ABSTRACT
For long, the aid debate has been enveloped in a cloud of cynicism. In the popular view, aid is no more than charity bestowed on the poorer nations of the world by the relatively affluent, guided by considerations of morality that the limited income and wealth of the world ought to be shared more equitably. Foreign aid has been assailed by differing spectrums of political opinion in India as well. Foreign aid, strictly defined, relates to a transfer of real resources from the donor countries to the recipients. Aid may be tied by source, by projects, or both. Source-tying compels the aid recipients to purchase goods and services from a specified source, usually the donor country, even though it may be a relatively expensive source. The role of aid should be construed as a supplement to the country's domestic savings effort and foreign exchange earnings.
