Why the British government should not cut important aid to India


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11:48 am - November 19th 2012

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by Jack Torrance

The recent announcement that UK government aid to India will be scrapped was mainly greeted with either agreement or indifference, but we should consider whether the arguments for this move were fair.

It’s easy to see why people would support cutting the idea. The Indian economy is fast shooting up the GDP league tables and is touted to be one of the economic superpowers of the future, along with Brazil and China.

People often also point to the Indian space programme and nuclear weapons as evidence that the country no longer needs or deserves aid. However what these things belie is the true state of poverty for much of India’s population.

Whilst the total size of India’s economy is pretty vast, so is its population. The nominal GDP per capita in 2011 was around $1,400, around just 5% of Britain’s. Even in terms of purchasing power, India’s GDP per capita is just approx £3600 per capita, one tenth of Britain. So even without the severe inequality which plagues India the country’s people would not be remotely well off.

Poverty estimates by the University of Oxford suggest that more than 53% of Indians live in poverty whilst 28% experience sever poverty. Make no mistake that despite its economic achievements poverty in India remains a major problem that needs to be tackled.

Turning to the “vanity projects” such as the space program and nuclear weapons, these are hardly grounds for cutting aid. It’s certainly difficult to justify development of weapons of mass destruction. But given that India’s primary military belligerent, Pakistan, also possesses a nuclear capability, we can sympathise with a desire for nuclear deterrent.

The space programme meanwhile is about much more than prestige. The primary focus of the program is the development of space technology, which has applications in telecomms, media and scientific research. These sectors are a big part of India’s emerging technology focused economy, and so the program could be itself an alleviator of poverty in the long term.

Furthermore the cost associated with projects like this are a drop in the ocean in comparison with the level of poverty in India. For instance the space program costs just 0.14% of India’s GDP. One would imagine that on a national level this amount of money would have a negligible impact on poverty alleviation.

Ultimately the real question is whether you distinguish between the people of India and the Indian government. While the comfortable and monied leaders of the country may be “squandering” money on unnecessary projects, this is hardly the fault of the Mumbai slum dweller or the poor sugar farmer in Uttar Pradesh.

Even if we consider the Indian government to wasteful and misguided, The Department for International Development should work with charities and NGOs to deliver aid directly to those people who endure severe hardship every day.

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Reader comments


Good piece. However, in addition to differentiating India from Indians, it’s useful to differentiate the Govt of India from the Indian states.

Most of the responsibility for development, and some of the funding, lies with the 33 fairly autonomous states – to a much greater extent than in, say, the Lander in Germany. Thus, while the right-wing papers talk of British aid as though it is delivered in a big brown envelope to a corrupt high official in a plus New Delhi office, the reality is that, national level permissions aside, it is agreed at state level through partnership agreements.

Sensibly, DfiD now provides its aid only to the poorest 8 of the 28 Indian states, mostly to the East and North, and in which 65% of India’s poor live.

As the Southern and Western states do grow their way out of poverty (though inequalities remain), these poorest 8 states are being steadily left behind, not least because the central state has dramatically withdrawn its financial support since 2005/06, when the Twelfth Finance Commission recommended a process of “disintermediation”, a euphemism for cutting states adrift from the Centre and leaving them at the mercy of the markets.

This means that all States are now borrowing at rates over 9% (seen as unsustainable in the Eurozone) and this, combined with reductions in States’ income from the National Small Savings Fund, means that the poorer States, with their lower tax base growth projections, face a very uncertain fiscal future, especially from 2017/18 as many of the recent loans come to maturity*.

In this macroeconomic context it makes sense, for those who support the idea of 350 million people having more secure livelihoods, to promote their position by making as clear as possible that aid is not in fact going to the Indian State at all, but to areas which are effectively, and increasingly as a result of central policy, “countries within a country”.

