March 4, 2004 ☼ Economy

Chidanand Rajghatta is indignant that shining India got only $85m of US aid, but ‘inept’ Pakistan got $700m. But why should a ‘shining’ India would even need to compare how much aid it gets as compared to Pakistan! Foreign investment may be a more appropriate and desirable yardstick of the ‘shining’.

In fact I’m thinking that foreign aid generally flows to hopeless economies, ie it flows to those countries which investors avoid. As investors start getting in, the need for aid should decline, although it may continue for political reasons.

India probably needs foreign aid, but does not need the charity of the United States to prop up its economy. Indeed in addition to at least $100m to Afghanistan, India in recent days has extended a $500m development facility to West African nations.

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