In just 20 days since Donald Trump has taken charge of the office, the newly-elected US President announced numerous policy changes --- from trade tariffs on China to the ‘possible’ shut down of America’s main overseas aid agency. The future of United States Agency for International Development (USAID), one of the largest official aid agencies in the world, has been thrown into uncertainty as both Trump and tech billionaire Elon Musk have been standing against it.
Trump clearly said that he wants overseas spending to be closely aligned with his “American First” approach. On his Truth Social Page last week, the US President also wrote, “USAID IS DRIVING THE RADICAL LEFT CRAZY.THE CORRUPTION IS AT LEVELS RARELY SEEN BEFORE. CLOSE IT DOWN!” And previously, Musk who is also a part of the Trump administration claimed that the aid agency is a “criminal organisation” and “the President has agreed to shut it down”.
Additionally, USAID has recalled its workers from missions across the world, Trump has planned to put thousands of employees on leave, and merge the aid agency with the US Department of State. The agency staffers were told to work from home in Washington DC, and its website even went offline since the morning of February 4, 2025. The controversy has sparked concerns within the agency and among its development partners.
What Is USAID?
The aid agency, which has a long history of supporting global development projects, was established in 1961 by President John F. Kennedy. USAID was created as a part of America’s efforts to assist other countries in their development. The success of the Marshall Plan inspired the initiative that helped Europe recover after World War II.
Since then, USAID has become the largest humanitarian and development agency of the US government. Currently, the agency is being operated in more than 130 countries, including India where it is making contributions in sectors like healthcare, education, sanitation, and agriculture. As per the government data quoted by BBC, the US has spent $68 billion on international aid in 2023, with India receiving $2.86 billion since 2001.
Why USAID Is Being Targeted?
The controversy erupted when Musk shared a series a posts on X (formerly Twitter) and accused the aid agency of “corruption”. “Did you know that USAID, using YOUR tax dollars, funded bioweapon research, including COVID-19, that killed millions of people?” he wrote, while responding to a post which cited a 2023 New York Post article about USAID and the origins of the pandemic.
“USAID has been paying media organisations to publish their propaganda,” Musk called the agency “a crazy waste of money” and “a radical-left political psy op”. However, he didn’t present any evidence to support the accusations against the agency.
Musk, during a conversation on X spaces as quoted by NBC News, stated that he had discussed USAID several times with Trump and the US President “agreed to shut it down”. Even Trump on Sunday told media persons that the agency has been run by a “bunch of radical lunatics, and we’re getting them out”.
Trump has also frozen all aid spending for three months and issued waivers for food along with other humanitarian aid to continue. Some critics also argue that Trump-Musk’s attempts to shut down the agency are a part of their efforts to shrink federal government spending.
How Will It Impact India?
As per MoneyControl analysis, more than 20% of USAID’s funding was directed to India in the last four years. Since then, the amount of funding to India has been declining. In 2024 alone, India received over $150 million funds from the aid agency, followed by $175.7 million in 2023, $228.2 million in 2022.
The report stated that a freeze on USAID assistance is anticipated to have the “greatest” impact on healthcare projects in India. In 2023, India’s healthcare received around 69% share ($120 million) of total $175.7 million from USAID. In addition, the country received $9.6 million in funding for environmental initiatives. In education, USAID supported India’s Padhe Bharat Badhe Bharat initiative, which trained over 61,000 teachers and benefitted approximately 2 million students.
“The suspension of USAID funding now places these health and education programs in jeopardy, threatening to delay progress and disrupt essential services,” said Pranjal Dwivedi, tech policy analyst in her blog post.
On the contrary, The Hindu Business Line data shows that Trump administration’s decision to shut down USAID will not impact India “substantially” because the share of funding remained “flat” from 2015-2024.
What Could Happen Next?
While the USAID suspension is likely to affect the lives of people who rely on the aid agency-supported projects, it may also change the nature of US-India relationship under Trump leadership as many ongoing projects will be put on hold.
However, Secretary of State Marco Rubio, as quoted by NBC News, clarified that Trump administration’s plan was not to end USAID’s ongoing projects. And placing the agency under the State Department could change how it functions.