More of that ilk at http://thoughcowardsflinch.com/2012/02/07/the-incomplete-state-charles-tilly-and-the-defence-of-aid-to-india/

2. Chaise Guevara

“While the comfortable and monied leaders of the country may be “squandering” money on unnecessary projects, this is hardly the fault of the Mumbai slum dweller or the poor sugar farmer in Uttar Pradesh.”

This.

Playing devil’s advocate, is continuing providing aid just exacerbating the problem and letting the Indian Government off the hook?
i.e. if we were supplying this money to say 1980s Burma or South Africa, wouldn’t we all be saying the UK Govt is propping up a corrupt or unequal regime?

Also, regarding nuclear weapons, didn’t India initiate the nuclear arms-race on the subcontinent?

4. the a&e charge nurse

Some say aid is part of the problem citing the 1trillion given to africa as an exemplar?
http://www.youtube.com/watch?v=dyf2Cf5GkTY&feature=related

Slightly strange comment:

“Furthermore the cost associated with projects like this are a drop in the ocean in comparison with the level of poverty in India. For instance the space program costs just 0.14% of India’s GDP. One would imagine that on a national level this amount of money would have a negligible impact on poverty alleviation. ”

For British aid is around and about the same percentage of GDP isn’t it? Meaning that it will have a negligible impact on poverty alleviation?

We can justify or delegitimise aid to lots of countries if we are free to build a case ad hoc. For me it is important to have some sort of explicit criteria so that we can scrutinise aid policies more effectively. And also determine what the actual goals of aid programs are.

Aid policies cannot be completely blind to the states in which recipients live, because some will give access to donors and support for projects while others may be obstructive or have agendas which undermine the supposed benefits of those projects. But if a state shows neglect towards the poor in their borders, that is not a justification (in my book) for the aid agencies also to show similar neglect.

Aid agencies often get drawn into campaigning (and are criticized for political campaigning) when they draw attention to state neglect of poverty and the reasons for it. But it makes complete sense for them to do it to make sure aid works in the long term and to get rid of structural poverty. That is what should motivate aid (when it is not corrupted). So did DFID identify and campaign on the Indian state’s (or provinces’) ineffectiveness in removing poverty alongside they aid they gave? And what should DFID do if campaigning fails? It is not an excuse to stop giving aid to those who need it.

I think it might be best for DfID to give aid through agencies which specialise in making decisions based on needs and opportunities for removing poverty globally. Probably UN agencies rather than NGOs or the World Bank, but that is another political argument. There may still be a case for aid to India but what consistently applied criteria is it based on? If DfID cannot give an answer, it should send aid through organisations that can – they would be more accountable than DFID if they have consistently applied policies open to scrutiny.

7. Jack Torrance

Tim Worstall,

Yeah that’s a fair point, but personally I would argue that our aid contribution should be higher than it was before.

All ‘government aid’ should be scrapped. It is not the role of government to give away people’s money. If someone wishes to donate money to India they can do so.

9. Chaise Guevara

@ 8

” It is not the role of government to give away people’s money. ”

Well, our democratically elected government does so. So it IS part of its job. What you mean is that you’d prefer that it wasn’t.

Fair enough if you’re against aid, but you can’t just define it into an impossibility like that.

@OP, Jack Torrance: “The Department for International Development should work with charities and NGOs to deliver aid directly to those people who endure severe hardship every day.”

I agree that charities and NGOs are best qualified to deliver poverty relief or to create economic foundations. Those organisations know how to work around corrupt or disruptive systems.

They are also qualified to provide aid from Indians to Indians.

Before anyone chips in about cultural hegemony, note that most employees of aid agencies in India are Indians.

Mean GDP per head in India is $3,600 so the mean is utterly shit. It could be argued that India, if its citizens were more generous, could look after itself; spread the wealth a bit more. But reality and humanity pops up; some people will only see assistance if it comes from a western project that has identified their needs.

