Arguing that borrowing from countries which receive aid from the US is dangerous, a Republican Senator questioned the decision of the Obama Administration to give financial assistance to nations like India that has bought USD 39.8 billion of American debt bonds.

"Borrowing money from countries who receive our aid is dangerous for both the donor and recipient. If countries can afford to buy US debt, they can afford to fund their own assistance programmes," Tom Coburn said in his report 'Back in Black: A deficit Reduction Plan', unveiling the most ambitious plan yet to break the debt ceiling stalemate.

In his 621-page report, Coburn referred to a recent Congressional Research Service (CRS) which revealed that the federal government gave USD 1.4 billion in foreign aid to 16 countries, including India and China, to whom the US owes USD 10 billion each.

According to the US Treasury Department, the largest holder of US debt is China, owning USD 1.1 trillion Treasury bonds and having received USD 27.2 million in foreign aid in FY2010.

"Brazil held USD 193.5 billion in Treasury securities and received USD 25 million in foreign aid, Russia had USD 127.8 billion and received USD 71.5 million, and India held USD 39.8 billion and received USD 126.6 million from the US," the Senator said.

In a letter to Coburn on May 13, the CRS said India in 2010 received USD 126.6 million - this includes USD 2.5 million for counter-terrorism, USD 700,000 for combating weapons of mass destruction, USD 30 million for fighting HIV/AIDS, USD 22 million for family planning, USD 19 million for maternal and child health and USD 13.7 million for fighting tuberculosis.

India is listed eight in the list of 16 countries that hold more than USD 10 billion of US debt.

"If countries can afford to buy our debt perhaps they can afford to fund assistance programmes on their own. At the same time, when we borrow from countries we are supposedly helping to develop, we put off hard budget choices here at home. The status quo creates co-dependency and financial risk at home and abroad," Coburn said.

The US President Barack Obama had recently defended the massive foreign aid arguing that this is an investment on which the return is much higher.

"I think it's important for people to know that foreign aid accounts for less than 2 per cent of our budget. If you defined it just narrowly as the kind of foreign aid to help feed people and what we think of classically as foreign aid, it's probably closer to 1 per cent," Obama said in response to a question during the first ever Twitter Town Hall at the White House on July 6.

"So sometimes people have an exaggerated sense that we spend 25 percent of the federal budget on foreign aid. It’s a tiny amount that has a big impact," Obama had argued in response to a question.

Coburn recalled a plan at a news conference, calling it bold, necessary and reasonable.

"One trillion dollars in defense cuts is reasonable. The threat of borrowing from China is greater than the threat of an armed conflict from China," Coburn told reporters at a news conference.

"This plan offers the American people USD 9 trillion reasons to stop making excuses and start solving the problems in Washington. I have no doubt both parties will criticize portions of this plan, and I welcome that debate," Coburn said.