East European Aid to India

This essay attempts to outline the basic features of the aid-relationship between India and the East European countries from the early 1950s to the early 1970s. For reasons that will emerge shortly, it is in these years that the flow of foreign credit designated specifically as aid began to flow from the latter. Aid from the East European countries has played a significant part in the development of the Indian economy. From time to time I shall illustrate the relative orders of magnitude involved, by comparing the volumes and terms of aid from these countries, with those received from other donors. To avoid misinterpretation, I should state that it is not my purpose to derive normative conclusions from such comparisons. Although aid administrators might argue endlessly about relative shares, there are no unambiguous criteria on the basis of which an economist can lay down how much aid country X as opposed to Y, should give to country Z. Moreover, the formal and nominal terms of aid received from alternative sources are not always a reliable index of the benefits which accrue to the recipient country from such aid. There are certain distinctive characteristics of the mechanism of aid-transfer between East Europe and India, that make such comparisons even more difficult to draw.