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Anatomy of 'Aid'

Ashutosh Varshney

By Brojendra Nath Banerjee
Agam Prakashan, Delhi, 1977, pp. 378, Rs.80.00

VOLUME III NUMBER 2 September/October 1978

Foreign aid to India is a subject which has attracted good deal of scholar­ly attention. Its topicality, too, has seen many revivals, the latest occasion being Carter's visit to India early this year. Surprisingly, the works available so far have failed to present an in-depth analysis on the subject, verging either more on the biased side or betraying a much too configurative approach. B.N. Banerjee's attempt is not an exception. Though purporting to deal with foreign aid to India in general, he con­fines himself to US aid with only sporadic references to aid from other quarters. The book has been divided into six chapters of which four merit critical attention. The other two are not in­tended to be analytical chapters. While chapter III deals with ‘The Cooley Loan Programmes in India’, chapter IV contains a more or less descriptive account of the ‘termination of US aid to India'. The other four are examined here in detail. The first chapter deals with ‘What is foreign aid?’ (though the writer incorpo­rates a number of allied, and at places even unrelated, topics). Aid is defined as ‘a concessionary transfer of public resources from the developed countries to the developing countries for the latter's economic development’. The developing countries, including India, needed such aid, for their economic growth was hampered by inadequate capital inflow or shortage of foreign ex­change. From the donor's side the 'correlation between poverty and insta­bility' ostensibly formed the premise motivating an aid programme. Conver­sely, however, the corresponding correla­tion assumed between economic develop­ment and foreign aid was ‘not very tangi­ble’ for development itself, despite aid, depended on certain variables—the cult­ural characteristics of the recipient nation, political considerations in allocation of aid, and the donor's strings. It is the last factor which draws a line between what is professed to be a philanthropic exercise and what actually is a 'solid benefit'.  Apart from political gains, stimulation of exports, creation of emp­loyment opportunities, disposal of surplus, easy procurement of necessary raw materials and the creation of a favourable climate for private investment were benefits that flowed from aid. As a result, the main beneficiaries were the donors themselves. For the recipients it had little to offer except creating ‘enclaves of privileged elites addicted to First World luxuries and having standards’. Throughout the chapter, we find two incoherent stands jumbled ...

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