Monday, January 10, 2011

India might refuse development aid from the UK

The UK government is about to debate the practice of sending aid to the booming economy of India. The UK has already stopped sending aid to Russia and China as they strike off middle income countries as recipients. Despite the boom, India still has a majority of its population still in poverty. Even though India has a great need they might say "no thanks" to UK aid to show some independence after being a part of the old British empire.

From the Guardian, writer Madeleine Bunting examines the upcoming debate.

For a group of Conservatives, India is a prime example for their "charity begins and ends at home" approach. When Mitchell came into office, he made great fanfare about cutting aid programmes to China and Russia; allegedly, some in his department wanted to add India to that list but No 10 prevailed. India is still regarded by the UK public as a poor country, despite its recent economic growth and global power.

And the truth is, that perception is absolutely accurate. A third of the world's poor live in India – more than all those designated as poor living in sub-Saharan Africa. Shockingly, half of all Indian children are malnourished. This poverty is concentrated in just four Indian states, which account for one-fifth of the world's poor. So if aid is about relieving poverty, UK aid to India is entirely justified.

Some hopeful observers point to a new determination on the part of India's ruling elite to tackle poverty. Sonia Gandhi recently chaired a two-day seminar with the US economist Joseph Stiglitz on how to provide universal "social policy coverage" – basic services in health and education. It was a point made by Gordon Brown in his book Beyond the Crash, when he wrote about the new statutory rights to food and to primary education.

But there is a long way to go, and the sharp inequalities in India present a stark dilemma for those in charge of aid budgets. As many developing economies grow, more and more of the world's poorest are in middle-income countries. As Sumner has pointed out in his argument on the new bottom billion, 72% of the world's poorest are in middle-income countries.

Increasingly, much of the world's poverty is a result of inequality, rather than the conventional model of countries caught in a poverty trap, and the role of aid in helping to spring the trap. That presents a real challenge to state aid agencies: how do they justify taking their taxpayers' money to send aid to countries where a hugely wealthy elite is benefiting from an economic boom and failing to meet the challenge of distributing wealth? Aren't India's poor their responsibility?

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