In his pursuit to ‘Make America Great Again,’ one of the first things US President Donald Trump did on assuming office was to impose an immediate freeze on all US foreign assistance, including halting the disbursal of $40 billion for international projects funded by USAID.
In no time Trump’s move kicked off a political storm in India. The BJP attacked the Congress for allegedly using external influence in the 2024 Lok Sabha elections citing Trump’s remarks on USAID funds being used to “increase voter turnout in India” as he cancelled the grants for the agency. The Congress retaliated by accusing the BJP of using foreign funds to destabilise governments in the past and demanded a white paper on USAID funding.
While the political class has found new ammunition to attack each other, experts warn that it would be India's development sector that would be the biggest casualty of Trump’s suspension of USAID funds.
Records show that USAID funds several projects on maternal and child health, tuberculosis, family planning, HIV/AIDS, apart from initiatives on education and climate change among others in the country. Several of these projects are initiatives of the state and BJP-led union government even as its party leaders have now accused the aid agency of “foreign interference.”
‘Several projects to be impacted’
Subrat Mohanty, board member, Stop TB Partnership, said that halting USAID funding would severely impact ongoing health projects in India. “Take tuberculosis, for example. Diagnosis and treatment are one part of the solution, but reaching poor and remote communities, and making them aware of TB, and ensuring they get tested, plus following up on treatment–that is the role played by these projects (supported by USAID),” he told Newslaundry.
USAID is currently one of the top donors of his non-profits, which further distributes funds received from the agency to grass-root organizations for works related to eradication of tuberculosis. “Without them (USAID), that work stops.”
Hailing USAID’s support, particularly in the field of health and education, as “phenomenal,” Mohanty said that the funding cuts would affect India’s vulnerable and poor the most.
Echoing Mohanty’s concerns, Biraj Swain, a global development expert, said that revenue-deficit states could be hit the hardest.
Speaking to Newslaundry, she said: “Revenue-deficit states in India can’t bankroll humanitarian assistance to their people on their own. So, once USAID stops supporting projects in these states, there are chances that these projects would completely shut down.”
She also pointed out that funding received by the development sector in India had already shrunken massively with the cancellation of registrations of many prominent organizations under the Foreign Contribution (Regulation) Act. “These organisations are not only doing social welfare work but also employ a number of people. Such moves also impact the employment generated by this sector,” she said.
Noting that while USAID has never been a big donor in India, Swain added that the technical expertise the agency brings into the country is important. She further said that USAID did some “commendable” work in health and education. “Having said that, transparency regarding these funds – who provides them and where are they spent – is essential for public accountability,” she added.
According to Learning4Impact, a USAID-backed knowledge partnership, the agency currently operates 41 projects across 582 districts in India in collaboration with 26 national and international non-government organizations. Most of these projects focus on health-related issues.
USAID support to government projects
USAID’s involvement in India dates back to the early 1950’s, when the country was grappling with a severe food shortage. According to the archived webpages of its now-offline website, the agency has supported several projects across multiple sectors, including science and technology, food aid, health, and education in the country.
Its archived website also says that USAID has contributed to several resource-building projects in India, such as: establishing eight agricultural universities with world-class research capacity; assisting the establishment of the country's first Indian Institute of Technology (IIT) part from 14 regional engineering colleges; and supporting capital market development to improve administration and price transparency in stock exchanges.
Almost every state in India has at least one active USAID-supported project. Jharkhand leads with 24 projects, followed by Assam and Odisha with 22 projects each. Gujarat has 16 ongoing projects, while Uttar Pradesh has seven, according to Learning4Impact data.
The agency operates in the country under a bilateral arrangement between India and the United States and the Indian government is actively involved in several of the projects supported by USAID.
“The US and Indian governments work together via various ministries. In these projects, both USAID and ministry staff collaborate, and in some cases, NGOs are also involved,” Dr R Gopakumar, who worked on a USAID-funded tuberculosis project until last year, told Newslaundry.
NGOs primarily operate at the implementation level, where community involvement is critical, and are accountable to the Indian government, he said. “The government has full oversight, and USAID officials ensure that everything goes through proper channels.”
The close collaboration between USAID and the Indian government is also evident through several agreements signed over the years.
In June 2023, Indian Railways had signed a Memorandum of Understanding with the USAID on energy efficiency solutions . The MoU was approved by the PM Modi-led cabinet in January 2024, just months before the general elections.
In February 2022, NITI Aayog had partnered with USAID to accelerate health innovation and entrepreneurship. Speaking about the collaboration, former NITI Aayog CEO Amitabh Kant then stated that “blended financing has the potential to redefine development finance by enabling partnerships that unlock greater pools of affordable capital for scaling up businesses that deliver both financial and social returns.”
Shortly after the partnership was inked, USAID Administrator Samantha Power even visited India and met with key officials, including NITI Aayog CEO Parameswaran Iyer, Principal Secretary to the PMO PK Mishra, External Affairs Minister S Jaishankar, and Foreign Secretary Vinay Kwatra.
Even public sector undertakings have worked closely with USAID in the past.
In 2020, Energy Efficiency Services Limited (EESL), a joint venture of PSUs under the power ministry, partnered with USAID’s MAITREE program to launch the “Healthy and Energy Efficient Buildings” initiative, aimed at promoting greener workplaces.
Moreover, Modi government’s flagship Swachh Bharat Mission also received funds from USAID after the Ministry of Urban Development signed an MoU with the agency in 2015.
Who received $21 million?
While its government, like its predecessors, has been working closely with USAID, BJP leaders have linked funding from the agency to manipulation of election outcomes and trained guns at the Opposition.
The controversy first erupted when Elon Musk-headed US Department of Government Efficiency on February 16 announced that it “cancelled,” the USAID funding of “$21 million for voter turnout in India.” The claim was amplified by Trump who implied that the Joe Biden administration tried to “get somebody else elected” in India.
Citing Trump’s assertions, several media outlets, including state broadcaster DD News, parroted BJP allegations against the Opposition of allegedly using foreign interference to defeat the Prime Minister and his party.
However, US federal spending data shows that the amount in question was meant for Bangladesh, not India.
An analysis of Consortium for Elections and Political Process Strengthening funding, flagged by DOGE, shows that $21 million was allocated in 2022 for a project named "Amar Vote Aamr (my vote in mine)" in Bangladesh, of which $13.4 million has already been disbursed.
On Friday, The Indian Express also reported that India had not received any funding via the CEPPS through USAID since 2008.
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