Examination of Witnesses (Questions 40-59)
DR CHARLOTTE
SEYMOUR-SMITH,
MRS ARUNA
BAGCHEE AND
MR JEREMY
CLARKE
5 JULY 2004
Q40 Chairman: I am sorry to interrupt
you but could you speak up a little as some of us are a little
deaf.
Mr Clarke: I was simply saying
that there is already a cap in the formula that we use which is
an adjustment for population which ensures that the needs of other
poorer countries and regions are taken into account and I think
that the application of this allocation model has been also effective
in ensuring that resources go to poorer countries in Asia. The
only other point I would make is that of course economic growth
and the achievement of the income poverty target is only one aspect
of achieving the Millennium Development Goals (MDGs) and clearly,
aside from the fact that there are very large numbers of poor
people in India, it is also true that India does not perform as
well against some of the other MDGs due to factors like inequality
and social exclusion which no doubt we will come on to talk about
a little more.
Q41 Chairman: Could I just ask a follow
up to that? It strikes me that one of the conundrums is this:
we are selling Hawk trainer jets to India, the cost of which is
roughly equivalent to ten years' worth of UK bilateral development
aid and one could argue—and indeed my constituents and anyone
else's constituents could argue—"Look, all we are doing
collectively as taxpayers is subsidising over the next decade
the ability for India to have free Hawk trainer jets which it
is getting from the UK", not necessarily to stabilise peace
in the region but that is another argument. There is a bit of
one that says, "Is what we are doing by way of development
aid really being appreciated or is it just being taken as a given
by the Government of India which can then actually use that money
as a subsidy to spend on other things such as defence that it
might like otherwise to spend?"
Dr Seymour-Smith: That is a very
valid question and one side of that, I suppose, is to say, "Is
defence expenditure in India very high?" It is not. I think
it is lower than the developing country average and India, like
any other country, has a right to a defence budget and a programme
for its own defence. Another side to that is to say, "How
do we know that we are not just substituting government expenditure
in important areas like health and education?" This is something
that we are very concerned about and, in all our interactions
with state governments and with the central government, we are
looking at the overall pattern of expenditures and the level of
expenditures on basic services such as health and education and
the trends and whether they are going up or remaining stable.
In that respect of course, we very much welcome the commitment
that is there in the common minimum programme to increase substantially
the levels of expenditure on health and education. If I could
give just an example of the Indian programme for elementary education
which we, alongside other donors, are supporting. A great deal
of time has been spent in designing that programme and in obtaining
assurances on exactly the point you have raised that the money
that is put in by donors will be additional to the money that
is put in by the Government of India and a great deal of lengthy
discussion has taken place on exactly that issue. While expenditures
on health and education are being protected in difficult times
of economic reform or we see them increasing, then we feel that
we have enough comfort and that is a satisfactory picture. Another
point that I would raise in reply to your question is that often
what we are seeking when we provide assistance is not just to
fill a financing gap, it is also to enable change to take place.
We believe that a number of the programmes we support are different
because of our intervention. They are different because of the
inputs of good practice that we are able to bring, because of
some of the technical assistance that can come alongside the programmes
and, because of some of the additional scrutiny, we are getting
improvements in the governance of these programmes overall. So,
on all of those counts, we of course ask ourselves the same question
that you have asked and we will seek assurances that we are genuinely
adding value through our inputs.
Q42 Chris McCafferty: I would like to
ask about DFID's priorities in spending plans. Having looked at
some of the written evidence, I am a little confused, so perhaps
you could explain. In the written evidence, you made it clear
that, in the last three years, over 60% of resources have been
spent on state programmes and the written evidence states that
spending was £198 million in 2003-04, that it will be £250
million in 2004-05 right up to £280 million in 2005-06. It
also says that there will be enhanced off-track spending including
£250 million for sexual and reproductive health, £190
million for primary education and £123 million for HIV/AIDS.
My first question is, is that new money or is that money being
top-sliced from somebody else? I hope it is new money because
it is very innovative if it is. The wider question is, can you
clarify for me where DFID will be spending this money in India
during the Country Assistance Programme rising to 2008 and perhaps
explain what the current balance of funding is between support
to sector-wide national programmes, direct budget supporting and
funding to civil societies?