Loads of poor people live in India, high aggregate growth masks large areas of stagnation, aid buys policy influence (i.e. the Marshall Plan), while there is a British aid budget some of it should be spent in India even if their own government’s spending priorities are at times stupid. This is actually a policy area that isn’t all that complicated.

12. Northern Worker

As someone who has visited India on business on occasions in the past few years, I don’t think we should give them a penny. The poverty is hard to comprehend right from the moment you land – in Mumbai, in my case en route to Pune. I don’t have the words to describe what I have seen in the parts of India where tourists don’t go.

But, but … the extent of poverty is well beyond anything we can solve. Only the people of India and its government can do anything. And India does have the capability. The burgeoning middle class has more money than most in the UK, at least in relative terms, and the middle class is ever more numerous in numbers. However, there is little ethic of charity amongst the middle class. I’ve been with guys from work who just shove the poor out of the way. In all my visits there I’ve never seen an Indian part with a dime.

On the wider subject of overseas aid, Cameron is misguided. When it only takes a few billion to provide old people with residential homes here, we shouldn’t be aiming to spend 0.7% of GDP on aid – a made-up figure pluck from the air. Indeed, we will spend more on aid by 2015 than on our police force.

While our own population, and especially old people, are facing real problems, and we are reducing our armed forces to paramiltary police, we should rein in Cameron’s delusions of the UK as a ‘rich country’. We are not and India will be richer than us quite soon.

Should we, shouldn’t we? I don’t know, but it does sound a bit like the white man’s burden.

14. Chaise Guevara

@ Northern Worker

I’m kinda glad to have you to disagree with on this thread, because you’ve always come across as a decent and reasonable person, and it’s nice not to be exchanging aggro with a libertarian.

That said, I think you’ve fallen into a couple of traps in your post. The first is saying that we can’t solve all of India’s problems. Does that matter? If we can help some people, and we do so, those people have in fact been helped. This is called “perfection fallacy”: the idea that, because we can’t fix everything, we shouldn’t bother doing good things that are in our power to do.

The second is pointing out that the Indian government has the power to step in and do this itself. Yes, it does. But it isn’t doing that. Why should we allow ourselves to fail as human beings just because some other people have?

15. Chaise Guevara

@ 13 damon

So it vaguely resembles something bad if not examined too closely. Wow, that’s convincing…

Oh noes! You’ve caught me damon.

By wanting to give money to poor people… I’m weally a nasty wacist!

There are two ways out of poverty, one is for your local state to build institutions that secure your personal rights to liberty and property rights. Basic Acemoglu, Johnson, North, Robinson, Broadberry, etc. economic history stuff. Two, is to move to a country where those institutions already exist.

However, one thing which aid is quite good at is stopping people dying. Even if it doesn’t aid development too much (although I expect aid does), it can stop people dying from things like malaria. Now lots of poor people surviving isn’t optimal, but its better than lots of poor people dying.

Re: ‘Well, our democratically elected government does so. So it IS part of its job. What you mean is that you’d prefer that it wasn’t.’

A government, democratically elected or otherwise, has no mandate to take people’s money without their consent and give it away. An individual’s rights should not be voted away by a majority.

LO @16:

Spot on, except that aid delivered well (meaning respectfully) can build precisely the kind of institutions you speak, and on a big scale at lowish cost, of as well as doing the keeping alive stuff.

From a very good BBC piece from someone who actually went to India and spoke to Indians about a soon-to-be-cut DfID project (more athttp://thoughcowardsflinch.com/2012/03/07/the-burgeoning-of-bihar-lessons-for-hitchens-staines-co/)

“[T]he case that Britain retains its large aid budget to build the capacity of the Indian state may be a hard one to make to someone in the British public sector who has lost their job in the cuts caused by austerity at home.

But no-one could doubt the scale of the need.

If Bihar were a country, its per capita income would be the third lowest in the world. Only two countries in Africa would be below it.

Some Indian politicians and diplomats do not like Britain’s large aid programme because this is not the image of a land with global middle class aspirations they want to project. They live as if in another country from the lepers by the railway tracks.

