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We recognise that we cannot be everywhere but, depending on the outcomes of the consultation, we will need over time to drill down to the very poorest districts in India in providing aid and support. In the short term, that means building on the early successes that we have witnessed in Orissa and Madhya Pradesh by slowly introducing more funding to those deprived states. For example, our new rural livelihoods programme for Madhya Pradesh means that we will be able to provide £45 million of assistance to lift remote
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tribal communities out of the spiral of poverty. It also means designing a brand new programme for Bihar—a state that is in desperate need, although traditionally it has been unattractive to donors because of its record on corruption and crime. There is now in Bihar a state government that is demonstrating a growing commitment to development and to addressing the needs of its people. We are working on a partnership with the government of Bihar, the World Bank and the Asian Development Bank.

We hope in the future to find a way to work at state level in Uttar Pradesh, which is the state with the largest number of poor people in India—50 million people. Less than two months ago, the world witnessed a major political upset as a party led by a Dalit woman swept to a convincing victory in the state elections. We will watch how the new administration settles in and develops, because if we can continue to develop confidence in the work of that administration, we can potentially work alongside it to help to tackle poverty in Uttar Pradesh.

India has growing global significance, and not only for its economic and political clout.

Stephen Pound: I apologise for interrupting my hon. Friend, but he mentioned those states in which he hopes that his Department will be more active in the future. I think that every single person in the House would applaud his plans for Bihar. Has he given any thought to working in Jammu and Kashmir? That is an area where traditionally there have been difficulties, albeit perhaps not quite as terrifying as the Naxalite presence in Bihar, where my hon. Friend is well aware of the difficulties. Might DFID feasibly work in Jammu and Kashmir in the future?

Mr. Thomas: We liaise closely with the Government of India, and the states in which they want us to work are the states that I have identified. I should make it clear to my hon. Friend that we do not only have the state-level programmes that I am describing; we also work at federal level, trying to make the Government of India’s own health and education programmes more effective across the whole of India. In that way, our support for education and health should help to catalyse better support for the poorest people in Jammu and Kashmir and in states such as Gujarat, which I know is also of concern to my hon. Friend and, indeed, many of my constituents.

As I was saying, India has growing global significance, not least because of its potential importance on issues such as climate change and access to medicines. On climate change, our primary concern is to help to protect India’s 30 million vulnerable people from the adverse effects that climate change is already having, which include floods, drought and other natural disasters. All our rural programmes are designed with that guiding principle in mind. That is why we are designing a £12 million climate change innovation programme to pilot new ways of helping the poor to respond to climate change. In that respect, collaboration with Whitehall colleagues is essential, and we are working with the Foreign Office, the Department for Environment, Food and Rural Affairs and the Treasury. We are committed to working across
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Government not only on climate change, but on issues such as access to medicines.

I believe that British aid has had a profound impact already on the poorest people in India—I believe that it has achieved strong results. However, we cannot afford to grow complacent, because new challenges face India. We have launched a consultation document on the future of our aid programme, and I welcome the opportunity that Mr. Speaker has provided today to hear the views of hon. Members on how we should help India to move forward.

2.59 pm

Mark Simmonds (Boston and Skegness) (Con): I am delighted to see the Minister in his place. I hope that the debate is not keeping him away from his telephone; I am sure that his pager is firmly switched on.

The Opposition take very seriously the importance and significance of the relationship between the UK and India. That was clearly evidenced by the recent visit to India of my right hon. Friend the Member for Witney (Mr. Cameron), the leader of the Conservative party, and my hon. Friend the Member for Tatton (Mr. Osborne), the shadow Chancellor. They went to India to understand in more detail the relationship between our two historic nations and to put on record their firm commitment to enhancing it.

The Minister was absolutely right to point out that India is the world’s largest democracy. It has made significant economic and political progress in recent years, and we in the UK should welcome that. I very much hope that there will be further significant co-operation not only in relation to the Department for International Development and the country assistance plan, but on such significant issues as terrorism, energy co-operation and environmental sustainability, which the Minister mentioned. I shall return to that issue if there is time.

