The United States Agency for International Development (USAID) has been instrumental in the development of India for decades, providing funding for a variety of projects, including healthcare, gender empowerment, education, economic development, disaster relief, infrastructure development, and more. On January 20, 2025, the Trump administration issued an executive order that immediately suspended all new foreign aid obligations and disbursements by USAID for 90 days.
This action poses a threat to the agency’s very existence and halts funding, thereby raising concerns about the United States’ long-term future in International development efforts. During this period, the State Department is required to evaluate the efficacy and consistency of all aid programs with U.S. foreign policy, with department chiefs conducting assessments per the Secretary of State’s guidelines.
During this period, the State Department is required to evaluate the efficacy and consistency of all aid programs with U.S. foreign policy, with department chiefs conducting assessments per the Secretary of State’s guidelines.
The review will determine whether to continue, modify, or terminate foreign aid programs. Those already at a disadvantage, such as transgender persons, low-income rural populations in India, and women, would feel the effects of the sudden cut-off of foreign assistance the most.
USAID’s global role and India’s partnership
USAID, founded in 1961, has been the major US agency for humanitarian aid and foreign development across the world. According to a Congressional Research Service (CRS) estimate, USAID managed approximately $40 billion in appropriations in FY2023, accounting for more than one-third of the U.S. budget. The agency has helped over 130 countries. The ten most important ones are Syria, Ukraine, Ethiopia, Morocco, the DRC, Somalia, Yemen, Afghanistan, South Sudan, and Nigeria. USAID has lately provided strong financial support to global health concerns post-COVID-19 outbreak and has played a key role in assisting PEPFAR (U.S. President’s Emergency Plan for AIDS Relief).
These initiatives have been instrumental in assisting individuals worldwide during times of crisis. For India, it has been a significant development partner since 1951, when US President Harry Truman signed the India Emergency Food Aid Act. Over the years, USAID’s responsibilities have grown beyond just distributing food aid. Now, it encompasses a wide range of areas, including economic reforms, education, health, agriculture, water and sanitation, renewable energy, disaster management, and infrastructure development and capacity building.
As per a report of NDTV USAID has allocated over $17 billion to more than 555 programs since its inception. USAID has partnered with local partners to improve access to quality healthcare, strengthen health systems, and enhance maternal and child health services combating diseases such as tuberculosis. On the other hand, the funding moratorium has resulted in severe disruptions or complete shutdowns for all of these programs.
USAID’s contribution to India’s development
A Boomlive article shared on its official page in February 2025 showcased USAID’s important role in enhancing water sanitation, education, and healthcare in India. Here are excerpts from the article: ‘In collaboration with the Indian government, USAID has been instrumental in efforts to prevent tuberculosis, provide treatment for HIV, and lower maternal and neonatal mortality rates. Its initiatives have contributed to saving more than 2 million children by reducing the number of deaths caused by pneumonia and gastroenteritis since 1990. It has also facilitated India’s efforts to combat tuberculosis (TB) by improving access to treatment and providing medical professionals with training. USAID provided around $13.1 million and 200 high-tech ventilators to support public health awareness efforts, monitoring, and testing during the COVID-19 pandemic. The goal was to alleviate the strain on the hospital system. USAID assisted groups like STIR Education and Kaivalya Education Foundation, which led to the improvement of school infrastructure, improvement of teacher training programs, and rises in literacy rates. In general, it has been shown to have a positive influence on the academic achievement of 5,64,000 pupils and has been useful for 14,657 educators, which has resulted in an improvement in the leadership and teaching approaches of more than 250 public institutions. The Right to Read initiative has enhanced the literacy skills of one million students across 5,000 institutions, while the Nurturing Early Literacy Project has reached over 90,000 children in states such as Rajasthan, Maharashtra, and Karnataka. Furthermore, USAID has encouraged the reading habits of 2, 46,000 children by providing support to public school libraries through its partnership with Room to Read India. The Swachh Bharat Abhiyan (Clean India Mission) is India’s water, sanitation, and hygiene (WASH) project that has received substantial contributions from USAID as a result over 3,00,000 people have obtained access to facilities, and 25,000 villages have achieved open defecation-free (ODF) status.’