Bihar has shaken off its past and is now the least corrupt state in India and from a low base its economy is growing at more than 14%. Given that, should it not now take care of itself?

The answer from the most senior civil servant in the state was simple. He told me that development would have come, but far more slowly without the British technical expertise that has changed the way they do things.

He said that millions would be lifted out of poverty far sooner because of the British help.”

19. Just Visiting

Left Outside

> Now lots of poor people surviving isn’t optimal, but its better than lots of poor people dying.

I’d agree.

But – and the real world is often not so easily ‘fixed’… – maybe by saving some lifes today, we are actually encouraging the behaviours that will lead to more deaths tomorrow (unless we intervene again tomorrow and ad infinitum).

I guess ‘dependency culture’ is the normal catch-phrase for this.

But trying to rephrase it a little – the old adage about giving a man a fishing rod and he’ll feed himself for life…. maybe needs to be rephrased as ‘stop giving the fisherman anything: he’ll be hungry for a day or a week but will eventually make his own fishing rod – and when he does it’ll be much better suited than anything we could give him for the type of fishing he needs to do, given the types of fish nearby, and given his type of water/culture/resources…

The ‘fisherman’ in this case is India as a whole.

It’s heartless utilitarianism, but maybe letting some poor starve this week, this year, will hasten the awareness within India at all levels that this is a problem they must now address? Discuss.

I don’t have a strong opinion on this one way or the other … but – popular opinion should count for something, as it is the people’s money.
What is the popular opinion on aid to India?

If Indians don’t care about their own people, does playing the foreign do-gooder really help, or just allow Indians to ignore their own problems?
They obviously need to develop the idea of the civil society – which helps for their most needy.
We can’t give it to them.

I haven’t seen it first hand, but in Paul Theroux’s book of his journey through Africa, he was scathing of the aid agency culture.

Throughout his account of his trip we are reminded of the uselessness of aid workers and, in particular, the offensive luxury of the vehicles they drive around in. In Malawi we hear of “a white person driving one-handed in his white Save the Children vehicle, talking on a cellphone with music playing loudly – the happiest person in the country”. In Tanzania, still in those culpably white cars, they “travel in pairs, in the manner of cultists and Mormon evangelists”.

And here is Theroux’s coup de grâce: “Aid workers in rural Africa are in general, oafish selfdramatising prigs and, often, complete bastards.”

http://www.guardian.co.uk/books/2002/nov/02/featuresreviews.guardianreview9

21. uiyfytshdclj

One of the problems with international aid that is rarely discussed is the way in which it allows governments to escape their responsabilities to their own citizens.

Just imagine for a moment if say, the US government provoded food and clothing for the poor here in the UK whilst the UK government then increased its spending on arms and whatnot. Come election time, the UK government would be crowing about their latest project, getting the public to vote for them by playing all the nationalistic cards in the pack. This is effectively what happens in countries like India.

There is a problem for the Indian poor, and there does need to be some mechanism for helping poor people wherever they are, however, the current system of aid provision is simply not tenable and should be scrapped. I’m not sure what it should be replaced with – I don’t claim to have all the answers – but I’m pretty sure that creative minds could work out a better system than the one used at present.

I think they should continue to give aid to India simply because of the atrocities they did during their 200 rule in India. Also development in India is not uniform. Much of the British aid is used in Bihar which is still not in par with the rest of India. But anyhow the decision has been made. No more aid.

23. the a&e charge nurse

[16] there are ways out of poverty but not for everyone, and certainly not if we rely on aid as a mechanism to bring about meaningful change.

Even if the UK did agree a generous aid budget it would be hard to know which parts of the world are most deserving (almost half the world’s population live in poverty) and what effect it will have in the face of exponential population growth.
http://www.globalissues.org/issue/2/causes-of-poverty

@ 22. Shalu Sharma”I think they should continue to give aid to India simply because of the atrocities they did during their 200 rule in India.”