DFID has published a consultation paper, and I hope that there will be significant input into the consultation not only from Members of this House, but from the wider international development community. The Minister is right to point out the economic growth that India is going through—an increase in gross domestic product of roughly 8 or 9 per cent. per annum—but a significant proportion of Indians are being left behind by that economic miracle. The three categories in the consultation document—global India, developing India and poorest India—provide a structured way of synthesising the issues and the potential solutions that have to be evaluated. There are enormous inequalities, and it is absolutely right that DFID’s long-term aim in India is, as it should be elsewhere, to move toward contributing to dialogue and technical expertise, rather than just giving financial assistance.

The interrelationship between our two countries is becoming more entwined, particularly in the economic and trading fields. Almost 50 Indian companies have been floated on the London stock exchanges, and last year, for the first time, more money was invested into the UK by Indian companies than the other way around—by UK companies into India. Some 400,000 people from the UK visit India every year, and more British tourists go to India than to any other country.
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More than 1.3 million people living in the UK originate from the Indian subcontinent, and those people have made an enormous and significant contribution to the UK not only in the national health service, which has been mentioned, but in business and by using their entrepreneurial flair.

The Minister was right to highlight that despite the economic growth, significant numbers of Indians still live in abject poverty. There are 300 million Indians living on less than $1 a day and more than 500 million living on less than $2 a day. Some 47 per cent. of children in India are malnourished, and every year, 1 million females and children die due to lack of health care. Only 30 per cent.—when I say “only”, I mean it comparatively—of children in sub-Saharan Africa are underweight, compared with 50 per cent. in India. Those figures start to deconstruct the argument that India should now be in a position to facilitate and enable the alleviation of poverty without outside help, which some have made. I do not agree, and we certainly want to play a significant role in helping India to build its governmental capacity by giving financial and technical support.

Peter Luff: On malnourishment and malnutrition, does my hon. Friend agree that one of the great scandals in India is the huge proportion of its agricultural product that does not reach its market and goes to waste? Does he agree also that British companies, particularly logistics companies and retailers, have a lot to give to India to ensure that that dreadful waste of food is discontinued?

Mark Simmonds: My hon. Friend is absolutely right. He has an intricate personal knowledge of India. Not only is there significant wastage of food there, but there are still barriers between states to the free transportation of agricultural produce, which, of course, hinders the free market and creates a false value in agricultural products, which is part of the problem that my hon. Friend highlighted.

As the Minister said, DFID has made a significant contribution to India. Other organisations have also made a significant input. About five years ago, India harmonised the donor community to enable it to co-ordinate more effectively and efficiently those donors and what the money is spent on. There is a lesson there for other parts of the developing world. I am pleased to see the Minister nodding. So, there are other significant contributors to the alleviation of poverty in India, namely multilateral institutions, such as the World Bank, which contributes mainly to transport and agricultural projects, and currently has 56 active projects. The Asian Development Bank is another contributor that has traditionally focused on infrastructure.

In his speech about India the other day, the Minister acknowledged that DFID is not particularly engaged in infrastructure. However, given that it is so intricately intertwined with economic growth, the alleviation of poverty and the removal of supply-side constraints, particularly in the rural parts of India where most of the poverty lies, there has to be co-ordination and co-operation between DFID and the multilateral institutions that are pumping large sums of money into the Indian infrastructure.

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Jeremy Corbyn: The hon. Gentleman will acknowledge that the worst poverty in India is often among the day labourers and landless people in the rural areas. I am sure that he welcomes the law that the Indian Government introduced to guarantee a number of days’ work each year for all landless people, which lifts some of them out of poverty. Does he recognise that the issues of access to productive land and of land ownership are absolutely crucial to the alleviation of poverty among the poorest people who live in remote villages?

