Summary
Three hundred and fifty million of India's 1.1 billion
people live on less than one US dollar a day. If the Millennium
Development Goals are to be met by 2015, considerable progress
on poverty alleviation will have to be made in India. It is possible
therefore, to argue that any money spent on poverty alleviation
in India by the Department for International Development (DFID),
is money well spent. DFID's assistance to India is the UK's largest
bilateral programme to any single country. The programme's expenditure
was £200 m. in 2003/4, and is planned to rise to £300
m. per annum in the medium term.
But India's needs are such that even £300 m.
per annum will only make a comparatively small impact on social
and developmental indicators. For this reason, under Clare Short's
leadership, DFID decided to focus the UK's bilateral assistance
on four states: West Bengal, Orissa, Andhra Pradesh and Madhya
Pradesh. These states were seen as reformers, seeking to improve
their delivery of public services, where partnership with DFID
could bring about more rapid and effective reforms.
Since that decision was made, a new government has
been elected in India. This government is reluctant to allow foreign
donors to determine which States in the Union are doing well or
badly, and which should be awarded development assistance. The
new government has taken the pragmatic decision to allow DFID's
existing programmes with its four partner States to run their
course. The current phases of these partner-State programmes will
be completed between 2007 and 2010. It is unlikely that DFID will
enter into any new partnership arrangements with new states. Once
the existing partnership agreements have run their course, it
seems probable that the Government of India will expect DFID to
contribute solely to central government development initiatives.
To some extent this shift is already happening. The
GoI is directing DFID strongly in the direction of support to
centrally sponsored schemes. In line with this, DFID is significantly
increasing the budget of its National Programme, increasing its
funding to sectors including HIV/AIDS and education. Illiteracy
rates in India are high, and supporting primary education is worthwhile.
Likewise, India faces a serious challenge in tackling the impact
of HIV/AIDS. Money spent on both these campaigns will be of assistance.
But we have not seen sufficient justification for this shift from
DFID. DFID does not appear to have developed adequate mechanisms
for measuring the impact which they have on CSSs. When working
at a central level DFID suffers from a lack of leverage, difficulties
in tracking money trails and problems in determining outcomes.
DFID needs to improve its monitoring, and demonstrate to external
observers that it is doing so.
Before undertaking such major budget reallocations,
the Department needs to be clearer about its overall strategy
in India. Two questions remain to be asked: could that money be
better spent by DFID in programmes elsewhere; and, is it possible
to be confident that the money being given by DFID to central
government programmes is providing additional spending in these
areas, and not simply substituting for central Government contributions?
During our visit, the Committee met India's Minister of Finance,
who expressed his appreciation for the support which the UK Government
is giving to the centrally sponsored schemes. It was clear, however,
that the money committed by the UK constitutes a comparatively
small percentage of their total budgets.
According to current predictions of growth in India's
economy, India is likely to become a Middle Income Country (MIC)
during the next ten years, by which time its eligibility for further
UK development assistance will be reduced. DFID needs to start
thinking now about when and why it might decide to taper its India
programme, assuming of course that the GoI's own policy decisions
do not pre-empt this decision. At the level of central government,
the extent to which India wishes to be a partner for development
with bilateral donors such as the UK seems questionable. If one
were to take the approach of the central government to its logical
conclusion, it would be possible to argue that DFID's team in
India could eventually be reduced to simply two or three people
to write and deliver the budgetary support cheques to the Ministry
of Finance. But at state and district level, and within the specific
sector programmes with which DFID is involved, DFID's expertise
and innovation continues to be highly valued.
It was clear to us that DFID's work in India is much
appreciated for its professionalism, programme design and input.
In many instances it provides other organisations with the capacity
to run poverty reducing programmes, and programmes promoting social
inclusion. That raises the question of whether DFID, rather than
committing sizeable amounts of money to central government support,
should not be concentrating on developing capacity in India within
the Civil Service and elsewhere to enable India to deliver such
programmes with confidence once it becomes an MIC.
Although the GoI has to a significant extent frustrated
DFID's attempts to work through civil society, this work is of
considerable pro-poor value, and DFID should persist with it.
We were convinced by arguments that DFID adds the most value in
India through its innovation, research, technical advice and demonstration
projects. DFID should concentrate on this developing this strength.
DFID has made changes to its management practices in India, but
the Department needs to be much more transparent about its choices,
disclosing information about the trade-offs associated with the
decisions it takes.
DFID also has a valuable role to play in drawing
the Government of India's attention to socially-excluded groups
and maintaining a focus on those Millennium Development Goals
on which India remains off-track. Since DFID's approach in India
is now unique among bilateral donors, there is a greater need
for DFID to justify its programme design. Yet DFID lacks a coherent
concept of where its strategic focus should lie in India. As India
develops, DFID needs to revisit continually its rationale for
being there. The issues of value for money and monitoring should
be key in making the case.
In light of the GoI's increasing reluctance to accept
international development assistance, DFID needs to plan its involvement
in India strategically, maintaining flexibility within its strategy.
Although we found much to commend in the individual projects and
programmes in which DFID is engaged, we found a lack of an overall,
strategic approach to this work - a very significant issue given
the size of the India programme and its cost to the UK taxpayer.
DFID has mainly concerned itself with reducing income
poverty in India. We believe DFID ought to reorient its objectives
to make inequality and social exclusion central objectives of
its work. DFID's policies discuss the importance of reaching socially
excluded groups, but policy narratives are not sufficient. What
is needed are ways to ensure these groups are reached in practice.
DFID needs to find ways of working with government that ensure
a focus on socially excluded groups and to ensure the pro-poor
impact of its work.
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