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


Written evidence submitted by Oxfam

SUMMARY

Oxfam welcomes the opportunity to submit evidence to this Inquiry. With 456 million (35%) of the world's 1.3 billion living on less than $1.25i a day living in India, it is crucial that DFID continue to provide aid to assist poor and vulnerable communities in India. Given Middle-Income Countries (MICs) such as India have more resources than Low-Income Countries (LICs) we expect lower absolute amounts of aid to these countries, but the role of rich country donors in tackling poverty remains critical. The extent of poverty and inequality remaining in MICs shows growth alone is insufficient to overcome poverty and that MICs will continue to need assistance. DFID has, and continues to play, an instrumental role in reducing poverty in India by supporting innovative and catalytic programmes in a range of sectors, including health and education. Providing bilateral aid to India also gives DFID a legitimate role in bilateral dialogue about development and poverty reduction with India's state and federal government representatives.

OXFAM IN INDIA

1.  Oxfam Great Britain (GB) has worked in India for more than 60 years. Oxfam GB's current programme priorities are a focus on livelihoods, gender equality, disaster preparedness and, education.

2.  In 2008, Oxfam India was established as an independent organisation, and became an observer affiliate of the Oxfam International Confederation in 2009. Oxfam India strives to secure the right to a life with dignity for all by actively engaging people and policy makers in the inclusive development of society. It aims to ensure that everyone has access to education, health and social protection; people are able to overcome poverty by earning a decent livelihood with fair trade opportunities; women lead a life of dignity, free from violence; and communities are prepared to deal with the impact of climate change, natural and man-made disasters.

3.  Oxfam believes that the provision of aid by rich countries like the UK is an obligation and a matter of justice, not an act of charity. Rich countries should, and have committed to, give aid to help end global poverty, fight inequality, promote gender equality and meet humanitarian needs. Aid is not sufficient for poor countries or communities to fight poverty and inequality—there are many other important factors, such as reforming international trade and financial rules to ensure that poor countries can generate and retain their own resources—but it is necessary.

POVERTY AND VULNERABILITY IN INDIA

4.  Poverty in India is widespread. A third of the world's poor are Indianii and there are more poor people in eight Indian states than in the 26 poorest countries in Africa. More than 40% of India's population of over 1.1 billion falls below the international poverty line of $1.25 per day.iii Some Indian states have much higher levels of poverty and rank far lower on other development indicators than others.

5.  India is amongst the most vulnerable countries in the world to the effects of climate change. There is clear evidence now that the Himalayan glaciers are retreating due to rising global temperatures. Rising sea levels place the large coastal populations at risk of flooding and displacement. Most of the poor are dependent on rain-fed agriculture, and erratic monsoon cycles over the last few years have played havoc with their livelihoods and food security. Global climate change has also meant that farmers have to adapt to hotter and drier climates.

ROLE OF AID IN MIDDLE INCOME COUNTRIES (MICS) SUCH AS INDIA

6.  A recent study by the Institute of Development Studies (IDS) indicates that 75% of the world's poor belong to the MICs.iv One clear consequence of economic multi-polarity is that global poverty exists substantially within the borders of rising powers (particularly India). This is not an entirely new situation—Oxfam GB's own UK poverty programme testifies to the endurance of poverty within all countries. And the depth and intractability of poverty in low-income countries will continue for some time, particularly in sub-Saharan Africa. Nonetheless a growing proportion of those living in poverty are in rising middle-income countries.v

7.  Given MICs have more resources than low-income countries we expect lower absolute amounts of aid to be transferred to these countries, but an equal level of urgency is needed in tackling poverty in these countries. They still need assistance—and the extent of poverty and inequality shows growth alone is insufficient to overcome poverty.

8.  This means that, more than ever, the UK's contribution to combating global poverty must not be solely through providing finance. The UK's trade, tax, debt and other relevant policies will remain critical as well as its aid. Equally important in the UK's development "tool kit" will be diplomacy and positive influence on the domestic policies of rising middle income countries: for example, through the "thought leadership" of expert government departments like DFID; seed funding for innovative initiatives to mobilise these rising countries' own resources, and to foster domestic policies to reduce inequality; and, in global fora such as the G20, promotion of sustainable, equitable forms of growth.

9.  Donors need to invest through Overseas Development Assistance (ODA) in projects that are catalytic, demonstration projects, capacity building (both of civil society and state) and in helping build domestic resources, for example through tackling tax evasion. DFID's contribution in middle-income countries like India remains critical, and needs to be strategic in order to leverage policy change for the smaller contributions made relative to domestic resources.

 DFID IN INDIA

10.  DFID has had a very strong presence in India for many years across a range of sectors, including health and education. While bilateral aid is relatively small in comparison to the Government of India's social spending, it is highly valued because it provides small incremental financial contributions to test new ways of improving governance and delivery on the ground, often drawing on DFID's experience in other countries. Learning from many DFID-supported interventions has been integrated in to national and sub-national policies to ensure more effective delivery to target groups.

