It is generally believed that countries recipient of foreign aid notably benefit from it; however, what most people forget or are not aware of is that, in many ways, donors of foreign aid also benefit. In fact, it is not merely compassion but also interests such as the economy and national security that drive countries like the U.S. to provide foreign aid. Moreover, as with many countries, the U.S. benefits from foreign aid to India, which has almost become an economic superpower.

Foreign Aid Benefits Donor Countries

Bill Gates, in a response to the recent U.S. foreign aid budget cuts, wrote how foreign aid not only benefits the recipient countries but also the donor countries. He explained how having more middle-income countries in the world is beneficial for everyone. For instance, when a nation moves up the economic ladder, the donor countries like the U.S. ultimately profit because the newly self-sufficient nations gain increased spending power and become potential consumers, thereby increasing jobs and opportunities in the U.S.

The U.S. and India

Over the last few decades, India has, by far, received one of the largest portions of foreign aid from the U.S.; not surprisingly, India will become the “world’s fifth-largest consumer market by 2025.” Global corporations view India as one of the most powerful markets with a promising future growth, and India’s “favourable population composition and increasing disposable incomes” is expected to only make the nation’s consumer market grow even more. For instance, the middle-income bracket in India is also expected to increase by “more than ten times from its current size of 50 million to 583 million people.” From this type of interaction, the U.S. clearly benefits from foreign aid to India.

For example, one study has found that there is a “shift toward higher-quality, higher price subsegments within categories, as Indian consumers trade up with greater frequency and enthusiasm.” A survey demonstrates this as “30 percent of consumers in India are willing to spend more on products that they perceive are ‘better,’” which is a significantly higher percentage than is found in more developed markets like the U.S. and the U.K.

Shifting family structures is another trend in India that increases its consumer market. The traditional joint family structure is fading away as nuclear families replace them. This trend is significant because nuclear families spend “20 percent to 30 percent more per capita than joint families;” additionally, the fact that consumers are increasingly using the internet to make purchasing decisions is a trend that also benefits the U.S..

How the U.S. Benefits from Providing Foreign Aid to India

Providing quality healthcare to its increasing population is one of the greatest challenges for India, and one of the ways the U.S. benefits from foreign aid to India is to aid in the fight against epidemics i.e. AIDS. 

The U.S. benefits from foreign aid to India in that through the President’s Emergency Plan for AIDS Relief (PEPFAR), USAID in partnership with the Indian government’s national HIV program has achieved great success in this area. For instance, through prevention education and care to high-risk communities, USAID has managed to reduce new HIV infections by “66 percent since 2000, and nearly one million people living with AIDS are currently on antiretroviral therapy.”

U.S. Benefits Don’t Stop at the Economy and Healthcare

Economy and healthcare are just two of the many sectors in which the U.S. benefits from foreign aid to India. For instance, foreign aid to India also helps the country to offer better education, which helps fight illiteracy and extreme poverty in the country. As a country becomes more educated and self-sufficient, it is empowered to fight global issues such as political instability, poverty, and terrorism, which ultimately threaten everyone around the world. Hence, with continued U.S. support to India, the U.S. will also benefit in a myriad of ways.

– Mehruba Chowdhury

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