.
A primary justification for EAPs is local job creation. However, the employment generated is often transient and skewed, failing to foster sustainable livelihood transitions. Most EAPs in sectors like road construction, power, and building create a surge in demand for low-skilled, daily-wage labour. While this provides temporary cash inflow, it is precarious work with no social security, skills advancement, or long-term prospects. Conversely, the skilled and semi-skilled positions – site supervisors, engineers, accountants, and machine operators – are frequently filled by non-locals. This is due to a real gap in local technical capacity. The result is a “leakage” of the project’s higher-value economic benefits. Local youth may find themselves as helpers or manual labourers on projects crossing their own land, unable to access the training or upward mobility that would break cycles of poverty. Furthermore, EAPs may create jobs for which the local educational system has not prepared the majority. This creates a small, privileged class of English-educated, urban youth who benefit, while the vast majority, educated in the state’s vernacular and often struggling system, remain in the informal sector.
Many politicians have repeated the refrain of EAPs leading the state into a “debt trap”. While very simplistic (economist Sumarbin Umdor has highlighted that public debt is necessary for growth), the long-term fiscal implications pose a significant threat to equity. A significant portion of EAPs in India, including those in Meghalaya, are not grants but loans contracted by the government. These loans must be repaid with interest. Although terms are favourable, repayment constitutes a future claim on the state’s fiscal resources. Here lies the hidden peril: if an EAP does not generate substantial, broad-based economic growth that expands the state’s revenue, its repayment will inevitably compete with other essential public expenditures. In the future, the Government of Meghalaya will face a fiscal squeeze where funds that could have been allocated for pro-poor initiatives – healthcare, investments in public schools, pensions, or support for small farmers – are instead diverted to service debt for projects whose benefits were captured by a few. The poor, who benefit most from direct social sector spending, effectively bear the long-term cost of projects that disproportionately aided the affluent. Again, I am not parroting the simple-minded politicians because I believe loans are a good thing if we know how to use them. I am of the opinion, however, that currently the EAP loans are not being managed well and would need a number of socially conscious managers instead of a few IAS officers. After all, this is our money and we should have a say in how it is used.
Recommendations:
1. Mandatory Social Equity Audits & Participatory Planning: Every EAP must begin with a rigorous, independent assessment of potential inequality risks. Planning must move beyond token consultations to structured, empowered participation from community-based organizations (CBOs), women’s collectives, and representatives of marginalized groups. Traditional institutions must be engaged as partners in equity, not just as signatories.
2. Transparent, Decentralized Benefit Governance: Create publicly accessible online portals detailing all project contracts, budgets, and beneficiary lists down to the village level. Implement Community Scorecards and Social Audits led by civil society, allowing citizens to track spending and outcomes. Procurement policies should mandate a large quota for local, small-scale contractors and suppliers. Workers must also be consulted and not just the contract winners. Public debt must be monitored and investments that expand the revenue base must be prioritised.
3. Building Local Capability, Not Just Infrastructure: Every EAP must have an integral, well-funded Local Capacity Building and Skilling Component. This means partnering with local ITIs, polytechnics, and NGOs to create training pipelines aligned with project needs -from carpentry and masonry to GIS surveying and environmental monitoring – ensuring skilled jobs go to locals.
Externally Aided Projects are neither inherently good nor bad. They are powerful tools whose impact is determined by the hands that wield them and the systems that guide them. The current trajectory risks using precious resources to etch existing inequalities deeper into the state’s socio-economic landscape. However, by confronting the demons of elite capture, demanding employment justice, and accounting for the true cost of debt, Meghalaya can harness EAPs for their intended purpose: to lift all boats, not just the yachts!
Sidenote: One of the consequences of EAP funding is that they have allowed for skewed salaries and financial benefits to accrue to a few people whose main business it is to “sound smart”. Even within the same agency now you might find people who make Rs 3 lakhs per month while the actual drudge work might be done by people getting paid Rs 30,000 per month. This is not ideal and creates resentment amongst the employees. Silent mass resignations follow soon after and highly capable people leave on account of this. None of this imbalance in payment would have been possible without the advent of EAP money.
