Indo-US economic relations:
1. There was a slow start to the economic assistance that India received from the US. India's food production at the time of independence was insufficient to feed its millions; its industrial and service sector were also quite backward. That is why India was dependent on other countries for bilateral assistance.
2. The first of the many food aid shipments to India from the US started in 1951.
3. In 1954, the US Congress passed a Public Law 480 (PL 480) allowing the sale of surplus American wheat to India. India continued to receive foodgrains from the US under PL 480 till the early 1970s.
4. The story of suspicions in political relationships uses only one side of the coin. During the cold war, despite political differences, India received significant economic and food aid from the US, right from the 1950s.
5. In addition to food assistance, the US had provided large bilateral developmental assistance to India. However, you must not forget that this assistance was not available for the development of heavy industry but in the field of agriculture, development of raw materials and minerals. For creating a heavy industrial base, India had to turn to the Soviet Union.
6. The development assistance given by the US reached a peak of around $500 million in 1962.During the Bangladesh war, the US froze its economic aid to India.
7. However,the bilateral assistance started in 1978 after a long gap. But the importance of bilateral aid decreased from the late 1970 onwards because of the substantial increase in multilateral assistance given by the International Development Authority (IDA), the soft-money affiliate of the World Bank. Much of the IDA money was, of course, funded indirectly by the US.
8. In the 1980s, the World Bank lending typically ran into $2 billion (one billion is one hundred crores or one thousand million). So, for India, the US stance towards multilateral financial institutions mattered more than the bilateral aid.
9. The US had no objection to clearing India's request for a $5.8 billion loan from the International Monetary Fund (IMF) in 1981- the largest ever sought by a member country.
