Striipes - Decline in Official Development Assistance to Developing Nations in the Last Decade.

Developing nations have witnessed a massive decline in the inflow of aids from the developed Nations. India is no exception in it, as it has also experienced a considerable cut down in its official development assistance(ODA) extended by the donor countries. The following data throws a clear factuallight over the declining development aid assistance to India in the last decade.

• According to the OECD (the Organization for Economic Cooperation and Development) data,the decline in the aid to India incepted from the year 1994.
• In the year 1994, India received an aid of $2.3 billion, which got reduced to $1.6 billion in the year 1997. With this figure also, India continued to be the third largest recipient after China and Egypt in the year 1997.
• During that period of 1994 to 1997, the global aid volume dropped by more than $10 billion.
• In the year 1998, owing to nuclear tests, many donor nations imposed certain sanctions that further lowered the aid flow to India. Japan, which stood as the largest bilateral aid contributor in the year 1997, extending $492 million, suspended its new yen loans and aid for technical cooperation. It only kept minimal grant assistance open to those non-governmental organizations of India.
• Likewise,during this period Sweden also terminated its three-year cooperation agreement with India. Even Norway kept its aid assistance limited to poverty alleviation programs only while freezing all other aids.
• Denmark and Germany also knocked down the negotiations of aid increment.
• Even the aid from the member Nations of the UN also witnessed a sharp fall in the last decade.

The fall in the aid flow to India and other the developing nations as well from Developed countries have got triggered owing to the increment in the private capital flows. In 1980s, the volume of aid was much higher than the private capital flows but in the last decade, the growth in the private capital inflow to the developing nations dramatically outstripped aid volume by manifold.

Why the Inflow of Aid to Developing nations has declined?

In light of the on going discussions, it is important to understand the region of decline in the volume of official development assistance for developing countries. The expansion of the private capital, as mentioned above,is certainly one of the prime reasons. The aid administrators of Donor countries are under continuous pressure, as never before, to show their return on investment, and this has certainly led to a change in the thinking of the aid bureaucracies, which has made this shift from official development aid tolines of private capital.

Further, with the end of the Cold War, the developed nations nomore feel the need of propping up allies in different developing countries,which used to be one of the major reasons that incepted the process ofdevelopment aid from developed nations to developing nations.

Another important reason for aid decline is the emergence ofprivate capital as a contributor to official aid budgets. Previously, officialaid budgets were the preserve of governments only, now private capital alsogets included in the official aid budgets, this has made some major changes.For instance, The UNDP (United Nations Development Program) announced thelaunch of a Global Sustainable Development Facility, where teach majortransnational corporations will make a contribution of around $50,000.

The private capital is mostly received by a handful of fastdeveloping nations like china and India. However, the very poor nations likeMozambique are likely to suffer more from this decline of aid owing to the factthat  there aid constitutes around  60% of gross national product (GDP) as comparedto 0.6% in  India.