Dr Seymour-Smith: The commitments
on health, education and HIV/AIDS which you mentioned and your
specific question was as to whether those were new money: those
are new allocations. Of course, each of those will stretch over
several years. So, a bit of that spending will come in this financial
year, bits will come next financial year and in the two or three
years—
Q43 Chris McCafferty: But it is money
that is over and above the spending commitments that are also
specified? That is what I am trying to get at. Is it separate
money?
Dr Seymour-Smith: No, that would
be included. For example, when we talk about £190 million
on education, let us say that this financial year we spend £50
million on that, then that would go to make up part of this financial
year's total of £250 million expenditure. So, the £250
million spend that we are projecting this year includes commitments
on sexual and reproductive health, it includes commitments on
education, commitments on HIV/AIDS and commitments to our state
programmes and it is our best estimate at this point of how much
we will spend on all of those programmes to give us a total outturn.
Q44 Chris McCafferty: Would it be possible
to let the Committee know exactly what those figures are for each
year, what the percentages are? I am particularly interested in
the section on reproductive health obviously but primary education
and HIV/AIDS are quite important as well. I do not expect you
to answer those questions now but I think it would be useful for
the Committee to have that information.
Dr Seymour-Smith: It would be
possible to provide the Committee with a breakdown of the components
of the £250 million expenditure that we aim at this year
and how much of that is for health, education and HIV/AIDS and
how much of it is through civil society,[1]
but I can answer now that the proportion to civil society is quite
small. I think that, by their very nature, many civil society
interventions do not require a large amount of money, so that
percentage is pretty low. Budget support sometimes makes these
expenditure patterns a little lumpy because budget support tends
to come in large tranches and not necessarily every year. They
can be every one or two years. We tend to treat budget support
somewhat separately. Leaving aside budget support and just going
to the other part of your question, how do we plan to spend our
money, we think that a more or less equal distribution between
the national programme on the one hand and the four state programmes
on the other hand, in other words about half of our annual spending
going to the national programme and about half going to the four
state programmes, is about right. However, budget support in any
one might throw out that equation. For instance, last year we
had one large tranche of budget support to Andhra Pradesh which
somewhat distorts that in principle allocation.
Q45 Chris McCafferty: Just to push that
point a little further, do you plan to continue to spend about
60% on state programmes in the future or are you looking to shift
the balance of resources, maybe more support for the Government
of India in their centrally supported schemes or even more for
civil society because you have just said that that is a very small
proportion? Are you considering enhancing that?
Dr Seymour-Smith: Yes. As I have
said, leaving aside budget support which tends to be rather lumpy,
our view at the moment is that we should aim to spend about half
of our funding on the national programme and about half in our
four partner states. Looking forward to the future, as some of
our partner states fulfil the promise and the expectations of
the partnership that we have had with them and begin to perform
better—and this is a question looking beyond our current
Country Assistance Plan and perhaps forward to our next one—we
do need to ask ourselves—and I know that the Committee,
in its deliberations, has already looked at this question—should
we be taking on new focus states and in particular where are we
in relation to the states like Uttar Pradesh (UP) and Bihar which
have large populations, very great need and very severe levels
of poverty but where it is extremely difficult for donors to work
and indeed extremely difficult for Government of India centrally
sponsored schemes to obtain some purchase and actually make a
difference to those poverty areas? This is one of the questions
that is occupying us at the moment and perhaps I could invite
Aruna to add a few words on that question. Before I do that, could
I just address you on issue of the civil society. We do indeed
plan to enhance our engagement on civil society as is set out
in our Country Assistance Plan. We recognise that there is a role
for donors in supporting civil society in nurturing civil society
initiatives in strengthening the voice of the poor, in helping
to increase demand for services and helping poor people realise
their rights and we have a number of innovative and interesting
programmes such as the Poorest Area Civil Society programme which
works in the 100 poorest districts of India which are piloting
interesting innovative approaches and we do see scope for expanding
that engagement in civil society. Perhaps I should, if I may,
just pass on to Aruna to touch on this issue of where we go in
the future in terms of state and centrally sponsored schemes.
Mrs Bagchee: All I would add to
what has been said is that this is an area which DFID is thinking
very closely about. In India, there are no simple questions about
where and how DFID should spend its money. As the Chairman has
pointed out, the amount is so small that it is not a question
of major resource transfers that is going to make a difference.
