Conclusions and recommendations
Government of India spending priorities
1. India
has a large and growing economy and its spending on pro-poor policies
has increased. The Government of India is increasing its tax revenues
and this will enable it to do more to end poverty there. Its middle
class, though small, is paying taxes. Although India has a space
programme, this has important socio-economic benefits including
mapping weather patterns and flooding, both of which can assist
development. Moreover India needs a credible defence programme
and satellites may be part of this. India suffers from corruption,
but in parts of India where DFID has focused its work, for example
Bihar, the state Government has made a serious effort to reduce
corruption. DFID is also assisting this. Despite corruption, money
does get through to services, as the increase in school attendance
rates demonstrates. (Paragraph 27)
2. Given current high
levels of poverty in India we agree with the Government's decision
to maintain an aid programme in India until 2015 provided it can
make a difference. Not every DFID project currently does this
and DFID must be more rigorous in its choices over the next four
years, funding only projects which have a clear development benefit
and which national or state governments would not otherwise fund.
DFID rightly focuses on catalytic, demonstration projects which
can be replicated and scaled up. This approach should continue.
(Paragraph 28)
Increased focus on poorest states
3. DFID
plans to spend an increased proportion of its budget in India's
poorest states. We understand that the reasons behind this include
not wanting to spread resource too thinly. However DFID must ensure
that the Government of India, at national and state levels, fully
understands and agrees with DFID's aims and objectives since the
Government of India has primary responsibility for its own development.
DFID's work in helping state Governments to access central funds
and manage resources better has been very successful and should
remain a key part of DFID's programmes in its focus states. (Paragraph
41)
Sanitation
4. Poor
hygiene and sanitation is costing India $54 billion a year or
6% of GDP. Yet many of the problems associated with it can be
addressed at community level relatively inexpensively. In particular
the Community-Led Total Sanitation Programme (CLTS) offers a road
tested, low cost alternative to expensive programmes based on
distributing sanitation hardware. Sanitation is the first step
to improvements in health yet DFID allocates only 1% of its programme
to water and sanitation and over 40% to health. DFID should switch
resources from health to sanitation and give sanitation a much
higher priority in the programme to 2015 including rolling out
support to CLTS. We also recommend that any future investments
in sanitation should be linked to and carried out in conjunction
with hygiene education. (Paragraph 48)
Nutrition
5. We
fully support DFID's emphasis on tackling under-nutrition in India
and working with the Government of India on this important issue.
The persistently high rates of child under-nutrition in India
concern us greatly and must be addressed. DFID has identified
India as a focus for its new Nutrition Strategy and has said it
plans to work with the Government of India to target 3.9 million
children under-five with nutrition programmes by 2015. We welcome
the Secretary of State's emphasis on the 'first 1000 days' of
a child's life. We recommend that DFID refine its programme to
focus on the first 1000 days rather than under-five children more
generally. (Paragraph 54)
Maternal and child health
6. India
is making slow progress in reducing maternal, child and neonatal
deaths. Progress is most slow in the poorer states and amongst
the poorest people. DFID's new programme should have a strong
focus on this area. To ensure such investments are properly targeted
to achieve results among the poorest, we recommend that DFID fund
a group of epidemiologists, or other appropriate researchers,
to collect data over a given period on caste, tribal and religious
affiliation of those who access maternal services or have institutional
deliveries. This should enable the Government of India to make
more informed decisions about how to target its interventions
in this important area. (Paragraph 62)
Social Exclusion
7. India
has high levels of inequality—particular castes, tribes,
and religious groups do less well than others because of entrenched
discriminatory practices and despite laws against such behaviour.
We met groups of Dalits, including children, who were beginning
to challenge social norms about their role in society. We were
impressed by their brave and determined outlook. However it will
be virtually impossible for most of these children to change their
social status while other parts of Indian society, and social
institutions, tacitly accept this level of exclusion and discrimination.
We recommend that DFID place greater explicit emphasis on tackling
inequalities throughout DFID's programmes. (Paragraph 69)
8. DFID's focus on
girls' education, in particular at secondary level, is important
for tackling gender discrimination and will help in relation to
DFID's objectives in maternal and child health. We strongly support
this new initiative. (Paragraph 70)
Working with the private sector
9. We
are still concerned that DFID does not have the right private
sector expertise in-house and recommend it work with appropriate
bodies which do have such expertise. (Paragraph 80)
10. DFID proposes
to spend £140 million—or half of its budget—by
2015 through the private sector in India. While we understand
that DFID's funding is intended to demonstrate that it can be
profitable to invest in the poorest states, DFID has not provided
us with sufficient detail on which sectors are most appropriate
in terms of returns and for maximising the poverty impact. The
decision about how much to spend through the private sector should
be dependent on achieving greater clarity on what the most effective
investments are likely to be. (Paragraph 81)
11. In addition we
do not consider it appropriate, in general, for aid to private
companies to be provided as a grant or a concessional loan because
to do so would skew the market and undermine free competition.