Impact of USAID shutdown on India
Over the years, India’s dependence on USAID has diminished, with grants now accounting for only 0.2%-0.4% of USAID’s global expenditure. Even though USAID has ceased operations in India, the country’s increasing self-reliance and alternative monetary assistance may limit the overall impact. However, there are significant sector-specific repercussions, particularly in the fields of healthcare, environmental sustainability, governance, and education.
USAID allocated 69% ($120 million) of its $175.7 million assistance to health programs in 2023, which led to the demise of critical initiatives, including the Mitr Clinics for transgender healthcare. The freezing of funds can have major ramifications on public health programs and is a threat to India’s TB eradication objective for 2025 as well. If the ban continues the allocated money of $9.6 million for environmental projects in 2023 will make it harder to clean up the air, make more green energy, and slow down climate change.
WOHLA and other projects promoting employment and education are also in danger. Through these efforts, low-income women learn to use technology, which improves their access to reproductive health care and teaches them how to create a personal budget.
Impact on marginalised communities in India
The pause of USAID funding will disproportionately affect marginalised communities, particularly those already vulnerable due to systemic inequities. The suspension of financial aid has already had an immediate and profound effect on healthcare services for transgender individuals.
As per a report from Reuters, the closure of 3 Mitr Clinics meant for Transgender population after the announcement of budget cuts has deprived approximately 5,000 transgender individuals of essential healthcare services comprising hormone therapy, mental health counselling, HIV and STD treatment, legal aid, and general medical care. Owing to stigma and discrimination LGBTQ+ individuals face intense psychological distress and the discontinuation of USAID-supported mental health and social inclusion programs meant for them will further worsen this issue, leaving fewer resources and support systems.
Again, the programs and initiatives meant for women and receiving grants exclusively from USAID are likely to be hit. For example marginalised women, particularly those from rural areas and lower socio-economic circumstances, will endure grievous consequences. Despite the Indian government’s commitment to enhancing maternal healthcare through the Janani Suraksha Yojna and Pradhan Mantri Matru Vandana Yojana, access to these programs remains inconsistent as noted by Sharma, et al in their research studies.
USAID has been instrumental in helping teenage girls from underprivileged backgrounds achieve their educational goals.
USAID has been instrumental in helping teenage girls from underprivileged backgrounds achieve their educational goals. Financial support can be crucial for overcoming the challenges many young women encounter in their education, which can restrict their future job prospects. The suspension of programs such as WOHLA, which restricts access to reproductive healthcare, financial literacy, and digital skills training, could impede progress in addressing gender-based violence and enhancing women’s economic security.
A budget cut in the provided financial aid will impact the environment and governance projects that are directly or indirectly affecting disadvantaged people. The lack of USAID-supported programs for sustainable energy and climate protection may increase the vulnerability of disadvantaged communities, which are already more vulnerable to the consequences of climate change.
USAID’s funding suspension could have serious consequences for India’s underprivileged populations, particularly those who rely on healthcare and social assistance programs. Although India’s reliance on foreign aid has lessened over time, which may have mitigated the impact, the immediate repercussions for disadvantaged groups remain harsh. This case highlights the critical importance of developing long-term, locally sourced solutions to aid individuals in need.
References:
https://crsreports.congress.gov/product/pdf/IF/IF10261
https://www.moneycontrol.com/news/business/economy/over-a-fifth-of-usaid-s-2-9-billion-assistance-to-india-since-2001-came-in-last-four-years-12930184.html
https://www.boomlive.in/explainers/how-will-india-be-affected-by-trumps-pause-on-usaid-funding-27738
Sharma, S., Bhardwaj, A., Arora, K., Akhtar, F., & Mehra, S. (2023). Assessing universal maternal health service coverage and their determinants in india: a multicentric cross-sectional study. Journal of Family Medicine and Primary Care, 12(8), 1516-1524. https://doi.org/10.4103/jfmpc.jfmpc_1891_21
About the author(s)
She is a Research Scholar, currently dedicated to pursuing her doctoral studies in the field of Political Science and International Relations. With more than ten years of hands-on experience across various media-related domains, she has established herself as a seasoned Media Professional.
