New Internationalist

Should India still receive foreign aid?

May 2012

NGO director Jamal Kidwai and activist and writer Praful Bidwai go head-to-head.

Every month we invite two experts to debate, and then invite you to join the conversation online.


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.


Mukesh Gupta / Reuters
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.

  1. 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.

Front cover of New Internationalist magazine, issue 452 This feature was published in the May 2012 issue of New Internationalist. To read more, buy this issue or subscribe.

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  1. #1 Boris Rheinhart 05 Apr 12

    Of course India should not receive aid. It is a rapidly developing country with a booming economy. It has a vast problem with poverty but that is partly because the government and the rich in India do nothing to address it; the country has the means but not the desire to sort its own problems out and its a bit ex-colonial paternalistic to think that we should help sort them out instead. India is a bit like the UK in the 19th century - rich and successful but with its lower classes in abject poverty. I don't recall any countries giving aid to Victorian Britain and nor would it have been welcome, an insult to what was then the most powerful and richest country in the world despite having a vast underclass in dire straits

  2. #2 Pravin Mahajan 18 Apr 12

    it will be interesting to know from Jamalbhai what is the source of his information that the foreign funding is mainly for neoliberal policies. The so called foreign origin of the aid is received the most by religious bodies may it be majority or minority religions in India. This is followed by support to fight diseases and health concerns ( HIV, reproductive health etc. but not necessarily Primary Health care).
    It is relatively easy to raise funds from International NGOs to oppose globalization than to support neoliberal policies. Jamalbhai needs to substantiate his perception with some data.
    It is not clear why NGOs sh not do what the govt. is suppose to do? Isn't govt. suppose to work towards secular policies and ensure peace and tranquility, still organization like Aman have to work. Finally when the likeminded people support each other why comment on their ’origin’, in how many spheres do we recommend it to search origins ( especially to suspect intention.

  3. #3 Priya 26 Apr 12

    While both gentleman are postulating valid but contrasting points, ironically they are both proposing different means to the same end: independence and autonomy. Mr. J is proposing a self-inflicted autonomy by outright refusing foreign aid while Mr. P feels that it is far too premature to start refusing foreign aid. Mr. J is relying on a reform of the upper middle class, through a re-education of the youth of this demographic perhaps, to put the focus on having it unlearn is self-serving tendencies and take upon itself greater social accountability. On the other hand Mr. P. is far more deficient in his faith and hope for revolution that originates from the upper echelons of Indian society but nevertheless he is unusually optimistic about the ability of NGOs to unravel themselves from the net of hidden neo-libralist agendas behind the funders' donations whereas Mr. J is doubtful that this is possible, believing very much so in the persistence of the existence of these motives, which, let's face it, resonate with an imperialist/capitalist conspiracy theory inspite of Mr. J initially denying the former as a basis for his argument. A top-down reform and autonomy are certainly not mutually exclusive in order to reach self-awareness and realise that in some if not many ways the donors need the donatees just as much and use that information to strategically put the funds to use so as to achieve freedom from external/foreign reliance rather than have the final recipients be used as channels to bring hidden agendas to fruition. Both parties have proposed solutions, the practicality of which are as of yet intangible but not necessarily impossible.

  4. #4 liz thornton 28 Apr 12

    I love India and I shudder to think how much money those billionaires have squandered on cars aeroplanes,palaces while closing their eyes to what is actually happening around them.

    Ayurveda is such humble way of living and yet it has been trodden on by BIG PHARMA ,COCA COLA, BIG everything is sucking out the life blood of this wonderful country.
    Imagine Australia selling Uranium to INDIA so that it can use its own Uranium in the latest weapon against Pakistan. Clever stuff Now Pakistan retaliates YUK

    I am not sure that aid is helpful erm

  5. #5 Terry Brown 05 May 12

    As a member of an international community based organisation, (Society of St Vincent de Paul), I visited India in 2010 and came back to give talks and generate support for our members there. Showing a picture of a very overloaded bus in rural Orissa with passengers on the roof and hanging from the sides I explained that during that day we had only seen one other private car and a handful of autos with most travelling either on foot or bicycle. From the name on the back of the bus came the inevitable question ’Tata - don't they own Jaguar and Land Rover’. A country of great contrasts but with a per capita GDP of $1389 compared with our $38592 (IMF 2011) one which really does need our aid.

  6. #6 AJAY 09 Aug 12

    I am Ajay from mauritius. Am an international trainer for Altenative to Neo- Liberalism in Southern Africa(ANSA).The question raised about foreign funding is relevant to the ALL countries in the South.The people of the South have been discriminated for long and is in need of support and this is legitimate. But then we must be careful about the donors and the real motivations.

    The donors may be the same who since long led us in this situation by setting their own conditions/agenda.Help from the north and even China in Africa are clear example of the possible trap.

    For ANSA all assistance,investment and programme should be geared towards people welfare .We are for a people led development.

    Many countries in the south are working towards regional integration through the creation of regional forum.This is a very good move.ANSA is for a de-linking and re-linking programme where the rights and dignity of the country and its people are safeguarded

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This article was originally published in issue 452

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