ABSTRACT
India is a very big country, with 765 million people in 1985 inhabiting an area of over three million square kilometres-233 persons per square kilometre, compared with 52 for all developing countries and only 19 for sub-Saharan Africa (World Bank, 1987, 202). The sheer size of India has conditioned the relationship between aid resources and the Indian economy as a whole. In absolute terms, India has always been one of the three largest recipients of net economic aid.1 From the major western donors in OECD-who in 1985 disbursed US$29.4bn of net economic aid to developing countries (bilaterally and via multilateral agencies), of which US$25.6bn could be clearly allocated to particular countries-India received US$1.5bn in 1985, as against US$1.8bn for Egypt (population fifty million) and US$2.0 billion for Israel (population four million). Net aid from other donors in 1985 provided a further US$7.6bn for developing countries, but almost nothing for India, since a net inflow of about US$100m from Comecon was offset by a US$91m net outflow to OPEC (i.e. capital repayments of past aid loans outweighed new aid receipts) (World Bank, 1987, 242-5; OECD, 1986, 77-82, 258, 284). These same figures show that aid donors have never been willing to provide the massive absolute sums of money required to render India’s aid, per person or as a proportion of GNP, comparable with that of other low income countries. In 1985 aid constituted 0.7 per cent of India’s GNP as compared with 7.8 per cent for low-income countries other than India and China; per capita aid was US$1.9 for India compared with US$16.2 for other low-income countries excluding China (World Bank, 1987, 244). This ‘large-country effect’ results partly from the geo-political motivation behind aid-giving. Most donors wish to appear generous in as many different countries as possible; and can win friends in twenty medium-sized poor countries, each with 35-40 million people, by economizing on aid to one large country like India.
