The Hindu Business Line : US graduates India out of aid budget

THE Bush administration has said that India has been "graduated out" of American economic assistance but only with the "understanding and agreement" of New Delhi.

"We are graduating India. That is with the understanding and agreement of the Indians," a senior administration official briefing the media on the Fiscal 2006 budget said.

"I've been to India six times in the last year and a half and ...when we sit down and talk to them about assistance levels, it's not one of the major things they focus on. It's not that important. The tsunami was a good example. The Indians said, "We don't need your assistance. We can do this ourselves," the official remarked.

"On the economic side and development side the amount of money we are putting in India right now is not large ," the senior official added making the point that "we've already graduated them from the military assistance programme; we graduated them a couple of years ago...that's a bilateral thing that we're working with them; this is an understanding that they have".

India will be getting about $14 million (Rs 61 crore) for a number of programmes including developing a more effective disaster response system, financing education initiative in disadvantaged communities, implantation of water and power structure reform activities and help for reducing fiscal deficits of Indian States.

Contrast this with Pakistan which will be getting about $640 million (Rs 2,796 crore) for Fiscal 2006, primarily for standing with the US and showing "resolve" in the war against terror. The President has asked for over $640 million to Pakistan "to help advance security and economic opportunity" for its citizens.

The economic component will be in the range of $300 million, $200 million for budget support and the rest for social sector programmes that would include education and health reforms.

On Monday morning the US President, Mr George W. Bush, sent to Congress a $2.5 trillion budget that spared the Departments of Defence and Homeland Security but showed deep cuts in several domestic spending programmes that includes farm aid and housing grants for the poor.

The Fiscal 2006 budget has set the stage for a political fight on Capitol Hill. The White House is calling this budget the most austere proposal since the Reagan era and in line with Mr Bush's idea to come to terms with soaring deficits. But Democrats do not share this view and are determined to put back some of the programmes for the disadvantaged.

For Fiscal 2006, Mr Bush has requested nearly $420 billion for the Defence Department, which represents a nearly 5 per cent increase over the 2005 funding levels. Defence spending for fiscal 2006 is 41 per cent over fiscal 2001.

The Department of Homeland Security will be getting a seven per cent increase this year, for a total of about $34.2 billion.

But what this Fiscal 2006 budget leaves out are some big and critical items such as the future cost for military operations in Iraq and Afghanistan and the kind of money that would be required to make necessary and envisaged shifts in the administering of the social security programme.

In the next several days the Bush administration will be asking Congress for a $-80 billion supplemental to keep the conflicts in Iraq and Afghanistan going. This is in addition to the $25 billion that was provided by Congress last year for 2005. Another huge supplemental for Iraq and Afghanistan spending is expected to go up to Capitol Hill early next year.

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