Recent reports that India is proposing to set up its own international agency to disburse foreign aid have added a new dimension to the debate around the issue of international development assistance. Over the past 60 years, India has been the largest aid recipient in the world, receiving over USD 50 billion; today, it continues to be home to the largest number of poor people of any country. As such, it would seem that the new initiative flies in the face of received economic wisdom, given that India will remain a net aid recipient for the foreseeable future. However, such a proposal is actually in line with the efforts of other large economies that nevertheless have many poor people – particularly Brazil, Russia and China – countries that are now clearly hoping to leverage their growing economic clout on the international scene.
International aid has long been a controversial issue in developing countries, with many arguing that it does more harm than good. The left in India has traditionally opposed foreign aid, that received by both the government and NGOs. In 1984, an article by Prakash Karat – then a rising star in the Communist Party of India (Marxist) and now the party's general secretary – went so far as to allege that organisations receiving foreign funds were conscious agents of the US Central Intelligence Agency. While Karat and his party have since moved on from such conspiracy theories, there remains considerable disquiet in many circles about foreign assistance and its efficacy in alleviating poverty or achieving development goals.
Over the last two decades, international NGOs have been gradually reducing the amount of funds disbursed in India, as its economic indicators have improved. With the much-ballyhooed 'India Shining' propaganda already impacting on the overseas assistance programmes for India's poor, New Delhi's promotion of its own aid agency will almost certainly portend a further dip in Western and multilateral agency assistance for India. Meanwhile, there is a growing chorus of voices in the West that governmental foreign-aid budgets be reduced. With the growing gloom on the economic front both in the US and in the Eurozone, it is a given that the amount of foreign aid being disbursed by developed countries will further plummet. It is in this situation that India, along with other large developing countries, is stepping up its own foreign-aid disbursements.
Six decades on