Cold turkey would hardly have been a sensible way for the UK to withdraw aid from India. There are too many DfID programmes on the ground that still need British support, reflecting the fact that the UK (the last time I checked) had a near 30 per cent share of all bilateral foreign aid to the country.
Andrew Mitchell, the secretary of state for international development, has instead sensibly decided to freeze the overall quantum of aid to New Delhi, currently running at about £280m a year, while shifting a large chunk of it towards investment in private enterprise, focusing it more narrowly on the parts of the country that need it most and measuring its impact more systematically than in the past. The direction of travel is clear. After a decade in which the UK sharply increased its aid to India, making it DfID’s single largest country programme, the trend is now in the other direction. As aid to India falls in real terms, it will be overtaken by Ethiopia as Britain’s largest aid programme.
This shift will not be enough to satisfy die-hard aid sceptics, who want answers to two recurring questions: 1) has nuclear-armed India, itself a donor country in Afghanistan, Bhutan and parts of Africa, reached a stage where it can fund its own development, and, if so, are we not simply crowding out Indian government spending? 2) is DfID not better off focusing its aid on poor and conflict-prone countries that cannot fund their own development rather than giving money to those that take it because it is going free?
While the answers might be ‘Yes’ and ‘Yes’, the reality is more complex. The Millennium Development Goals, to which we are committed, will not be met globally unless they are met in India. And notwithstanding India’s rapid growth, there is a continuing demand for UK development assistance – especially the programme design expertise and the badge of good governance it confers – from the Indian government at central and state level. Lastly, the UK is rightly seeking to construct an “enhanced partnership” with India on the world stage: DfID aid, for the time being, remains a valuable and valued, part of the package.
Posts on India – from beyond brics, the FT’s emerging markets hub
Jo Johnson was editor of the Lex column before leaving the FT at the general election after becoming Conservative MP for Orpington. He is a former FT South Asia bureau chief.