11.  Aid can and does encourage governments such as India's to invest more of their own money in tackling poverty and DFID's aid to India has achieved real impact in this way. For example, through its support to the Sarva Shiksha Abhiyan Programme (the Government of India's flagship programme to achieve universal elementary education), it has helped get tens of millions of children into school in the last 10 years. As a result of this programme, the enrolment rates have gone up by over 95% for most states.

12.  India provides an excellent example of where DFID's contribution can help leverage pro-development change. One of the clearest examples is in relation to India's failure to date to invest in more equitable and accessible health financing, including failing to remove user fees for health care, one result of which is that 50% of women in the country do not have access to even the most basic assistance during childbirth. DFID could have a significant impact for example by supporting in-country analysis of the current inequitable financing situation across the country, providing technical advice on equitable and universal financing (perhaps in partnership with the World Health Organisation) and helping millions get access to essential life saving health care paid for by improved and progressive taxation.

13.  In a very large and rather decentralised federation like India, governance structures do not effectively promote adequate redistribution. Development assistance can help overcome that and target the poorest states and improve governance and redistributory structures and practices.

14.  Since the mid-1990s, DFID has played a critical role by bringing other donors—both bilateral and multilateral—on to one platform. Many of the interventions that DFID has been supporting in-country have been designed as joint interventions with the World Bank, the EU and UN agencies. These include the Sarva Shikha Abhiyan (The Government of India's flagship programme on Universal Elementary Education) and the Reproductive and Child Health Programme—Phase II (the Government of India's programme addressing maternal and infant mortality). Improvements registered under Sarva Shiksha Abhiyan are well documented.vi

15.  DFID still has an important role to play in India's development, especially due to the reputation it has built as a strong, independent thinking development agency. Oxfam firmly believes that UK aid to, and DFID's presence in India should continue.

FINANCE TO SUPPORT INDIA TO ADAPT TO AND MITIGATE THE IMPACT OF CLIMATE CHANGE

16.  Under the terms of the United Nations Framework Convention on Climate Change (UNFCCC), developed countries have a responsibility to provide finance to developing countries, including India, to help them tackle climate change. Climate finance is an obligation under the terms of the Convention, in recognition of the fact that climate change presents new and additional costs to developing countries—those least responsible for creating the problem, and least able to cope. Specifically this finance should help support India to make a transition to a low carbon development path and adapt to the impacts of climate change.

17.  Climate finance should be provided in addition to the UK's ODA commitment of reaching 0.7% GNI by 2013. Diverting money from aid budgets to meet the new and additional costs of climate change will reduce the funds available for other ODA priorities such as health and education. It should primarily be provided through a new global climate fund under the UNFCCC, which can act as a "one stop shop" for developing countries, reducing their transaction costs in accessing finance.

18.  New and additional climate finance is desperately needed to help vulnerable communities adapt to climate change. Oxfam estimates that currently less than 10% of climate finance is flowing to adaptation, with the results that the needs of the poorest and most vulnerable communities—those least responsible for creating the problem—are not being met.

19.  A new global climate fund has a crucial role to play in meeting these needs in India. In order to ensure that adequate adaptation resources are reaching the most vulnerable communities—in India and elsewhere—the governance arrangements for this fund must ensure equitable representation of developing countries on the Executive Board. They must also include a dedicated window for adaptation with a 50% pre-allocation of funding, and a Finance Board to assess the balance of financial flows for adaptation and mitigation and across different countries and regions.

20.  India has an estimated 400 million people without access to electricity. On a per capita basis, the average person in India emits about 1.2 tonnes of carbon dioxide, compared to over 20 tonnes in the US. Therefore increasing energy use and access are development priorities for India. But if catastrophic climate change is to be avoided, India, and other developing economies, will need to forge new low carbon paths to development, and as they do so, they will incur incremental costs—for example the higher costs of investing in a wind farm over a coal-fired plant. These will, by definition, not be met by the private sector without public intervention. There is therefore a need for public mitigation finance, which can be used to cover this financing gap, leverage private finance and direct it towards opportunities which can maximise pro-poor outcomes such as rural electrification.

21.  As with adaptation finance, public mitigation finance should be channelled primarily through the new global climate fund which can be accessed efficiently and transparently by India and other developing countries.

22.  New innovative financing mechanisms, such as a Financial Transactions Tax, the introduction of emissions trading schemes, or levies for international aviation and shipping, will be needed to ensure that the Copenhagen commitment to provide $100 billion a year by 2020 for adaptation and mitigation in developing countries is provided in the form of public money and in addition to existing ODA commitments.

REFERENCES

i  New research from the Institute of Development Studies suggests that three quarters of the world's poor now live in countries classified as "middle income": although this is substantially due to the rise of four countries (India, Nigeria, Indonesia and Pakistan) into the "middle income" bracket. Andy Sumner, Global poverty and the new bottom billion: Three-quarters of the World's poor live in middle-income countries (Sussex: 2010).

ii  op cit.

iii  41.6% of population below income poverty line, US$ 1.25/day, 2000-07.
See http://www.cuts-grc.org/pdf/CUTS_GRC_Note_on_Issues_Related_to_Aid-for-Trade.pdf

iv  op cit.

v  op cit.

vi  See for example, http://www.education.nic.in/ssa/ssa_1.asp

30 March 2011



 
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Prepared 14 June 2011