This House would stop sending development aid to India

India is a booming economy with GDP growth of 7% over most of the last twenty years, and it is likely to overtake the UK economy within a decade.[1] As a result development aid today to India is small by comparison to what India itself can and does spend on its poorest citizens. The UK gives just £280 million per year, less than 0.04% of India’s GDP[2] and only enough to provide £1 per year for every one of India’s poorest.

This foreign aid is therefore not essential for poverty reduction in India. Indeed China has been the country most successful at reducing poverty and it has done it through economic growth not large amounts of development aid.[3] Aid money should therefore go to countries that really do need the money for development rather than those who are already succeeding at financing it themselves.

[1] Gilligan, Andrew, ‘India tells Britain: We don’t want your aid’, The Telegraph, 4 February 2012

[2] Ghosh, Jayati, ‘Yes: Should rich countries stop sending development aid to India?’, BMJ, Vol.346, No. 7891, pp.1-42, p.20

[3] Data and Research, ‘New Estimates Reveal Drop In Extreme Poverty 2005-2010’, The World Bank, 29 February 2012

The geography of poverty has changed; in 1990 94% of those in poverty lived in ‘low income countries’ today that is down to 28%. The rest live in ‘middle income countries’ that are often fast growing and able to provide much of their own poverty reduction funding.[1] Should all money go to those few countries that are still classed as ‘low income’? Instead it must be recognised that the impact of aid is on individuals not the nation as a whole. Aid that builds a school and provides for teachers will have little impact on the whole of the nation but a large impact on those who are able to attend school where they would not have had the chance before.

[1] Ravillion, Martin, ‘Should we care equally about poor people wherever they may live?’, 8 November 2012

Aid is simply a continuation of the “white man’s burden” and is therefore demeaning to the countries where it is meant to help. It implies that western countries have to provide money to those who are less ‘developed’ in order to develop them. This sounds very similar to westerners having to go out into the world in order to civilize the other countries and civilizations around the world. This similarity is made even closer when western aid has strings and institutions like the IMF impose ‘liberalisation’ of markets as it did for India at the end of the 1980s.[1] Far from providing help it is imposing western ideas and values on others.

[1] Weinraub, Bernard, ‘Economic Crisis Forcing Once Self-Reliant India to Seek Aid’, The New York Times, 29 June 1991

It is nonsense to compare aid with the west’s actions during the nineteenth century. Yes the west with aid sometimes wants to encourage its own values but this is a long way from forcing those values on the other state. The IMF may demand certain changes and liberalisation but regardless of how much India needed the help it could have said no.

It is clear that the donor countries do not know how best to spend the money they give as aid. Instead they want their money spent on the latest development fad whether this is the privatisation of basic services, microcredit, conditional cash, or particular infrastructure projects.[1]

Development can also be misspent as a result of corruption and a lack of oversight, for example the UK suspended its aid to Uganda as a result of indications it was being misused by the Ugandan government and not “going towards helping the poorest people lift themselves out of poverty”.[2] The Lords Economic Affairs select committee explained why this is the case; “aid is essentially seen by those entrusted with it as "free money", whose loss will go unnoticed by the giver and whose appropriation is nothing like as morally reprehensible as appropriating local tax revenue”.[3]

[1] Ghosh, Jayati, ‘Yes: Should rich countries stop sending development aid to India?’, BMJ, Vol.346, No. 7891, pp.1-42, p.20

[2] Tran, Mark, and Ford, Liz, ‘UK suspends aid to Uganda as concern grows over misuse of funds’, The Guardian global development, 16 November 2012

[3] Economic Affairs Select Committee, ‘Chapter 4: The Impact of Aid’, Parliament.uk, 2012

It is likely true that people on the ground sometimes see aid as ‘free money’. But the existence of corruption shows a need for greater accountability and more pressure from donors to ensure that occurs rather than less. Leaving a country because of corruption would simply show unwillingness to tackle one of the major issues that need to be tackled in order to ensure development.

Development aid is sometimes spent on implementing schemes that may be the result of a new idea that may not work that becomes a ‘fad’. But to object to this is to object to innovation; new ideas must be tried out on the ground before the development community knows for sure they won’t work. Development thinking is moving towards just handing out cash rather than subsidies; will this work? We don’t know, but won’t know for sure until it is tried more comprehensively than it has been so far.[1]

[1] See Helling, Alex, ‘This House would give cash to the poor to reduce poverty’, Debatabase, 24 January 2013

India is a booming economy with GDP growth of 7% over most of the last twenty years, and it is likely to overtake the UK economy within a decade.[1] As a result development aid today to India is small by comparison to what India itself can and does spend on its poorest citizens. The UK gives just £280 million per year, less than 0.04% of India’s GDP[2] and only enough to provide £1 per year for every one of India’s poorest.

