The Trump administration decided to stop giving money to the United States Agency for International Development (USAID), which has led to concerns about how this will affect important projects in India, like healthcare, energy, and infrastructure. After becoming president, Donald Trump signed an order to review and change how the U.S. gives foreign aid. This led to a temporary 90-day pause on all funding. As a result, USAID asked all organisations working on projects in India to stop their work for now. The freeze is part of a larger effort by the new U.S. government to rethink its foreign aid and adjust it to match its own priorities.

Elon Musk supports the freeze, calling USAID a "criminal organisation"

On social media platform X, Elon Musk also showed support for the freeze, calling USAID a “criminal organisation." Musk’s statement added to the controversy surrounding the move and has led to further discussions about the role and actions of USAID globally.

What is USAID, and what does it do?

USAID is a government agency from the United States that helps with aid and development projects around the world. It has about 10,000 workers worldwide and manages billions of dollars in funding each year. The U.S. Congress decides how much money USAID gets, and the agency works with Congress and the White House to decide which projects to focus on, based on U.S. foreign policy.

USAID gives out money through grants, contracts, and agreements to support projects that align with its goals. In the year 2023, USAID managed over $40 billion, which made up more than a third of the U.S. State Department's budget. However, this is still a small amount, just 0.7% of the entire U.S. government spending, which was $6.1 trillion that year.

The history of USAID in India

The United States has been helping India grow for a long time. The partnership started in 1951 when U.S. President Harry Truman signed a law to provide food aid to India. Over the years, USAID's role has changed from just providing food to supporting many different development projects.

In 1960, most of the aid from the U.S. was food, making up 92% of the total assistance. But by the 1970s, U.S. aid began to focus on other areas like providing electricity in rural areas, promoting the use of fertilisers, controlling diseases like malaria, offering health programs, and improving irrigation systems for farming.

By the 1980s, U.S. aid shifted to helping with science, technology, and policy changes. They supported agricultural research, renewable energy projects, advancements in healthcare, water management, and family planning programs. USAID also worked on transferring technology and building systems that could help India in the long run.

How the freeze will affect USAID’s key projects in India

The freeze on USAID funds will affect many important projects in India. These include programs in energy, health, water, sanitation, hygiene, and education, all of which are crucial for India’s development.

Energy access and security

USAID has been working with India’s government and private sectors to help the country shift to a low-emission and energy-secure economy. The goal is to improve access to clean and reliable energy while creating investment opportunities in India’s large $1 trillion energy market. Through its partnerships, USAID supports the U.S. government’s Indo-Pacific Energy Initiative, which aims to enhance energy access across South Asia.

Without funding from USAID, the progress made in India’s energy sector could face delays, especially in expanding clean energy solutions and boosting energy security.

Health initiatives

India has many health problems, including high rates of mothers and babies dying, widespread hunger, and the largest number of people with tuberculosis (TB) in the world. USAID’s health programs in India work to solve these problems, aiming to save up to 2 million lives every year.

India also has the third-highest number of people living with HIV, and many people have to spend so much on medical treatment that they fall into poverty. USAID has been working to make healthcare more affordable and better for poor and vulnerable communities. If funding is stopped, these efforts could face big challenges, especially in rural areas and for the most at-risk people.

WASH: Water, sanitation, and hygiene

USAID has partnered with the Indian government to improve access to clean water and sanitation. These efforts are part of the USAID Water and Development Strategy and the Water for the World Act, which aim to make water services more affordable and accessible.

Without USAID’s support, India’s progress in improving water and sanitation services for urban communities could slow down, affecting millions of people who rely on these essential services for better health and quality of life.

Education initiatives

India has a young population, with nearly 30% of its citizens under the age of 14. This demographic presents a major opportunity for economic growth. However, despite free education, around 40% of students drop out before completing the 8th grade, and many struggle with basic literacy skills.

According to the 2018 Annual Status of Education Report by the Indian government, only 56% of 5th graders can read a 2nd-grade-level text. USAID has been working with the Indian government to improve education quality and increase literacy rates. A pause in funding could delay these improvements, especially in underprivileged areas.

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