His remark came while observing that economic growth is allowing many developing nations to devote more resources for their poorest people.
"The good news on resources is that many developing countries have growing economies that allow them to devote more resources to helping their poorest people. India, for example, is less dependent on aid and will eventually not need it," Gates said in his annual letter.
Gates, Co-Chair of Bill & Melinda Gates Foundation, is actively involved in various developmental activities in many countries, including India.
According to him, aid is critical as it helps in meeting the basic needs of people in the poorest countries.
"Unfortunately, aid generosity is threatened by big deficits in almost all of the rich countries ... A single story, true or not, about a small amount of aid being misused can often cloud the entire field," he noted.
Gate, who is the co-founder of software giant Microsoft, said that some countries, like the UK, Norway, Sweden, Korea, and Australia, are increasing their aid while traditionally generous givers such as Japan and the Netherlands have reduced it.
"The direction in many countries, including the United States, France, Germany, and Canada, is unclear," he added.
Gates expressed optimism that things would be even better in next 15 years.
"The lives of the poorest have improved more rapidly in the last 15 years than ever before, yet I am optimistic that we will do even better in the next 15 years. After all, human knowledge is increasing," he added.
The two challenges that worry him the most are "the possibility that we won't be able to raise the funds needed to pay for health and development projects, and that we wont align around clear goals to help the poorest".