US Senator questions rationale for US aid to India

19 Jul 2011

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Washington: In a way reflecting the recent controversy in the United Kingdom over extending official aid to India when the Asian country's economy was doing so much better than their own, an American senator has raked up a similar controversy in the United States of America questioning the rationale of extending aid to a country that was easily able to invest in American government bonds. 

India currently has bought $39.8 billion of American debt bonds.

"Borrowing money from countries who receive our aid is dangerous for both the donor and recipient. If countries can afford to buy US debt, they can afford to fund their own assistance programmes," Tom Coburn said in his report 'Back in Black: A deficit Reduction Plan', which unveils a plan to break the debt ceiling stalemate.

In his 621-page report, Coburn referred to a recent Congressional Research Service (CRS) which revealed that the federal government gave $1.4 billion in foreign aid to 16 countries, including India and China, to whom the US owes $10 billion each.

According to the US Treasury Department, the largest holder of US debt is China, owning $1.1 trillion Treasury bonds. The nominally communist country has received $27.2 million in foreign aid in FY2010.

"Brazil held $193.5 billion in Treasury securities and received $25 million in foreign aid, Russia had $127.8 billion and received $71.5 million, and India held $39.8 billion and received $126.6 million from the US," the Senator said.

In a letter to Sen Coburn on 13 May, the CRS said India in 2010 received $126.6 million - this includes $2.5 million for counter-terrorism, $700,000 for combating weapons of mass destruction, $30 million for fighting HIV/AIDS, $22 million for family planning, $19 million for maternal and child health and $13.7 million for fighting tuberculosis.

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