Elon Musk’s “department of government efficiency” has been accused of setting off a political firestorm in India after it claimed that the US government had been sending millions of dollars to support the Indian elections.

In a list published on Musk’s social media platform X last week, Doge, a special group that Donald Trump created, claimed that a $21m grant distributed by USAid – the US agency for international development – to help “voter turnout in India” had been cancelled, as part of the president’s sweeping cuts to foreign aid.

However, records accessed by the Indian Express newspaper have found that no such funds were ever distributed in India and USAid staff have also denied the existence of such a programme.

Instead, documents show that USAid had allocated $21m for a non-profit promoting political engagement in neighbouring Bangladesh, amid a draconian crackdown on the political opposition in the country.

Nonetheless, the claim was seized upon with gusto by Trump, as he sought to discredit USAid and its global development programmes and justify gutting the agency. Musk too has boasted that Doge is “feeding USAid into the wood chipper”.

Speaking at an event in Miami, Trump told the crowds: “What do we need to spend $21m for voter turnout in India for? Wow, $21m. I guess they were trying to get somebody else elected.”

The next day he repeated the allegation at another event, stating that $21m was “going to my friend Prime Minister Modi in India for voter turnout”. He brought it up again on Sunday, as he addressed the Conservative Political Action Conference, this time claiming the figure was “$18m for helping India with its elections” and calling it a “kickback scheme”. “They take advantage of us pretty good,” he added.

Trump’s misleading tirade came less than a week after the Indian prime minister, Narendra Modi, travelled to Washington to meet the new president. Trump called Modi a “great leader” and Modi called Trump a “friend”.

Trump’s USAid claims had a seismic impact in India. Modi’s governing rightwing Bharatiya Janata party has long accused international civil society and human rights groups of trying to undermine it, forcing some of the world’s most respected organisations – from Amnesty International to Greenpeace – to shut down their operations in India.

Several BJP leaders and ministers said Trump’s allegations were proof that international actors were trying to work against the BJP government and interfere in the country’s affairs. Amit Malviya, head of the BJP IT cell, said that Trump “has confirmed that there was indeed an attempt to influence the Indian election and install someone other than Prime Minister Modi”.

India’s vice-president, Jagdeep Dhankhar, said he was “shocked … the democratic process of this country was sought to be manipulated to dent the purity of our electoral system”, while Sanjeev Sanyal, a member of Modi’s economic advisory council, called USAid the “biggest scam in human history”.

The foreign minister, Subrahmanyam Jaishankar, called the claims “concerning” and the department’s spokesperson, Randhir Jaiswal, told a weekly news briefing they were “deeply troubling”.

The controversy also stirred up concern among some in India’s beleaguered civil society, who said they feared that the allegations against USAid would be used to justify a further crackdown on their funding and operations by the BJP government.

In response, India’s opposition Congress party accused the BJP of spreading “fake news from America” while remaining silent as Trump and Musk insulted India.

“Elon Musk made a fake claim, Trump got confused between Dhaka and Delhi,” said Congress’s spokesperson, Jairam Ramesh. “The BJP should just answer this: Why did the BJP spread fake news about India’s democracy?”