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India: From Recipient to Donor

October 21, 2010

India has grown from aid-recipient to aid-donor

When the U.K announced that it would be cutting back development aid, India opted to pre-empt such cuts by announcing the end of its recipient status. Prompted by the “negative publicity of Indian poverty” from the U.K Department of International Development (DFID), India’s Finance Ministry was instructed to inform London that India would not be accepting further aid as of next April.

In the midst of it all, Laura Freschi at Aid Watch, blogged on the paradox of Indian aid, and the country’s precarious position between being labeled a rich versus poor nation. As the world’s 11th largest economy, Freschi notes that ironically, India isn’t just home to a space and nuclear weapons program, but also “one-third of the world’s poor, who live on less than $2 a day”.

Both Freschi and the CGD’s blog Global Development: Views from the Center write that India has quietly positioned itself from aid recipient to aid donor. Once one of the world’s largest recipients of aid, India has moved toward receiving only bilateral aid from a limited number of donor countries, and more recently, to blacklisting certain donor countries. Despite the lack of data on exactly how much India gives toward development assistance,  CGD offers some significant numbers which include: a $547 million budget for aid-related activities in 2008, aid programs which increasingly include countries outside its surrounding neighborhood, and commitments of over $1 billion since 2001 to Afghanistan, making India the 5th largest donor to that country.

Pakistan arms villagers to fight Taliban

Pakistan Military arms villagers to fight Taliban

India is obviously using its aid budget to do what established aid donors do: create associations and authority for itself around the world.  This comes at a time when the U.S is in talks with Pakistan for a $2 billion aid package to boost the Pakistani military. Such proposed aid has bred fear in India that an improved military will target India and not the Afghanistan insurgents it was designed for. At one time, India would have had little recourse to such actions, but with a growing economy and aid budget of its own, India can also tailor aid to build a world better suited to state interests.

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