Considered an important strategic partner for the UK, India is set to receive £1.2bn in the next five years. Since the department’s bilateral aid review earlier this year, Andrew Mitchell, the international development secretary, has been forced to defend his decision to continue to give aid to a country whose economy is the 11th largest in the world.
DfID points out that India is still home to one third of the world’s poor – people living on less than $1.25 a day – more than the number of poor people in sub-Saharan Africa. Despite its status as a middle income country, the average income in India is one third of China’s, and eight states are home to 65% of India’s poor. More than half of all young children in Madhya Pradesh are malnourished; only one in four people in Bihar have access to a toilet. Poverty reduction in these states remains critical to global success in meeting the millennium development goals, said DfID in its operational plan, which was unveiled after much delay.
“This detailed operational plan for India clearly shows how we are changing our approach,” said Mitchell. “We will focus aid on India’s poorest states such as Madhya Pradesh, where half of young children are malnourished. Crucially, we will focus much more on the private sector. Our ultimate aim is to move from aid to a mutual partnership with India on critical global issues, including trade, global growth, climate, and food security.
“Alongside this, Britain’s development finance body, CDC, has just announced a round of investment in promising businesses in India’s poorest states, to kickstart economic growth and bring jobs and security to the poorest.”
Pranab Mukherjee, the finance minister, told the Indian parliament last year he would turn down Britain’s plan if it tried to go back on its commitments. India receives about $2bn of aid annually from all sources and since 1998 has received more UK overseas aid than any other country.
Britain’s aid effort will target the poorest people in three states: Madhya Pradesh, Bihar and Orissa, moving away from large financial transfers to the centrally sponsored schemes of the national government to a tighter focus on those neediest regions.
The biggest chunk of Britain’s aid to India – £341m – will go towards wealth creation, with the focus on women. DfID expects the number of people with access to savings, credit, insurance to reach 3 million, 2.1 million of whom will be women.
Mitchell has cited as an example of wealth creation Unilever’s scheme to equip more than 25,000 women known as Shakti entrepreneurs in India and Bangladesh to sell products such as toothpaste or tea to people in remote areas – in turn, enabling them to afford healthcare and schooling for their families.
In addition, DfID envisages 35 public private partnership deals in infrastructure across eight low income states. Education will absorb £213m over the next five years, while £165m will go towards governance and security.
“Our theory of change is that bringing assets, opportunities and basic services directly to women and girls can break the cycle of poverty passed between generations; investment support to low income states, combined with help to improve the climate for business will create economic opportunities for poor people,” said DfID.
“We believe private sector investment can achieve a commercial and developmental bottom line – and that if DfID works alongside other capital investors, it can help catalyse new flows of private investment that will boost employment, develop markets and unblock infrastructure constraints; the UK can have the most impact by working with Indian partners to reinforce the impact of India’s own programmes, including by piloting innovations and establishing credible evidence on new approaches.”
Besides the focus on wealth creation, DfID says its programmes will help more than 400,000 mothers deliver babies more safely with the help of nurses, midwives or doctors, reach 3.9 million children with nutrition programmes and provide 5.8 million people with access to improved sanitation facilities.
Aid to India and other middle income states is a subject of considerable debate in development circles. Some – including Conservative MPs – have argued that it is anomolous to send aid to a country that has a space and nuclear programme, and that has become an aid donor itself with a programme estimated at $550m. But as Andy Sumner, a research fellow at the Institute of Development Studies in Sussex, points out:
“The case for continued UK aid to India is those 450 million poor people, most of whom live in India’s poor states in a decentralised system where some Indian states have been compared to fragile states in Africa. Also, the poor in India are lower caste, tribes, etc and so very marginalised – not just a bit poor but very poor. Which makes reducing poverty much harder due to entrenched marginalisation.”
Britain’s approach to India contrasts with the EU’s new development policy, which is to stop giving money to middle income countries. The EU will focus on the world’s poorest countries and cease aid programmes for China, India and Brazil on the grounds that they now have the necessary structures in place to deal with their poor.