An Evaluation of U.S. Government Aid to India, June 1964
Abstract
This study is an evaluation of United States Government aid to India through Fiscal Year 1962 in terms of its contribution to Indian economic development. An effective aid program for development purposes is defined as one having a high rate of return in terms of the increased income of the recipient country. Primary emphasis is placed on the evaluation of aid at the micro or project level. Two sectors of the Indian economy, transportation and irrigation, are selected for detailed case studies.
The analysis of aid to transportation concludes that the basis for making the early U.S. aid to that sector for replacement of rolling stock was never thoroughly examined, that little effort has been made to persuade the Indian Railways to implement a number of the suggestions made by the only U.S. technical study of the Indian Railways, and that there is some economic justification for expanding line capacity by installing centralized traffic control in many cases rather than the much more costly doubling now commonly undertaken. More broadly, it is found that the growth of demand for Indian Railway services and hence the need for U.S. aid is likely to be reduced if the Railways charged rates which more accurately reflected the full costs of moving various commodities, particularly bulk minerals such as coal, and if alternative modes were given an equal chance to develop. Detailed estimates of the fully-distributed average costs of transporting passengers, coal, other bulk minerals, and other freight are developed and compared with Railway rates and present and potential costs of coastal shipping and bus transportation.
The study of aid to irrigation centers attention on the state tubewells built in North India with U.S. aid. Rough estimates of benefits and costs suggest that the rate of return on invested capital is perhaps as low as three per cent, and that their operation involves a large subsidy to the water users. More generally, it is found that the state tubewells, like most other irrigation and drainage projects in India, provide a very low quality of service and that the water is used at an intensity far below optimum. It is suggested that American aid would be more effective if it were directed towards encouraging more intensive use of irrigation and drainage, research on the optimum use of water under Indian conditions, and systematic analyses of benefits of proposed projects, rather than on providing foreign exchange for doubtful projects.
With regard to the program as a whole, the study finds that the nontechnical aid given during the early period (prior to U.S. Fiscal Year 1958) was ineffective in promoting Indian development since India had substantial foreign exchange reserves at the time which could have been used for the same purposes. Although significant improvements are possible, the later program (since 1958) is found to be fairly efficient in raising Indian national income; but considerable question is raised as to the expectations that India will be able to carry on its development program without outside assistance in any “reasonable” period of time.
The study suggests that U.S. aid could be made more effective if more U.S. influence were exerted on the program level to improve the balance of payments situation and, particularly on the project level, to insist on more minor changes affecting the efficiency of the use of developmental resources in sectors receiving substantial U.S. aid. The program is found to be particularly deficient in the techno-economic analyses made of projects and sectors receiving substantial U.S. aid. Agency for International Development personnel problems together with a generally overoptimistic view of Indian development prospects are singled out as two of the underlying problems of the U.S. AID program in India.
Over and over again, life expectancy studies related to diet, including by the World Health Organization (WHO), have concluded that Americans and Europeans would do better to eat more like third world peoples as the options provided by their additional wealth have most often lead to poor nutritional choices. This is the same basis for the USDA based their popular food pyramid in 1992. Researchers at Harvard have only suggested perhaps tweaking the food pyramid by replacing some dairy products and read meat with more fruits, vegetables, and fish while also emphasizing the importance of improving the ratio of “good” to “bad” cholesterol. Plus, exercise not only makes weight loss much easier, but also lowers blood glucose levels, decreases blood pressure, improved circulation, and increases one’s metabolism. Good regular sleep patterns are also just as important. Diets based on USDA recommendations include DASH, American Diabetic Assoc, Weight Watchers, and Jenny Craig.