Changing ties: USAID funding to India on the decline since pandemic

Experts feel that funding freeze may not move the needle much; but some projects will be in limbo

As American President Donald Trump’s decision to re-evaluate and realign his country’s foreign aid is sending the world into a tizzy, data from the United States (US) government’s foreign assistance website shows that funding by the US Agency for International Development (USAID) for India has been on the decline since the pandemic. 

Since 2022, USAID disbursements for various programmes, which include health, education, and sanitation, and other related social infrastructure projects, have been dropping — from $228.18 million in 2022 to $175.72 million in 2023 and falling further to $151.8 million in 2024 (partial figures). 

However, when seen in the broader scheme of things, the amounts are not very significant. For example, in 2024 the USAID gave around $80 million for health and population projects. Of that around $43 million was for “basic health” and $21 million for child health and family planning. HIV/AIDS programmes got $9.9 million. 

In contrast, the government here allocated Rs 3,079 crore ($353 million) in the FY24 Union Budget for the National AIDS and STD Control Programme. It gave Rs 2,892 crore ($332 million) in FY25. 

India’s budgetary allocation for health care has been growing year-on-year — from Rs 73,991 crore in 2021-22 to Rs 89,155 crore in 2023-24. 

Harshvrat Jaitli, chief executive officer, Voluntary Action Network India (VANI), a national network of Indian voluntary development organisations (VDOs), told Business Standard India needed more technical assistance from foreign agencies like the USAID. 

He added smaller non-government organisations (NGOs) were unlikely to be affected as a result of funds stopping because many of them did not work with large agencies like the USAID. 

“If the Bill and Melinda Gates Foundation cuts funds, there could be more impact,” he said. 

 

While the amount of aid in health care from the Bill and Melinda Gates Foundation to India could not be ascertained, some industry insiders pegged it at $120-130 million annually. 

Another NGO official was hopeful fund disbursement would resume after a few months. 

“There is likely to be project-wise reviews, and thereafter funding may resume. However, we don’t have clarity on this. At For three-six months, funding will be affected, thereby stalling work at the ground level,” said the official. 

Last month Trump issued an order to re-evaluate and realign foreign aid. The new administration also put a 90-day pause on foreign aid. Thereafter, the USAID issued a directive asking all organisations implementing projects with its support in India to suspend work until further notice. 

The freeze will also impact education projects here. 

Commenting on the impact of the USAID’s exit on education projects, a sector expert said while the move might affect private organisations such as NGOs working with them on basic literacy projects, USAID projects in education were a small slice of the pie compared to social-welfare expenditure by India. 

“It may not have much effect because many organisations are still supported by other bodies such as the Bill and Melinda Gates Foundation, which is working in areas such as elementary education in rural areas,” he added. 

The USAID works with India on several initiatives like preventable child and maternal deaths, creating an AIDS- and tuberculosis-free generation and achieving universal health coverage. Since 1998, the USAID has partnered the government to combat tuberculosis, investing more than $140 million to help diagnose and treat 15 million people infected with the disease.