India promised $1 billion in aid to Afghanistan during a visit to New Delhi on Wednesday by President Ashraf Ghani, making a downpayment on stabilisation and reform ahead of a major donor conference next month.

In a statement issued after meeting Ghani, Prime Minister Narendra Modi pledged the financial help to back India's "abiding support for a unified, sovereign, democratic, peaceful, stable and prosperous Afghanistan".

Both leaders expressed "grave concern at continued use of terrorism and violence in the region for achieving political objectives" - a veiled reference to common neighbour Pakistan, which denies sponsoring terrorism.

As the United States scales back its military presence in Afghanistan, efforts are being ramped up to rebuild the country after decades of conflict dating back to the Soviet invasion of 1979 and a prolonged Taliban insurgency.

"Forty years of violence would have broken any other country," Ghani said in a speech to Institute for Defence Studies and Analysis, a government-funded think tank, declaring himself "delighted" with Modi's aid pledge.

The former World Bank official said that while armed conflict posed a great threat, it was also vital to build market institutions that could lift living standards in a nation where 70 percent of people live on less than $2 a day.

The European Union and Afghanistan will host a donor conference on October 5 in Brussels attended by 70 states and 30 international organisations and agencies, to seek backing for reforms to stabilise and develop the Central Asian country.