It also runs the risk of "picking winners" which often
fails and can simply shore-up unviable business practices. Instead,
funding for private sector development should take the form of
repayable loans. (Paragraph 82)
Ways of working in India
12. The
value of DFID's work in India is enhanced when it can demonstrate
new ways of doing things which work and these are scaled-up by
the national Government. DFID has a proven track record in this
and the Government of India is appreciative of DFID's efforts.
This way of working should form the basis of future programmes
in India since it does not require large amounts of funding. (Paragraph
86)
Working with civil society
13. DFID's
work through civil society organisations is extremely valuable,
especially in tackling social inequalities. As we have recommended
that DFID increase its emphasis on social exclusion, DFID will
need to increase its funding to dynamic Indian civil society organisations
with a proven and measureable record in challenging social exclusion.
(Paragraph 90)
Climate change
14. We
are delighted that the Government intends to approach climate
change with India in a coherent, cross-Government manner. However
we would like greater clarity about the Climate Change and Energy
Unit—in particular the Government's objectives and work
plan for it, and DFID's strategy for ensuring that developmental
concerns, including helping India to develop new low carbon paths
so that it can provide affordable energy for the poorest, are
an integral part of this. (Paragraph 97)
Trade and Investment
15. We
support the expansion of trade between India and the UK and consider
that increased trade has the potential to assist development in
India. For example, India has played an important role in the
production of low cost anti-retrovirals which have greatly assisted
those suffering from HIV/AIDs in both India and Africa. The proposed
EU-India Free-Trade Agreement should ensure that India can continue
to supply essential and affordable medicines in this way without
penalty, recognising that over time Africa is likely to develop
its own capacity to do so. DFID must champion this within the
Government and the UK Government must lobby for this within the
EU. We recommend that the Government set out its position on this
issue in its response to our report. (Paragraph 104)
16. DFID has a key
role to play in ensuring that UK Government policies "beyond
aid" are coherent with its poverty reduction objectives.
Development will not happen with aid alone. India is growing fast
and already attracts large amounts of inward investment. DFID
must play a greater role in encouraging UK investment in India
to actively support DFID's development objectives, especially
in the poorest states. (Paragraph 105)
Education Cooperation
17. The
Government is seeking to promote greater opportunities for cooperation
between the UK and India at higher education level. We welcome
the Government of India's Foreign Education Providers Bill, currently
before its Parliament, which will open up opportunities for UK
Universities to invest in India and help meet the growing demand
for higher education. (Paragraph 108)
Policy Coherence for Development
18. The
Coalition Government has recognised the importance of policy coherence
for development. It is important that DFID has a strong voice
in all cross-Government debates on India and ensures that poverty
reduction is a key part of these. We recommend that the Government
provide more information on the work of the Partnership Secretariat
in the its Response to this Report. (Paragraph 110
The post-2015 relationship
19. We
recommend that the newly created Independent Consortium on Aid
Impact (ICAI) undertake a study of the opportunity cost of DFID
continuing to provide £280 million per year to India, or
to other countries with a lower GDP per capita or slower progress
towards the Millennium Development Goals, as a means of demonstrating
to us and the British public whether investing in India represents
value for money. (Paragraph 115)
20. Notwithstanding,
in a context where DFID is closing its aid programmes in some
poorer countries we think that after 2015 DFID's aid relationship
with India should change fundamentally. Assuming the progress
we expect to see, DFID should continue to provide technical assistance
where needed and requested, but the funding mechanism should change.
This will need to be planned in advance. DFID must now begin to
consider how the post 2015 relationship will look and report on
its plans in the next 12 months. We will continue to monitor progress
in India and intend to ensure that any decisions are reviewed
before the end of this Parliament. (Paragraph 116)
Working with multilaterals and other doners
21. As
the largest bilateral donor DFID has an important role to play
in influencing other donors in terms of best practice and value
for money. DFID also plays an important role in fostering dialogue
with other donors and works cooperatively with multilateral organisations
such as the World Bank. As India graduates from International
Development Association eligibility, DFID and the World Bank must
ensure the transition takes place without having a detrimental
effect on poverty levels and on inequality. Given India's apparent
desire to reduce its reliance on bilateral donors, we expect the
role of multilaterals, especially the World Bank, to increase.
We recommend that over the next year, DFID undertake a careful
examination of the Bank's potential to continue to drive forward
poverty reduction in India. (Paragraph 120)
Working with India as a donor
22. India
is increasing its role as a donor in many of the countries where
DFID works. We recommend that DFID establish a development forum
for joint work with the Government of India and its focus state
Governments to share best practice and provide important learning
opportunities for both parties. This Forum for Development Dialogue
could see the UK providing technical assistance with India's aid
programme. We recommend the Forum be established before 2015.
(Paragraph 123)
Conclusion
23. The
Government wants to forge an enhanced partnership with India.
This will include development as well as trade, climate change,
security, diplomacy and education cooperation. We support the
UK Government in this objective which recognises India as an emerging
power and key partner for the Government. However there remain
large pockets of poverty, and the challenge of achieving the Millennium
Development Goals in India is immense. For this reason we support
the UK's continued development assistance to India for the period
up to 2015. However after this the development relationship must
change fundamentally to one based on mutual learning and technical
assistance where requested. (Paragraph 124)
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