When we look at the picture, it is not a very easy thing to say
that these are the successful states and we need not work there
at all and these are the difficult ones where we should be working
because there is the question of, do you work only in those states
which are difficult and where the money may not be as effective
versus working with those states where there is reform and you
want to commend further reforms and so on? On the need itself,
if you look at India, 70% of India's poor are in six states: UP,
Bihar, Madhya Pradesh, Maharashtra, West Bengal and Orissa. Today,
DFID is already working in three of them and, of the other three,
UP and Bihar we can understand but there is also Maharashtra,
which is normally considered as a well-performing state but it
does have high levels of poverty. Similarly, when we look at the
hunger MDG, the states with higher than 60% caloric deficiency
happen to be Kerala, Gujarat, Andra Pradesh and the north-eastern
states. Again in this, Kerala and Gujarat are normally considered
as quite well-performing states. So, we look at all these questions
of need with reference to the particular MDGs and we cannot be
all over. In balance, we have to consider whether to stick to
these four focus states as the main focus of our work and then
to see to what extent we can go into the difficult environments
as Charlotte has said. For this, we have a Task Team that is looking
more closely into the more difficult environment states to see
if DFID chooses to work there, what will be the appropriate strategy
in order that money is not wasted, and through which means, whether
through other partners or through the civil society or by whatever
means we could be more effective. These are the kind of discussions
we are having internally, and we will have our decision ready
by the Fall as to whether we go to other states or not.
Chairman: You mentioned Andhra Pradesh
and Piara would like to come in at this point.
Q46 Mr Khabra: I would like to draw your
attention to country assistance planning as far as Andhra Pradesh
is concerned. If you look at the expenditure profile, you will
find that one third of DFID's spending in India in 2001-02 was
in the form of direct budgetary support particularly for economic
and public sector reforms in Andhra Pradesh. Even in 2002-03,
Andhra Pradesh received about a quarter of UK spending in India,
not so much as direct budgetary support. There is a rumour that
DFID might pull out of Andhra Pradesh in 2008. Is the bias to
Andhra Pradesh likely to continue as it has been in the past?
Is Andhra Pradesh not one of the states in India most likely to
meet its on and off-track MDGs without DFID support?
Dr Seymour-Smith: First, I should
say that the figures for last year are in fact heavily affected
by one large tranche of budget support to Andhra Pradesh. As I
mentioned earlier, this does tend to produce a lumpy expenditure
profile. It is true that, even without budget support, Andhra
Pradesh has received a significant proportion of DFID assistance.
It has also received a significant proportion of total donor assistance.
Andhra Pradesh has been very heavily supported not just by DFID
but by the donor community as a whole because it was perceived
as a state with significant numbers of people in poverty and with
significant opportunities to make progress. Whether Andhra Pradesh
will continue to receive such large amounts of aid I think is
unlikely. I believe that some of the significant improvements
that have been achieved in the poverty indicators in Andhra Pradesh
will be sustainable and certainly the new Government in Andhra
Pradesh is very firmly giving the message that they intend to
build on the successes of the previous Government and that they
do not intend to reverse the reforms that have taken place. I
have to say that this is a slightly sensitive subject because
we have not yet had discussions with the Government of Andhra
Pradesh itself and we would not like them to hear from anyone
else, we would like them to hear from us first what the long-term
plan is, so I am going to be a little cautious in saying what
the future might be. Certainly, we did not enter into state partnerships
with the idea that they would be permanent arrangements. We entered
into them with the idea that here were opportunities which we
should take, that we should maximise those opportunities and get
the most benefit for poverty reduction and then be prepared to
move on because there are significant other challenges in India.
Q47 Mr Davies: I wonder if it might be
possible for you to let us have a list of the policies which you
just mentioned where you think you have had some influence as
a direct result of the relationship you have had with the direct
budgetary support[2].
I am not sure whether you had in mind the national government
polices or the policies of the state government. If you want to
let us have that in confidence, it will be equally helpful for
the Committee to see, for example, how the system works. I was
wondering whether I could explore a little further the way in
which you conduct your relationship with the recipients of DFID
support. You clearly have a dialogue with them which results in
a plan which you put together and you make it very clear that
you would like that to be a bilateral effort but do you coordinate
with other donors at the same time, in which case do you discuss
with them, with USAID or the World Bank or the EU, what you should
be doing and then, in the light of that, open discussions with
the recipient, whether it is the Government of India or the state
governments concerned? Do you start off with the state governments
coming to some draft agreement and then tell the other donors
what you are doing? How does the procedure work?