As someone left of the current Labour party, I always find this an odd statement to make. Who is the ‘they’ here? During the 200 years you speak of, the bulk of the population in Britain were living in fantastic poverty. They didn’t see the benefits of the Empire and were without any political voice despite paying the price in terms of human cost.

You appear to arguing that not did the working-classes then have to pay for what went on during the Empire, but the current working-classes should also pay again by way of apology?

The current aid model is wrong. It seems to be about taking a political/economic system that most of us acknowledge is broken here and then exporting it to the rest of the world and with all kinds of strings attached. Bizarre.

Oh yeah.

Kenya is a perfect example of what is wrong with the aid system as it exists.

Kenyan MPs are the highest paid in the world. They receive bigger salaries and allowances than MPs in any EU country or the US. They drive around in 4x4s paid for by western aid budgets intended for improving democratic representation… and yet poor Kenyans still need aid handouts from us… why do they still vote for the same corrupt politicians who rob them at every turn?

Nationalistic answers on a postcard please.

26. Chaise Guevara

@ 24 Olafr

…And while modern Brits could be argued to have benefited from British rule in India, so could modern Indians.


Reactions: Twitter, blogs
  1. Jack Torrance

    Why the British government should not cut important aid to India | Liberal Conspiracy http://t.co/pEzgPbQ0 via @libcon

  2. Ravin

    Don't agree with any of it but well worth reading – Why the British government should NOT cut important aid to India http://t.co/uZp51Dpt

  3. Rishma Dosani

    Why the British government should not cut important aid to India | Liberal Conspiracy http://t.co/g643pSdV via @libcon @theJackTorrance

  4. Lizzie Palmer

    Why the British government should not cut important aid to India | Liberal Conspiracy http://t.co/g643pSdV via @libcon @theJackTorrance

  5. Jason Brickley

    Why the British government should not cut important aid to India http://t.co/Ku2TINyF

  6. Craig Johnson

    Why the British government should not cut important aid to India | Liberal Conspiracy http://t.co/w7Ib4kQa via @libcon @thejacktorrance

  7. Daniel Silva

    Check out this great article by my friend @theJackTorrance on why government shouldn't cut important aid to India | http://t.co/ZCH85edd

  8. Naresh Sevani

    Don't agree with any of it but well worth reading – Why the British government should NOT cut important aid to India http://t.co/uZp51Dpt

  9. A LETTER OF MARQUE

    'Why the British govt should NOT cut important aid to India' – good piece by @thejacktorrance – http://t.co/Ufzb3mzR

  10. Gabby M

    'Why the British govt should NOT cut important aid to India' – good piece by @thejacktorrance – http://t.co/Ufzb3mzR

  11. HazelKatherineLarkin

    'Why the British govt should NOT cut important aid to India' – good piece by @thejacktorrance – http://t.co/Ufzb3mzR

  12. Josh

    'Why the British govt should NOT cut important aid to India' – good piece by @thejacktorrance – http://t.co/Ufzb3mzR

  13. Madhavi 'Maddy' Ravi

    'Why the British govt should NOT cut important aid to India' – good piece by @thejacktorrance – http://t.co/Ufzb3mzR

  14. Jim V Norton

    Why the British government should not cut important aid to India | Liberal Conspiracy http://t.co/pEzgPbQ0 via @libcon

  15. Jack Torrance

    'Why the British govt should NOT cut important aid to India' – good piece by @thejacktorrance – http://t.co/Ufzb3mzR

  16. Politics&Government

    Why the British government should not cut important aid to India … http://t.co/RSaOoAXH

  17. Jack Barker

    Why the British government should not cut important aid to India | Liberal Conspiracy http://t.co/2QACit6S via @libcon

  18. PACS Programme

    Despite its economic achievements #poverty in #India remains a major problem, so #DFID should not cut aid to India. http://t.co/W1jARbq7





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