Trump, Musk gun for USAID: All about the agency, its role in India

The President had campaigned on a promise to “dismantle the deep state” and sack “rogue bureaucrats”. He simultaneously promised to downsize the federal government, and slash excessive and inefficient government spending. To deliver on these promises, Trump appointed billionaire Musk as the chief of the newly fashioned DOGE whose sole mandate is to make the federal government more efficient. Musk has vowed to slash federal spending by $2 trillion.

Soon after taking office, Trump ordered a temporary pause in federal funding so that departments and agencies can “review their grants, loans and programs to ensure that they align with the new administration’s priorities”, NPR reported. This order was temporarily blocked by a federal judge.

The Trump administration has nonetheless continued to target specific programs — such as DEI (Diversity, Equality, and Inclusion), which provide help to historically underrepresented and discriminated groups — and departments or agencies.

What does USAID do?

USAID is the “lead international humanitarian and development arm of the US government”, according to the Congressional Research Service (CRS).

The agency provides assistance to other countries primarily by funding non-governmental organisations (NGOs), foreign governments, international organisations, or other US agencies, often for specific programs to alleviate poverty, provide education and healthcare, among other things.

The agency managed more than $43 billion in funds, and provided assistance to around 130 countries in FY2023. (See Charts). The top 10 recipients of USAID-managed funds in FY2023 were: (in descending order of funding) Ukraine, Ethiopia, Jordan, Democratic Republic of Congo, Somalia, Yemen, Afghanistan, Nigeria, South Sudan, and Syria.

USAID employed more than 10,000 people in FY2023, according to CRS, with approximately two-thirds of this workforce serving overseas. This number does not factor in thousands of “institutional support contractors” who are pivotal for the execution of the agency’s programs. USAID maintains more than 60 missions around the world.

Proponents of USAID argue that the agency is essential to further US influence overseas. “It’s a national security tool kit that has been developed over 60 years,” Jeremy Konyndyk, president of Refugees International, an aid group that does not receive US funding, told The Washington Post. “And if it’s destroyed, it cannot be easily rebuilt,” he said.

What is the history of USAID?

Since the end of World War II, the US has viewed international development assistance as a key weapon in its foreign policy arsenal, one it has wielded to make new allies, and exert leverage over existing ones.

This began with the Marshall Plan which provided economic assistance to war-torn Europe, in no small part to prevent communism from spreading beyond the Iron Curtain. During the Cold War “…economic, technical, and military development aid gained enormous prominence as a foreign policy tool as the United States… entered into a competition with the Soviet Union,” historian Corinna R Unger wrote in International Development: A Postwar History (2018).

USAID too was a product of the Red Scare, more specifically, the United States’ fear of a communist takeover of Latin America following the Cuban Revolution of 1959. In 1961, President John F Kennedy launched the “Alliance for Progress”, a multi-billion dollar program to boost democracy and economic development in South and Central America with educational initiatives, housing and infrastructure projects, among other things.

“[The program] was an attempt… to fight communist tendencies in Latin America… with USAID responsible for coordinating the activities of the different organisations involved,” Unger wrote.

The agency was established via an executive order by President Kennedy after the US Congress in 1961 passed the Foreign Assistance Act which mandated the creation of a single agency to administer foreign aid.

What role does USAID play in India?

The US has provided development and humanitarian assistance to India since 1951, when President Harry Truman signed the India Emergency Food Assistance Act, according to an archived page on the USAID website.

“USAID’s program has evolved progressively over the decades from emergency provision of food, to infrastructure development, capacity building of key Indian institutions, support for the opening of the Indian economy and more,” the website said.

Economic aid from the US has also helped establish eight agricultural universities, the first Indian Institute of Technology, and 14 regional engineering colleges, as well as strengthen India’s national programs on immunisation, family planning, maternal and child health, HIV/AIDS, tuberculosis, and polio, according to the website.

However, its operations in India — as in the rest of the world — have historically come with strings and conditions attached.

For instance, USAID in 1965 gave India a $67 million loan to build a chemical fertiliser factory in Madras (now Chennai) on the condition that a private American company be in charge of distribution, rather than the Indian government, and no additional fertiliser plants be built in the region.

In 2004, the Indian government decided to reject any foreign aid that comes with conditions. This has, over time, led to a decline in the quantum of such assistance. According to ForeignAssistance.gov, US aid obligations to India in FY2024 stood at $141 million, down from more than $153 million in 2023, and significantly lower than the $208 million obligated in 2001 (the earliest year for which this data is available online).

This means that India should be able to tackle any disruptions in USAID in the near future. “Although USAID does fund many crucial initiatives in India, it comprises only a small slice of the pie in terms of the country’s total expenditure on social welfare programs,” a source in the development sector said, on the condition of anonymity.