ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

A+| A| A-

Foreign Aid to India

This article shows that foreign aid to India merely substitutes for spending that the government would have undertaken anyway; the funds freed by earmarked aid are spent elsewhere. Moreover, in passing external assistance earmarked for the states, the central government makes a reduction in transfers it would have otherwise made to the states. From the country's perspective these fungibility results could be good; domestic spending priorities - inter-sectoral and inter-regional - are unaffected by foreign aid. For the donors, however, the results indicate that success of their projects, as measured by the conventional benefit-cost analysis, does not tell the whole story; the marginal use of their money and its overall development impact could be different from that intended.

To read the full text Login

Get instant access

New 3 Month Subscription
to Digital Archives at

₹826for India

$50for overseas users


(-) Hide

EPW looks forward to your comments. Please note that comments are moderated as per our comments policy. They may take some time to appear. A comment, if suitable, may be selected for publication in the Letters pages of EPW.

Back to Top