Financial flows from China and India: How concessional are they?

This article attempts to estimate the concessionality of Southern financial flows using the OECD and World Bank methods in case of two major Southern providers, namely China and India. As loans from China and India are broadly perceived as non-concessional, the study employs a yardstick measure to investigate whether this perception holds true in practice. Based on a set of criteria, a group of lines of credit (LOCs) extended to developing countries by each provider were selected for the assessment. The obtained results show that most of the selected LOCs are concessional under OECD method and not necessarily under the World Bank method. Resource-secured loans found to be not concessional. The exercise also demonstrates that estimating the concessionality of Southern financial flows is mired by definitional, methodological and data challenges.