Context and Background
- India historically had an ambivalent stance on foreign aid—welcoming at times, suspicious at others.
- Peak foreign aid flow to India occurred between 1955-1965, primarily from Western nations.
- After 1990, Official Development Assistance (ODA) became insignificant due to India’s high growth trajectory.
Relevance : GS 2(International Relations)
Decline in Official Foreign Aid
- Western countries now perceive India as a self-reliant, emerging global power.
- Factors for reduced aid:
- Rising political and religious nationalism.
- Donor countries facing domestic constraints: economic slowdown, immigration backlash, geopolitical conflicts.
- US President Trump’s attack on USAID marked a global shift; EU countries may follow suit.
Decline in Private Aid
- Private foreign aid to NGOs has also been declining.
- Data (2017–2022): NGOs received ₹88,882 million, but actual foreign aid is believed to have dropped further.
- Implications:
- Potential unemployment in donor and recipient sectors.
- Wastage of unused aid resources like medicines/food.
- Reduced international collaboration in health and environment.
Regulatory Crackdown via FCRA
- Foreign Contribution Regulation Act (FCRA) introduced in 1976; amended multiple times (2010, 2011, 2020, 2023, 2024).
- Justification: Alleged anti-national activities by NGOs (e.g., conversions, protests).
- Increasing stringency of regulations and cancellation of registrations have discouraged both donors and recipients.
- Targeting of donors like Soros Foundation signals further narrowing space for foreign philanthropy.
Role of Foreign Aid in NGO Functioning
- Foreign aid filled gaps where government funding was insufficient, rigid, or delayed.
- Enabled:
- Greater flexibility in project design and execution.
- Capacity building and exposure to global practices.
- A watchdog role against governmental or corporate overreach.
Consequences of Aid Withdrawal
- Risks include:
- Unemployment in the voluntary sector.
- Stalled or unfinished projects.
- Deterioration of service delivery in health, education, livelihoods.
- Weakening of dissent and accountability in democratic processes.
Self-Reliance vs. Strategic Myopia
- While Atmanirbhar Bharat (self-reliance) is an admirable goal, the blanket rejection of aid may be detrimental.
- Shunning foreign aid without viable alternatives risks hampering inclusive development and silencing civil society.
