The Future of DFID's Programme in India - International Development Committee Contents

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)


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)


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)


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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Prepared 14 June 2011