Mark Simmonds: I am grateful for the hon. Gentleman’s intervention. He is absolutely right to say that the national rural employment guarantee scheme that the Government recently introduced, despite criticisms that it might be unworkable and too expensive, could make a significant contribution to guaranteeing work and a minimum income to many individuals, so that they can provide for their families. He is also right to highlight the issue of land ownership. Has he read Hernando de Soto’s book about wealth creation and the way in which capitalism was generated by land ownership, which enabled land to be used as collateral to borrow money from banks as seed corn to help their businesses to grow or to move enterprises from being small to medium and, ultimately, to being large? If he has not read it, I suggest that he does, although I am not sure whether he would agree with it.

Jeremy Corbyn: I have not quite finished Adam Smith, so perhaps I shall move on to that book later. The hon. Gentleman raises some fairly fundamental issues, such as the promotion of co-operatives and giving access to land. Giving all workers access to productive land is probably likely to lead to greater success than lecturing the landless people of India on the benefits of rampant capitalism. I do not know whether the Conservative party currently stands for rampant capitalism or whether it has moved on a bit, but it is important to have co-operatives, co-operation and community values, which is why I drew attention to the minimum work guarantee that has been produced by the Indian federal Government.

Mark Simmonds: The hon. Gentleman is being slightly unfair.

Jeremy Corbyn: No, never.

Mark Simmonds: He is being unusually unfair for him. He makes a reasonable point about people having access to land of reasonable quality, which ties in with his earlier point about the discrimination against the many vulnerable groups who are not allowed access to such land. Nevertheless, there is also an opportunity to have a greater spread of land ownership in rural India, which would enable small farmers to act as co-operatives, to work individually, with their families around them, or to combine those ways of working, to enable them to have some stake in their own communities and societies. That would go a long way to removing much of the discrimination in some parts of India.

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Peter Luff: I understand, although I am happy to be corrected, that one problem is the fragmentation of land ownership in much of rural India. The co-operative route that is being advocated is therefore a way to reconcile the differences of opinion that are being moderately expressed across the Chamber.

Mark Simmonds: My hon. Friend is absolutely right. I hope that he did not get the impression that there is significant disagreement on this issue. There is an alignment of views that a combination of the two factors that we are discussing might provide a solution that would go some way towards alleviating some of the poverty that exists in many parts of rural India. I want now to suggest a number of issues that the Minister and his civil servants might like to look into.

Mr. Thomas: Before the hon. Gentleman moves on to those suggestions, and in the spirit of trying to bring all sides together on the question of land ownership, let me reassure him that we have rural livelihoods programmes in all the key states in which we work, including Orissa, Andhra Pradesh, Madhya Pradesh and West Bengal. Those programmes work to ensure that poor people have better access to land and, in particular, to the resources found in forests, which are often a key source of income for the poorest.

Mark Simmonds: I am grateful to the Minister for that intervention.

The suggestions that I shall make need to be put in context. DFID’s contribution to India is its biggest bilateral programme, and Conservative Members acknowledge the significant contribution to progress that has been made by senior figures in the national Indian Government and by many significant figures in the regional and local governmental structures that DFID supports. Indeed, my first suggestion relates to the issue of governance.

The country assistance plan states:

a Government of India initiative. Has DFID considered helping to make progress on tackling corruption? How will it make a contribution to building up governance, particularly transparency and accountability? I am, of course, aware that some states are better than others, but governance is still a significant issue in some, although I will not mention them for the record. The Minister has not mentioned the particular state that I have in mind, but I hope that DFID will look at the issue closely.

The World Bank is particularly concerned about the issue. Indeed, it has said that it has self-regulating triggers, which means that when a particular province demonstrates better governance and is proved to have achieved greater transparency and accountability, that province can draw down more money from the World Bank. Has DFID thought about introducing similar structures to assist in the effective and efficient delivery of aid? As we all know, we are talking, ultimately, about British taxpayers’ money.

