The Politics of Aid: Misuse of Central Funds in India’s Northeast

The Northeast of India has long held a contradictory stance in the history of development in India, being a region that is strategically crucial, endowed with resources, and yet never underdeveloped. During the last ten years, the central government has made a lot of investments in the region in terms of its financial commitments in the region in terms of PM-DevINE, NESIDS and North Eastern Council. However, the disconnect between approved funds and the results achieved notes a more profound structural problem: the politics of aid and how it is prone to abuse.

Recent statistics indicate the extent of investment in money. The Ministry of Development of North Eastern Region (DoNER) alone spends over ₹15,900 crore between FY 202021 and FY 202425 in various schemes. Nonetheless, the same statistics show that merely approximately 62% of these funds were used, which means that there was a considerable gap in implementation. Such underutilization is not a simple bureaucratic inefficiency–it is in many cases the symptom of a more profound problem of diversion, leakages and politically-mediated expenditures.

Relevant data on the project level becomes even clearer when analyzing current data. By early 2026, 82 infrastructure projects with a value of 4703.81 crore were approved under the scheme of North East Special Infrastructure Development Scheme (NESIDS). Although these numbers indicate good developmental intention, realities on the ground tend to be different. State reports such as those of Mizoram state that despite sanction of funds, projects are often stalled or not implemented at all. In one scenario, ₹200 crore set aside to repair roads allegedly went to waste, casting doubts of diversion or misappropriation.

This trend indicates a greater governance issue: money is politically given out but is loosely tracked. The centralized allocation model, which involves New Delhi paying money to state governments, leaves various areas of discretion. The flow of money is usually controlled by local elites, bureaucracy and political intermediaries. In these types of systems, the development funds are easily transformed into a tool of patronage than welfare of the people. For more detailed reporting on these regional issues, many residents consult a northeast news portal to stay informed.

The problem of corruption also is inextricably connected with the local geopolitical and socio-political environment. The closeness of the Northeast to the international borders and its past of insurgency have created parallel economies where smuggling, narcotics, and informal taxation are being practiced. Such shadow networks are often interlaced with formal governance, making it more difficult to hold anyone accountable. Research observes that in cases of corruption in political and enforcement systems, illicit economies can flourish, which in turn supports the continuation of the cycle whereby the relationship between public funds and illicit revenues are functioning in the same ecosystem.

Additionally, systemic corruption does not just represent a local phenomenon but a broader national trend. In India, politics of corruption has remained an obstacle to the procurement and delivery of services to the people and the lack of proper implementation has seen many criminals go off the hook. These problems are compounded in the Northeast, however, by the geographic remoteness, weak institutional capacity, and reduced media attention. Following a North East news live stream can provide more immediate context to these ongoing governance challenges.

The other area of critical concern is the lack of congruency between spending and results. Although the Northeast has received decades of investment, critical development indicators, such as connectivity, access to healthcare, and job opportunities, are below the national average. This brings a very uncomfy question: is it the lack of funds, or politics that prevails in their usage? When projects are just in paper form or ill implemented, then development in the region is what scholars term as distorted development whereby monetary resources are not converted to physical developments.

These issues have been sought to be addressed. The government has implemented third-party tracking, result-based assessment systems, and online fund tracking. However, these reforms tend to fight with the deep political motives. In the absence of local transparency and an enhanced civic watchfulness, monitoring mechanisms are likely to turn into a formal structure, as opposed to a working protection.

After all, corruption is not the only tale of the abuse of central funds in the Northeast of India, but a tale of the failed governance as a product of politics. When patronage networks filter development aid, it becomes devoid of transformative power. To ensure the Northeast can fully enjoy the fruits of the resources being directed at it, reforms need to be more than just about financial accountability, but also about political frameworks that allow abuse.

Until that time, the area is in danger of being in a trap where money is flowing in but nothing substantial is being built.