This foreign aid is therefore not essential for poverty reduction in India. Indeed China has been the country most successful at reducing poverty and it has done it through economic growth not large amounts of development aid.[3] Aid money should therefore go to countries that really do need the money for development rather than those who are already succeeding at financing it themselves.

[1] Gilligan, Andrew, ‘India tells Britain: We don’t want your aid’, The Telegraph, 4 February 2012

[2] Ghosh, Jayati, ‘Yes: Should rich countries stop sending development aid to India?’, BMJ, Vol.346, No. 7891, pp.1-42, p.20

[3] Data and Research, ‘New Estimates Reveal Drop In Extreme Poverty 2005-2010’, The World Bank, 29 February 2012

The geography of poverty has changed; in 1990 94% of those in poverty lived in ‘low income countries’ today that is down to 28%. The rest live in ‘middle income countries’ that are often fast growing and able to provide much of their own poverty reduction funding.[1] Should all money go to those few countries that are still classed as ‘low income’? Instead it must be recognised that the impact of aid is on individuals not the nation as a whole. Aid that builds a school and provides for teachers will have little impact on the whole of the nation but a large impact on those who are able to attend school where they would not have had the chance before.

[1] Ravillion, Martin, ‘Should we care equally about poor people wherever they may live?’, 8 November 2012

Aid is simply a continuation of the “white man’s burden” and is therefore demeaning to the countries where it is meant to help. It implies that western countries have to provide money to those who are less ‘developed’ in order to develop them. This sounds very similar to westerners having to go out into the world in order to civilize the other countries and civilizations around the world. This similarity is made even closer when western aid has strings and institutions like the IMF impose ‘liberalisation’ of markets as it did for India at the end of the 1980s.[1] Far from providing help it is imposing western ideas and values on others.

[1] Weinraub, Bernard, ‘Economic Crisis Forcing Once Self-Reliant India to Seek Aid’, The New York Times, 29 June 1991

It is nonsense to compare aid with the west’s actions during the nineteenth century. Yes the west with aid sometimes wants to encourage its own values but this is a long way from forcing those values on the other state. The IMF may demand certain changes and liberalisation but regardless of how much India needed the help it could have said no.

It is clear that the donor countries do not know how best to spend the money they give as aid. Instead they want their money spent on the latest development fad whether this is the privatisation of basic services, microcredit, conditional cash, or particular infrastructure projects.[1]

Development can also be misspent as a result of corruption and a lack of oversight, for example the UK suspended its aid to Uganda as a result of indications it was being misused by the Ugandan government and not “going towards helping the poorest people lift themselves out of poverty”.[2] The Lords Economic Affairs select committee explained why this is the case; “aid is essentially seen by those entrusted with it as "free money", whose loss will go unnoticed by the giver and whose appropriation is nothing like as morally reprehensible as appropriating local tax revenue”.[3]

[1] Ghosh, Jayati, ‘Yes: Should rich countries stop sending development aid to India?’, BMJ, Vol.346, No. 7891, pp.1-42, p.20

[2] Tran, Mark, and Ford, Liz, ‘UK suspends aid to Uganda as concern grows over misuse of funds’, The Guardian global development, 16 November 2012

[3] Economic Affairs Select Committee, ‘Chapter 4: The Impact of Aid’, Parliament.uk, 2012

It is likely true that people on the ground sometimes see aid as ‘free money’. But the existence of corruption shows a need for greater accountability and more pressure from donors to ensure that occurs rather than less. Leaving a country because of corruption would simply show unwillingness to tackle one of the major issues that need to be tackled in order to ensure development.

Development aid is sometimes spent on implementing schemes that may be the result of a new idea that may not work that becomes a ‘fad’. But to object to this is to object to innovation; new ideas must be tried out on the ground before the development community knows for sure they won’t work. Development thinking is moving towards just handing out cash rather than subsidies; will this work? We don’t know, but won’t know for sure until it is tried more comprehensively than it has been so far.[1]

[1] See Helling, Alex, ‘This House would give cash to the poor to reduce poverty’, Debatabase, 24 January 2013

Aid should go to those who need it most around the world regardless of which country they live in. India still has the largest concentration of people in poverty in the world, according to the world bank there are “240 million rural poor and 72 million urban poor”.[1] So still almost a quarter of the world’s 1.4billion people in poverty.[2] With so many of the world’s poor people it is clear that India should be receiving a significant portion of the world’s development aid to end their poverty.

[1] Poverty Reduction & Equity, ‘India: Achievements and Challenges in Reducing Poverty’, The World Bank, 2011

[2] Poverty Reduction & Equity, ‘Overview’, The World Bank, August 2008

It does not make sense that India should receive aid simply because it still has poor people. Aid is used to help when the government cannot provide for its own people and India clearly already provides the vast majority of help for its own people and will provide more and more as the economy grows. The absolute numbers make very little difference because aid at current levels will never pull all 1.4 billion out of poverty at once. The government of India is improving he conditions of its poor so aid should be used somewhere where the government is less capable.

