Foreign aid encompasses technical, military, humanitarian and financial assistance provided by developed countries to help foster economic, political and social progression in developing countries. Foreign aid results in positive and negative consequences for developing countries and is subject to decisions made by government officials with regard to its distribution (Leonard, 2006). Examined in this paper is the impact of peace and war on foreign aid distribution, specific actions undertaken by government officials to relieve problems resulting from warfare and the role of foreign aid in poverty and warfare reduction in India.
India is not immune to intrastate and interstate warfare. The relationship between India and Pakistan has
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Instead, the government chose to invest in public sector projects such as government fertilizer plants, highway construction, planes for the state-owned airline, and the establishment of public universities (focused on technology and agriculture). These investments generated negligible profits with most of them operating at a loss. For example, in 1960s, the government banned the private sector from trading grain in wholesale resulting in perpetual shortages and widespread food shortages. The US government further intervened by supplying food aid, which undermined local food production (Kamath, 1992). However, the Indian government’s demand for accountability continues to transform the disbursement of foreign aid whereby, the government now invests in both the private and public sectors without bias. As a result, improvements in the economic sector occurred characterized by more employment opportunities, reduction of public rebellions instigated by poverty, and higher standards of living (Lancaster, 2000).
In conclusion, war and peace plays a pivotal role in the distribution of foreign aid in developing countries. The international community feels obliged to intervene whenever warfare infringes on human rights or in cases of interstate conflicts. However, international organizations sanction foreign intervention only when the countries involved are signatories of