To that end, perhaps the Minister can say a little more about the monitoring mechanisms that will be put in place. How will those that have been in place for the past four or five years—particularly those used to
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monitor local governmental structures—be enhanced and improved? How will DFID work with the Government of India to ensure that that actually happens?

Other hon. Members have rightly mentioned the importance of the economic and trade relationship between the UK and India, but there are issues about widening trade deficits and potential inflation. Is DFID giving India any technical or advisory assistance to improve the economic system and thereby reduce risks to fiscal stability? The Department has expertise in that area. It is important that the Government of India reform India’s co-operative credit structure so that economic growth is inclusive and not confined to just one section of the population. We want the maximum number of people to benefit from India’s economic growth.

DFID’s wish to focus the majority of its resources, quite rightly, on low-income countries has resulted in tensions. Of course, it is true that India is still classified as a low-income country, and I accept that there is a debate about the exact date when it will move from being a low-income to a middle-income country, but will that be built into the consultation procedure? There is a suggestion that India’s rate of economic growth means that it may well hit MIC status by 2009 or 2010, which will be bang in the middle of the time scale for the latest consultation process.

My hon. Friend the Member for Mid-Worcestershire (Peter Luff) rightly mentioned agriculture. Two thirds of India’s population depends on rural employment for a living, but current agricultural practices are neither economically nor environmentally sustainable; yields and technological inputs are low, practices are labour intensive and irrigation needs to be significantly improved, but that is expensive and needs to be co-ordinated with water and sanitation. There is also the need to address the issue of economic diversification so that people in rural areas are not dependent solely on the vicissitudes of the agricultural market and fluctuations in agricultural production prices.

Another big issue that needs to be looked at is remittances. Two per cent. of India’s population lives abroad, and India receives $18.2 billion in formal remittances per annum, which represents 3.5 per cent. of its GDP. Remittances are many times the value of developmental assistance support, but some companies still demand large charges and commissions for transferring funds back into the country. I am sure that the Indian Government would value DFID’s expertise and input in dealing with that issue.

The Minister rightly highlighted the issues of the environment and climate change, and the problems in India have been well documented. For example, people now fly more as their affluence grows. Climate change has already had an impact, and sea level rises will impact on coastal areas in particular. In addition, the country will have to put significant adaptation mechanisms in place to minimise water scarcity. There are also the issues of changes in agricultural productivity and the salination of previously productive land. Dealing with those issues will require finance and technical assistance from the developed world, but it will have to be done in a pro-economic growth way; we must protect the environment without
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hindering economic success. Has DFID considered how it might help India adapt to climate change financially and technically? In particular, has it considered the issue of technology transfer and of providing technology that will enable low-carbon energy sources to help the economy grow?

Another issue that I want to raise is public services. Access to public services in India is not as limited as in many parts of sub-Saharan Africa, but the quality of services can be very limited and mixed, particularly in education. In 2001, the United Nations human development report estimated that the cost to India of the brain drain mentioned by the hon. Member for Ealing, North (Stephen Pound) is $2 billion annually, which impacts on the country’s ability to provide public services. The problem is particularly acute in the health care sector, as we have discussed, and it would be helpful if the Minister could put into the consultation process the fact that Opposition Members hang great importance on the idea that the Indian elite should make every effort to make a significant impact on public services in their country of origin. We in the UK would, of course, be delighted to train them as best we can.

We have talked about labour regulations, and the World Bank believes that better designed regulations can attract more labour-intensive investment. It is right that the Chinese economic model has been driven by inward direct foreign investment, but the situation is not quite the same in India, which needs to free up its economic base by increasing deregulation of its labour market and employment structures.

The final area that the consultation could look at relates to the issue of vulnerable groups, which was raised by the hon. Member for Islington, North (Jeremy Corbyn). Scheduled castes and tribes account for a quarter of India’s population. I have met members of those groups who have travelled to Westminster, and some of them would acknowledge that progress has been made in the past four or five years, but there is still a significant amount to do. Indeed, the report by the Select Committee on International Development concluded not that long ago that DFID had

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