India Emerges as an Aid Donor

In the 1980's, India was the largest recipient of foreign aid in the world. But in September, the Indian Express announced that after April 2011, India will no longer be accepting aid from its largest donor, the United Kingdom. Currently, it only accepts bilateral development assistance from Germany, Russia, Japan, the UK, the EU, the U.S. India presents an interesting dichotomy in development, its the eleventh largest economy in the world, growing 8-9% annually. However, one-third of the world's poor lives in India, more than in all of sub-Saharan Africa. Quietly India straddles the fuzzy line between developed and developing.

India has also become a provider of development assistance. No clear numbers are available, but the Indian budget allocated $547 million to development related activities in 2008. In the past two years, India's aid to Africa has grown 22%. Many believe that this is an indication that India has placed new significance on aid as a tool of foreign policy.

The story of India is certainly multifaceted. But an important part of progress in India has been international development investment implemented by innovative national leaders. Twenty years ago, India was seen as threatening international geopolitical security. Today it is an important partner and leader in its region. It is a story of why aid works and should be used as an encouraging model to impoverished states throughout the world.

-Erica Stetz

SOURCE: Center for Global Development