Dr Seymour-Smith: Perhaps I can
answer the second question first and maybe ask Aruna who has kindly
gathered some information about policy influencing and attribution
of our own activities to answer your first point. On how we conduct
the relationship and how we conduct the dialogue, it is an iterative
process. You asked if we coordinate with the other donors: we
do so constantly because we believe it is very important to minimise
transaction costs for the Government of India both centrally and
at state government level. So, it would be unproductive for our
government interlocutors to have to have separate discussions
with ourselves, with the World Bank and with the EC that bear
no relationship to one another. Albeit the Government of India,
both centrally and at state level, has different expectations
from the different donors and expects perhaps slightly different
things from each of them, they should add together to a coherent
whole that supports the planning process and the objectives that
have been set out by the Government. We have just finished over
the course of 2003, the Country Assistance Plan which involved
extensive stakeholder consultation. Our main consultations were
with our main interlocutor which is the Department of Economic
Affairs and the Ministry of Finance. They have the responsibility
for coordinating all the donor inputs, so they have to be our
main point of contact and we have to ensure that they are comfortable
with the discussions we are having at other levels and that they
have all the information that they require to keep an overview
of the whole picture. We have also had discussions with our partner
state governments and, following the launch of our new Country
Assistance Plan, we are now developing State Assistance Plans
which go into detail for each of those focus states. We then go
back and talk again to the other donors in the course of implementation.
So, it is a constant process of discussion where our main partner
is the DEA and the Ministry of Finance but we have to keep the
state governments, civil society interlocutors, private sector
and the other donors all in the loop in order that we are not
making unnecessary confusion and unnecessary transaction costs.
Q48 Mr Davies: So, you do not have single
multilateral meetings with several different donors present and
the Ministry of Economic Affairs or the Ministry of Finance all
agreeing a programme and then you say, "We'll contribute
this bit, America this bit and the EU this bit"? It does
not happen like that?
Dr Seymour-Smith: Not as formally
as that, there is not a roundtable or a consultative group.
Q49 Mr Davies: "Roundtable"
is a good word for describing what I had in mind. Do you see merit
in moving in that direction?
Dr Seymour-Smith: I think I have
alluded to perhaps one reason why it might not happen which is
that the Government of India does have different expectations
from the different donors. The World Bank, for example, has a
particular kind of loan programme, the Japanese have a particular
kind of loan programme, the Asian Development Bank (ADB) has a
different one and we have our programme and the EC has theirs.
So, in a sense, they are segmented and the Government of India
has not chosen to bring all the donors together into a coordinated
and general meeting.
Q50 Mr Davies: The donors could themselves
take action in this case as the creditors did in the Paris Club,
for example. My question is really, would you see merit, irrespective
of the practicalities or whether it is acceptable? Let us talk
first about whether there would be merit in such a model if it
could be implemented; what do you think?
Dr Seymour-Smith: Yes, I agree.
It is very important for us all to coordinate behind the Government
of India's 10th plan and its objectives and UNDP has shown a great
deal of leadership in taking a coordination role for all of the
donor community. So, it does happen and it is a good idea. Greater
donor harmonisation is something that we are fully committed to.
Q51 Mr Davies: You are implying that
the Government of India would have hesitations in dealing with
all of their donors en bloc. That was not the phrase you
used but the impression I got was that perhaps the Government
of India liked to play one off against the other to some extent;
is that right?
Dr Seymour-Smith: I cannot speak
for the Government of India.
Q52 Mr Davies: You must have an impression
of how the Government of India works or at least I hope you do.
Dr Seymour-Smith: My impression
is that they have a different expectation and set of requirements
from each of the donors and that they do not see the need to bring
all the donors together into one room and have a roundtable discussion.
Q53 Mr Davies: You put it very tactfully
to avoid disagreeing with what I thought I put to you. Can I just
ask about the political change which has come about in India.
Is the new Congress Government going to have a different approach
to donors and to their role or indeed to lead on the policy where
it would affect our inclination to support projects and programmes
in India?
