Till 1992, India was one of the largest recipients of foreign aid in the world. But down the line the economic structure of India has changed remarkably and it has emerged out in the global forum as a middle income country. Because of this change and various other contributing factors, the inflow of foreign aid to India is also receiving certain alterations; one of the biggest among these is the Britain’s decision of cutting its aid to India by 2015. But the question is whether this decision affects the socio economic growth of India in any way?Well, this is a strong debate topic, which will definitely need a vast discussion supported with strong facts and figures to justify either of the aspects that yes, India needs Foreign aid or Not, India doesn't need foreign aid.
If to believe India’s former finance minister Pranab Mukherjee then India is no more in need of foreign aid, as he quotes “‘we do not require the aid. It is a peanut in our total development spending.” To a great extent that is the fact also, because at today’s date the foreign aid that India is receiving is less than 0.3% of its GDP. And it's not that the donor countries are cutting down the aid, but India of its own has started declining foreign grants because the nation is getting competent in taking care of its own requirement. A decade back due to the increased flow of foreign funds, India announced that it would only accept bilateral fund from Germany, Japan, Russia, UK and United States including EU.But after 2004 tsunami and the 2005 earthquake in Kashmir, the country declined receiving international grants. And now, the country has accepted the Britain’s announcement of cutting its aid to India by 2015.
If to believe India’s former finance minister Pranab Mukherjee then India is no more in need of foreign aid, as he quotes “‘we do not require the aid. It is a peanut in our total development spending.” To a great extent that is the fact also, because at today’s date the foreign aid that India is receiving is less than 0.3% of its GDP. And it's not that the donor countries are cutting down the aid, but India of its own has started declining foreign grants because the nation is getting competent in taking care of its own requirement. A decade back due to the increased flow of foreign funds, India announced that it would only accept bilateral fund from Germany, Japan, Russia, UK and United States including EU.But after 2004 tsunami and the 2005 earthquake in Kashmir, the country declined receiving international grants. And now, the country has accepted the Britain’s announcement of cutting its aid to India by 2015.
Apart from taking care of its in-house social and economic development projects, India is also marching ahead as one of the donor Nation extending its grants to various beneficiary nations. Although, there is no amalgamated figure on the gross foreign aid over the past decade, but India’s foreign assistance has increased with a compound growth rate. Its main aid beneficiaries are Afghanistan, Bhutan, Nepal, Srilanka and Bangladesh. In 2011, India became the fifth largest donor to Afganistan, while its aid programs in Africa are increasing at a fast rate. In Africa, sizable aid activities were received by Angola, Benin, Burkina Faso, Cameroon, Gambia,Ghana, Ivory Cost, Lesotho, Mauritius, Nigeria, Sierra Leone, Tanzania, Uganda and Zambia.
Moving ahead as a donor nation is currently important for India, if it’s to justify itself as one of the possible emerging super powers in the world. In all aspect the nation needs to get competent in taking up the responsibilities associated with tackling its domestic poverty, education problem, and others. The elite class of India holds huge potential in contributing huge donations for the domestic social development projects,apart from contributing money for international grant for the poorer section of its beneficiary countries. But, this aid assistance from India is seen lacking a well-defined objectives and approach as the aid flows through different channels and agencies.
Although, it's good that India is aiming to emerge as a global development aid agency by setting up its own development agency, ‘The Development Partnership Administration’, but is India in a position to say no to its foreign donor countries and at the same time act as a donor country itself. India has this big responsibility to improve the lives of 456 million poor surviving in the country, who are living below the poverty line. In light of this, why the country is aiming to become a donor nation, while the domestic problems are still all prevalent. Is that India’s foreign aid assistance is surrounded by a clear set of commercial and political interests? Well, again, it’s a point of debate,stay tuned for the coming blogs.
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