[lbo-talk] US decides to end all aid to 'rising' India

Sujeet Bhatt sujeet.bhatt at gmail.com
Mon Feb 12 06:15:13 PST 2007


http://timesofindia.indiatimes.com/World/The_United_States/US_decides_to_end_all_aid_to_rising_India/articleshow/1581019.cms

The Times of India

US decides to end all aid to 'rising' India

CHIDANAND RAJGHATTA [ 8 Feb, 2007 2303hrs IST TIMES NEWS NETWORK ]

WASHINGTON: The United States has decided to end all bilateral financial aid to 'rising' India, following the country's economic surge in recent years.

The Bush administration last week whittled down its already paltry $ 124.9 million aid in 2006 to a measly $ 81 million for the coming fiscal, a drop of 35 per cent, citing New Delhi's growing economic performance and changing profile.

Even that downsized funding "will be used for the eventual orderly close out of US Agency of International Development's programme in India," a state department official told ToI in a matter-of-factly disclosure that brings to an end one of the largest aid efforts undertaken by Washington, rivalling the famed Marshall Plan, while not drawing as much attention.

By US estimates, India has received the equivalent of $14 billion in American economic assistance ($57 billion in today's dollars) from the time Washington opened the aid flow in 1951. The US Marshall Plan to rebuild Europe after World War II involved $ 13 billion over a four year (1947-1951) period.

US bilateral financial assistance to India has been thinning steadily after peaking in 1960 when Washington gave $ 1.6. billion, 92 per cent of it as food aid, to a country that was widely considered a basket case.

Washington poured in billions more throughout the 1960s to help kick-start India's Green Revolution and bump up food grain production from 70 million tons those days to more than 200 million tons today.

US aid helped establish eight agricultural universities across India, and more famously, two IITs -- in Kanpur and Kharagpur - and 14 regional engineering colleges.

More recent US assistance has been directed towards such efforts as establishing a National Depository and paperless trading in stock exchanges and helping Ahmedabad become the first city in India to receive an investment grade rating and float a municipal bond.

But on Monday, a top US official said India's days of major league aid are over, although there will still be a trickle, mainly to help in health issues such as Aids. Even here, much more assistance is coming through private channels such as the Gates Foundation.

With an economy that is growing at over 8 per cent, India had become a donor country, US AID Administrator Randall Tobias said, citing New Delhi's $ 50 million aid to Afghanistan.

"India is in a position where they are taking on more of the burden for the problems facing India," Tobias observed at a briefing for the foreign media.

Washington's decision for fiscal '08 saves New Delhi the embarrassment of asking US to end its so-called financial assistance, much of which simply went towards administering the USAID operations in India.

For the past few years, India has been stressing that what it needs from US is fair practice in trade, not aid. Some of Washington's predatory actions cost India a lot more than what US gives in aid.

For instance, the U.S practice of extracting social security tax from guest workers from India (H1-B visa holders) nets Washington more than $ 500 million annually. This money is not repatriated to India even when the workers return, absent a 'tantalisation' agreement that Washington is reluctant to sign.

Other disagreements between the two sides, in areas such as food import/export, cost both sides billions, dwarfing any aid figures. Private equity inflows from US to India are now many times more than US aid.

In recent years, India has also been a quiet votary of US economic assistance (but not military aid) to Pakistan. Washington now considers Pakistan -- along with Afghanistan - a basket case. It has hiked aid to both countries, mixing butter with guns.

At $ 785 million for fiscal '08, Pakistan is now among Washington's top aid recipients, having already sucked up more than $ 3 billion over the past five years as a 'frontline ally in the war on terror.'

But Israel remains the most favoured US aid recipient.

In per capita terms, US aid to India is almost negligible ($ 84 million for a population of $ 1.1 billion) compared to what Washington lavishes on Israel ($ 2.4 billion on a population of 7 million)

-- My humanity is in feeling we are all voices of the same poverty. - Jorge Louis Borges



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