Dr Seymour-Smith: We have not
had the opportunity to have those discussions at a political level
as yet with the Government of India about their approach to donor
assistance, though I very much hope that high-level visits from
DFID senior officials and, we hope, our Secretary of State later
in the year will give us that opportunity. As to whether there
have been changes in broader Government of India policies which
will affect our willingness to provide donor assistance, I think
the Common Minimum Programme is the most that we have at the moment
as a guide to the intentions of the new government and the emphasis
there on the rural areas, on social inclusion and on reaching
the poorest is, I think, very welcome as are the commitments that
I mentioned earlier to increase expenditures on health and education.
I am conscious that we have not yet answered your first question
about where we have had policy influence and may we come back
to that?
Q54 Mr Davies: Yes, of course.
Mrs Bagchee: First to just complete
this discussion, I think it is fair to say, as Charlotte has said,
that the Government of India has not brought all the donors together
because it sees that it has different expectations from each of
them. For instance, it will look to the World Bank for structural
adjustment loans but is not so sure that it wants DFID's Direct
Budgetary Support (DBS) to go alongside of that. It sees some
donors as better on infrastructure works and other more in the
social sector. It is the case that, in particular sectors, this
kind of donor—
Q55 Mr Davies: What does it see us as
then? What do they like to think of us as?
Mrs Bagchee: In the social sector,
and poverty-focused social sector work. It is the case that in
particular sectors such as in health, the Government of India,
the Central Ministry of Health and Family Welfare has brought
all the donors together and would like to see a convergence of
all of the individual approaches that we have had so far—all
move, both within the Government of India, as well as on the donor
side, to not have their own separate programmes for reducing the
Infant Mortality Rate (IMR), reducing the Maternal Mortality Rate
(MMR) and so on. DFID is a leading party in this to bring about
donor harmonisation, to have one large reproductive and child
health programme. So, exactly as you said, we do have a development
partners' meeting where all the donors first discuss together
what the approach should be, and what the priorities should be
and so on and we have periodic meetings with the union, Health
ministry, as well as the state level departments to see how that
convergence should take place. There is a fair amount of that
work going on as well.
Q56 Mr Davies: Who is driving the coordination?
Is it the donors who are saying, "We should have greater
coordination" or is it the Indian government?
Mrs Bagchee: I think it is recognition
on both sides that, unless there is that convergence, we are not
going to reach the targets at all.
Q57 Mr Davies: There is genuine recognition?
Mrs Bagchee: There is genuine
recognition on both sides.
Q58 Mr Davies: I think a number of us
were struck by a decision of the last government of India to not
only sack a whole range of smaller donors, which is a rather unusual
thing to do, to turn money away, and I was wondering to what extent
that was almost a kind of warning shot to donors that the Government
of India does not really want too much interference in its own
policy making. For the people giving large amounts of money, they
will have a wider measure of tolerance no doubt; the ones who
are giving less, they will be fired together and dispensed with.
That would be a problem insofar as we do hope to have some influence
on policy and, even if we do not call it shareholders or something
like that, we hope that is justification for spending British
taxpayers' money in many cases in India as well as elsewhere,
which will have a beneficial impact on the whole of the area which
we are trying to contribute to. So, if there is resistance of
that kind from the Government of India, it would be quite problematic
for our aid effort in the amount of influence you can exercise
over time. So, could you tell me if my fears in that respect are
justified or partially justified or are totally unjustified.
Mrs Bagchee: I think at the moment
DFID is seen as a very significant player because it is seen as
a donor that has been engaged with the country for a long time
and it is focused on genuinely doing something about the MDGs
and helping India to reach the MDGs faster. I think it is also
quite influential in donor harmonisation itself and this role
is also recognised by the Government of India. In several of the
programmes in which DFID has taken a lead role for many years
such as the District Primary Education Programme (DPEP), we now
see that the work DFID did along with the European Commission
and the World Bank has led to the Government of India itself now
taking a large national programme which is known as Sarva Shiksha
Abhiyaan, SSA, to see that all of the children who are out of
school now get into school and complete eight years of elementary
education. It is now an education guarantee; an act has been passed,
so it is sort of a rights-based approach to education. I think
this had a lot to do with the kind of work and influence that
DFID had, over a long time in the education sector. There should
not be the fear that it is considered as one of the smaller donors
and that it is not significant.
Q59 Mr Davies: So we can continue to
exercise an influence commensurate with the development that we
are making?
Mrs Bagchee: I think so.
1 Ev 62 Back
2
Ev 64 Back
|
