08 November 2012

Is it wrong to cut UK aid to India?

Today’s announcement that the UK is to end financial aid to India by 2015 will re-ignite the debate about aid to middle income developing countries. 

It's a difficult one. 

Is India rich? No--its GDP/capita is a third of China's and a sixth of Brazil.  India is still a very poor country.  You won't see it so much if you go to Delhi or Mumbai but go one hour out of town and you will be shocked. 

Is India using its domestic resources as well as it can for poverty reduction? No, but it is trying to get it right--hence the debate over the massive National Food Security Bill. 

Why should a country with a space programme get aid?  As I have said before the space programme is as much about weather and land quality mapping as about anything else. 

Is UK aid "peanuts" for India as a Indian Minister said in February?  In absolute terms, yes.  But it is an invaluable source of experimentation, piloting, access to knowledge, and risk taking. 

What if the Indian government does not want aid?  Well, obviously it could easily say "no thanks". 

For every poor country, not just India, the future is in domestic resource mobilisation, not aid. 

Just try telling that to the millions of Indian mothers trying to keep their babies alive.

Maybe it's not so difficult.


Jeneral28 said...

Ha Joon Chang argues that aid should shift away from basic needs (health, education, sanitation etc) towards a productive industrial policy for long term development.

Can that be applied in say the development/aid policy of India?

Eeshani Kandpal said...

Even in Delhi and Mumbai, the depths of poverty can be as appalling as anywhere else. Yes, India is still a very poor country, but it is also an increasingly unequal one. Taking away development aid would probably worsen the inequality-- surely not the outcome British lawmakers desire.

Lawrence Haddad said...

Jeneral28 and Eeshani, thanks

There is no easy answer to the balance of investments for long term development..the MDGs have probably led to an underinvestment in infrastructure that is vital to growth... There are Indian studies by Fan, Hazell and Thorat from the late 1990s that show that roads are better investments than health in reducing rural poverty. However, agricultural investments (R and D) are at least as good as infrastructure. Also income from agriculture tends to be more poverty reducing that income from industrial sources (see World Development Report of 2008 -- Ligon and de Janvrey)

On inequality, yes, agree it is rising in India, and yes agree that aid that helps to level the playing field or help the poorest play the game will slow that down (of course not all aid does) But the Indian government does not seem too concerned about inequality, although I think that is changing, if only because they are getting worried about inequality as a drag on growth's ability to reduce poverty.

Sandesh Kotte said...
This comment has been removed by the author.
Sandesh Kotte said...

The aid all these years went in to the sectors which state deliberately 'neglected'...As you pointed out it is not about 'peanuts' or 'coconut' but what matters is the quality of the work done by that aid...If UK government get away with the aid, the neglected sector will be neglected for some more years(may be decades) and all these years investment will become useless...

Anonymous said...

India still being a member of Commonwealth nations, and Indian being a major contributor to the flow of cultural-material wealth to British empire,it is not just on the part of the UK to shun away its historical, moral and global responsibilities towards the multitude of masses wallowing in deprivation and destitution. What makes it brutal irony is these masses are off-springs of those communities of colonial past who had helped British empire to consolidate its power from Flanders to France and Egypt.