Clearly if India could end poverty within the country it would do so, however at the moment it cannot. If those in India who are not poor (considering this to mean earn more than $13 a day, the US poverty line) were to give 100% of their income above this level to those who live on less than $1.25 per day they would still not eliminate poverty in the country. “Indeed, appropriating all of the incomes of those living in India above the US poverty line would cover only a modest fraction of the country’s aggregate poverty gap.” So India does not yet have the domestic capacity to eliminate poverty on its own.[1]

[1] Ravillion, Martin, ‘Should we care equally about poor people wherever they may live?’, 8 November 2012

Clearly this is taking a double standard; India cannot immediately eliminate poverty using only its domestic capacity, but the aid from other nations at the current level cannot currently do this either. India can be reducing poverty and as the economy grows will eventually be able to eliminate poverty entirely.

Clearly someone earning $1 a day in India is as worthy of aid as someone earning the same amount in Burkina Faso. Equally the same amount of development aid can still make a similar amount of difference to the individuals it is targeted. It may potentially make even more of a difference in the richer country because that country has the infrastructure to ensure that the aid is sustainable and effective.[1] For example an aid program may help poor farmers to grow more food but that aid is much more sustainable and valuable if there is a road network so that they can sell some of their produce. In India UK aid has helped 1.2 million children go to school in the past 10 years[2] and this investment is potentially made more effective by India having universities these children could go on to attend if they wish.

[1] Economic Affairs Select Committee, ‘Chapter 4: The Impact of Aid’, Parliament.uk, 2012

[2] Agrawal, Nisha, ‘No: Should rich countries stop sending development aid to India?’, BMJ, Vol.346, No. 7891, pp.1-42, p.21

Clearly it is good where aid makes a difference to someone’s life but we are not advocating ending aid. That aid would instead be spent in a poorer country that is more in need than India. The country that is more in need clearly needs more aid to provide that infrastructure that helps multiply the value of aid. It is therefore clearly the place where more funding should go.

Currently the culture of giving in India is not mature enough to enable India to fight poverty on its own. Aid to India therefore provides more than one role. It does not just provide the money and supplies that the poorest need, it also encourages India to do more. When aid is needed to put primary children into school as a result of the mere 3% of national income spent on education it encourages the Indian government and people to spend more on alleviating their own compatriot’s poverty.[1]

[1] Agrawal, Nisha, ‘India needs to do more for its people but cutting foreign aid now won’t help – Oxfam’, Alertnet, 13 November 2012

The opposite is true; aid results in less Indian spending on poverty not more. In a few rare cases there may be sufficient media coverage of an aid program to shame the government into action but most of the time if others are spending that simply means the Indian government will save its own money. This was the assessment of House of Lords Economic Affairs Select Committee when it said “British development aid to the poorest Indian states may provide a perverse incentive to the Indian government to use less of its own revenue to alleviate poverty.”[1]

[1] Economic Affairs Select Committee, ‘Abstract’, Parliament.uk, 2012

India is a booming economy with GDP growth of 7% over most of the last twenty years, and it is likely to overtake the UK economy within a decade.[1] As a result development aid today to India is small by comparison to what India itself can and does spend on its poorest citizens. The UK gives just £280 million per year, less than 0.04% of India’s GDP[2] and only enough to provide £1 per year for every one of India’s poorest.

This foreign aid is therefore not essential for poverty reduction in India. Indeed China has been the country most successful at reducing poverty and it has done it through economic growth not large amounts of development aid.[3] Aid money should therefore go to countries that really do need the money for development rather than those who are already succeeding at financing it themselves.

[1] Gilligan, Andrew, ‘India tells Britain: We don’t want your aid’, The Telegraph, 4 February 2012

[2] Ghosh, Jayati, ‘Yes: Should rich countries stop sending development aid to India?’, BMJ, Vol.346, No. 7891, pp.1-42, p.20

[3] Data and Research, ‘New Estimates Reveal Drop In Extreme Poverty 2005-2010’, The World Bank, 29 February 2012

The geography of poverty has changed; in 1990 94% of those in poverty lived in ‘low income countries’ today that is down to 28%. The rest live in ‘middle income countries’ that are often fast growing and able to provide much of their own poverty reduction funding.[1] Should all money go to those few countries that are still classed as ‘low income’? Instead it must be recognised that the impact of aid is on individuals not the nation as a whole. Aid that builds a school and provides for teachers will have little impact on the whole of the nation but a large impact on those who are able to attend school where they would not have had the chance before.

[1] Ravillion, Martin, ‘Should we care equally about poor people wherever they may live?’, 8 November 2012