We use cookies for site personalization and analytics. You can opt out of third party cookies. More info in our privacy policy.   Got it

Should India still receive foreign aid?

Development (Aid)


At the outset, I would like to state that I work for an NGO in India that receives foreign funding.1

My opposition to foreign funds for India is neither based on rightwing nationalist claims that such aid will undermine internal security, nor on a typical leftwing argument that foreign funding is an imperialist/capitalist conspiracy.

I begin by offering two political – not moral – reasons why I believe that Indian civil society organizations/NGOs should not accept foreign funding.

Firstly, Indian NGOs should focus on generating resources from the people whom they claim to represent. This will make them more politically rooted as well as more accountable to the people they claim to represent. Accountability to foreign donors, on the other hand, is limited to relatively formal documentation such as audited financial and programme reports.

Secondly, many of the programmes that Indian NGOs conduct with foreign aid should be implemented by the government. These programmes typically belong to the sectors of livelihood, education, health and disaster management. They impact the everyday life of people and therefore have deep political implications. But both the Foreign Currency Regulation Act (FCRA) of the Government of India and foreign donors only allow aid for such programmes if NGOs agree that they will use these funds for non-political purposes. Such conditions do not allow NGOs to raise weighty issues, such as social and political discrimination against certain marginalized groups, as well as the adverse impact of neo-liberalism and globalization.


I think you focus excessively on NGOs and international funding. This isn’t unimportant. But the brief asks, ‘Should India still receive foreign aid?’ and thus primarily focuses on official development assistance (ODA). Such North-South transfers were recommended by the United Nations in the 1970s, with a target of one per cent of the developed countries’ GDP, later pruned to 0.7 per cent. Only a handful of Northern countries meet the target, even today.

ODA’s rationale is based, among other things, on acknowledging and redressing the horrible injustice of colonial exploitation, which has continued in different forms, such as in the adverse trade terms for primary commodities (the Global South’s main exports) vis-à-vis manufactured goods, in trade imbalances, in various restrictive practices imposed on the South, and in a skewing of its economic policies to favour free flows of global capital.

Disparities and structural imbalances between the North and the bulk of the South have worsened over the past three decades despite recent power shifts between states and the growing clout of the emerging economies. Much of the South is asked to compete as the North’s equals, when it’s manifestly unequally placed to do so. ODA should and can redress some of these disparities if it’s untied, well-designed and targeted.

Much of the debate over aid arises from confusion over its nature. Aid is about poor people, not poor countries. Many countries with abysmal human development indices neglect their dispossessed, and refuse aid. But so long as it fails to look after its own poor, the Indian government has no moral right to do so. Poor Indians deserve aid.


Several ‘poor’ countries in the South, like India, which have a large number of people living below the poverty line, have the following characteristics: they have a significant number of very rich people, relatively high GDP but also huge disparities in income between the rich and the poor. Those of us who are part of movements fighting for a more egalitarian and democratic India must focus on challenging the primarily neoliberal paradigm being followed by governments. By seeking foreign aid, these struggles are distorted. This happens for several reasons.

First, almost all the foreign aid these days comes with conditions that reinforce and strengthen neoliberal policies and which also assist large transnational corporations which have successfully subverted public spending on social sectors.

Secondly, these are times when the ‘War on Terror’ is one of the biggest priorities of Western donors, who are the biggest source of foreign aid. The Indian state has, on the one hand, strategically allied with these donors to suppress people’s movements against displacement caused by mining, nuclear plants and other large infrastructure projects; and on the other, collaborated with highly repressive and communal states like Israel. This goes completely against the grain of the progressive values of non-alignment initiated by India.

And finally, a large amount of foreign aid received by India goes into social development areas like HIV/AIDS, education, tribal and Dalit empowerment and water and sanitation. The donors dictate strategies for implementing these projects which are completely out of tune with social and political realities and most of the time do more harm than good.


Sikh women receive food from a roadside charitable community kitchen, on the outskirts of Jammu, India.

Mukesh Gupta / Reuters

I have no quarrel with your view that our topmost domestic priorities are to defend people’s livelihoods and their right to humane living standards, to fight predatory ‘development’ projects, sharply reduce inequalities, and mobilize opinion against neoliberal policies. Where I disagree with you is in assuming that we are condemned to follow neoliberal policies simply because India accepts aid, and that Indian NGOs and people’s movements – which you continue to overemphasize – will remain bound forever by the conditions that donors tend to impose.

