India’s foreign aid decline

• India’s attitude towards official and private foreign aid has been ambivalent, with some countries like the U.S. targeting USAID.

• India’s high growth rate, claim to become the fifth largest economy by 2047, and prevailing political and religious ideologies have led to a decline in official aid.

• Official developmental aid has shown a constant decline since 1970, with the peak period from 1955 to 1965.

• India’s current focus is on Foreign Direct Investment (FDI) and global cooperation in trade, climate change, and technological developments.

• Declining official aid is less a concern than declining private aid to non-government agencies, but it will have downsides such as unemployment in aid-giving organizations, wastage of stockpiled food and medicines, and reduced global collaboration in health and environment.

• Private non-governmental organizations (NGOs) will be more affected by a decline in aid, both official and private.

• The decline is attributed to the ambivalent attitude of the Indian government towards the receipt of foreign aid by Indian NGOs.

• The Foreign Contributions Regulation Act (FCRA) has been passed, allowing NGOs to accept aid, but it has been restricted since 1976.

• The FCRA has been amended in 2010, 2011, 2020, 2023, and 2024, making the rules more stringent, and some NGOs have lost their FCRA registrations.

• If foreign aid ceases entirely, it will lead to unemployment in the voluntary sector, unfinished projects, and a slowing down of social sector development.