How to manage Britain’s aid to India? The fast-rising country has a space programme, costing nearly the same as Britain gives in annual aid. To many people, that is reason enough to cut all aid.
Yet, at the same time, India is one of the world’s poorest countries. 456 million people live on less than $1.25 per day. Annual income per person is only $1,180, compared to $3,650 in China and $41,370 in the UK. That means there are 20 percent more poor people in India than in sub-Saharan Africa.
But India receives only $1.50 in aid per person, compared to $28 for Sub-Saharan Africa. A good example of India’s plight is Bihar province, which has population the size of Germany’s. Annual income per person in Bihar is £198, compared to £23,430 in the UK and the province has twice the number of Ethiopia’s poor. But it received only a tenth of aid given to Ethiopia in 2009-10.
It is odd that aid has little effect on where the majority of poor people are living. The Indians are keen to maintain the aid. When he met the Indian prime minister, David Cameron was apparently told that New Delhi hoped not to get any “surprises” from DfiD’s aid review, as they know the country still relies on external support and technical advice. The Indian Foreign Ministry spun the issue rather differently to the press, but the Indian hierarchy know better and appreciate that they hold the cards: to cut the support immediately would undermine the burgeoning UK-India relationship.
International Development Secretary Andrew Mitchell has found a middle way. British aid will be focused on India’s poorest states and poorest people, who live in three provinces. And the aid will be targeted to unlocking funds from the private sector and reinforcing the impact of India’s own programmes.
In time, UK aid will be phased out, hopefully replaced by private sector growth, which has been facilitated by the UK. As the Aid Minister will put it:
“Our aspiration over time is to transition from aid-based development relationships into meaningful and mutual partnerships for global development.”
That’s clearly right. British aid needs to help the poor, but also ensure that less is needed by facilitating the conditions for private-sector investment. Next steps should include more joint UK/India projects – like an LSE campus in Delhi, a joint British/Indian Peacekeeping Academy and so on.
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