Within my perspective, demanding appropriate forms of aid which don’t tie us down to neoliberalism and allow greater public spending on social services is itself part of the larger agenda we are fighting for. Take two examples. India’s primary education programme has for decades been funded partly by Japanese and British aid. We could demand its continuation with greater accountability and an independent audit. Secondly, I think modest foreign assistance has, on balance and despite some distortions, helped our fight against communalism, environmental destruction and climate change, and for egalitarian policies.

Most Indians want and deserve substantially stepped-up entitlements to food security, drinking water, healthcare, sanitation and education at affordable prices. These are all areas where well-targeted aid can help. Great struggles are underway on these issues, and on land rights, universal food distribution and employment guarantee schemes, which have the potential to reshape India in an inclusive, participatory, egalitarian direction. It’s far more important to oppose foreign corporate investment in destructive projects, over which we can have no control, than to oppose aid, whose direction can at least be negotiated.


I agree with you that India is not condemned to follow neoliberal policies because it receives foreign aid. What I am arguing is that any foreign aid, irrespective of where it comes from, has a tendency to dictate what is good or bad development for Indian society.

In the era of the Cold War, the Soviet Union donated generously to India. That aid, on the one hand, allowed India to stay away from being economically dependent on capitalist countries and, on the other, encouraged public institutions to adopt the liberal values of secularism and equality. In hindsight, even that aid did more harm than good. For example, it promoted political discrimination against individuals and ideas that were perceived as going against the grain of the Soviet brand of Left ideologies, as well as other, more liberal, world views. But, more importantly, it created rifts and factions among progressive Left movements. The present crisis in the Left movement and mainstream Left political parties has a lot to do with the collapse of the Soviet Union and its patronage of the former.

India now has a large affluent middle class. It provides massive donations for religious charitable purposes. We need to convince and encourage the middle classes to give some of this aid for liberal-progressive causes. This will benefit India in several ways. There will be a far greater participation of the people in development work, and such participation will not only create ownership but also make people demand accountability for funds spent on development projects.


I don’t share your faith in converting our affluent middle class – let alone the 50-odd billionaires who control one-seventh of India’s wealth – to a liberal or humane viewpoint. Minor philanthropic initiatives notwithstanding, they are among the most cynical rightwing, predatory people in the world, who have psychologically seceded from the country’s poor, and regard them as a drag on their own growth. Our kleptocratic, casteist élite has never shared anything with the underprivileged. It has always evaded accountability and doesn’t even pay taxes, although our income-tax rates are among the world’s lowest.

It would be fatally wrong to look towards the top 10-15 per cent of the Indian population as a source of support for progressive causes. They need to perpetuate the present maldistribution of wealth and political power – because it benefits them. Indeed, they have further skewed it over the last two decades, the highest GDP-growth period in recent history, which hasn’t seen a significant reduction in poverty, hunger, malnutrition or mass-scale social bondage and economic servitude.

In absolute numbers, aid may not deliver much to India’s social spending programmes. But its contribution must not be trivialized so long as the Indian state fails in public services provision. I would hate to see a world in which the rich feel they have no obligation to the dispossessed in whose continuing deprivation they, and the power structures they control, play a decisive role. The psychological impact of this will result in a terrifyingly misanthropic society. Aid, as part of a worldwide redistribution programme, must be integrated into the larger agenda of global democratization, which enjoys legitimacy.

Jamal Kidwai is Director of the AMAN Trust in India which works on issues related to violence and conflict. He was earlier associated with Oxfam’s Violence Mitigation and Amelioration Programme and is a regular commentator on Indian political and social issues.
Praful Bidwai is a political analyst, and an activist on issues of peace, global justice, human rights and environmental protection. He is one of South Asia’s most widely read columnists and the author of The Politics of Climate Change and the Global Crisis: Mortgaging Our Future.

  • The arguments expressed in this debate are Jamal’s and in no way reflect the opinion of his employer.
  • Slideshow photo: Arian Zwegers under a CC License.

    Subscribe   Ethical Shop