3 Changes to the DFID programme|
We have an unparalleled opportunity to seek out
new partnerships, to create dynamic new alliances, both formal
and informal. This is a completely changed landscape in which
to galvanise our efforts to achieve the Millennium Development
Goals and to drive yet harder the eradication of global poverty.
29. As we have noted, the Secretary of State plans
to change the focus of the DFID programme in India to one which
is much more "up to date"focused
on India's poorest states and poorest people, with emphasis on
the private sector, and helping the poorest women and girls in
terms of education, healthcare, nutrition and jobs.
This chapter provides an analysis of the proposed new programme
which we discussed in some detail on our visit. It begins with
a brief outline of the programme prior to 2011.
The DFID programme before 2011
30. The International Development Committee last
reported on DFID's programme in India in 2005.
DFID explained how its programme had changed since that Committee's
Report. It said it had "responded emphatically to the Committee's
recommendation to pay more attention to the India's off-track
MDGs" by targeting spending on child and maternal mortality,
communicable diseases, access to education, nutrition and hunger
and sanitation and water. It had done this mainly through the
Government of India's national schemes with complementary work
in five states (described as the focus states).
By 2009-10 DFID allocated 20% of its programme to education, 48%
to health and 1% to water and sanitation.
31. DFID claims that its work in focus states has
enabled those states to make better use of central government
funds with good results including significantly reduced infant
mortality rates in West Bengalfrom seventh highest place
among all states in 2003 to one of the three lowest in 2009. Another
focus state, Madhya Pradesh was able to increase rapidly its absorption
of national funds for rural health care including maternal and
child health. In
Madhya Pradesh the Committee was told that the state was becoming
a model in India as a result of the progress it had made in reducing
infant and maternal mortality although there was still a long
way to go.
32. In 2009-10 DFID allocated 43% of its India programme
through the national government, 37% through state governments
and 14% through multilaterals. The remaining 6% went through technical
assistance (4%), civil society (1%) and the private sector (1%).
Oxfam approved of the emphasis on state governments arguing that
"in a large and decentralised system governance structures
did not always promote redistribution but development assistance
could target the poorest state and in so doing improve governance
and redistributive structures and practices."
33. Other witnesses supported a number of aspects
of the DFID programme including its emphasis on the poorest, its
alignment with the Government of India objectives and its innovative
and catalytic role. Christian Aid for example commended DFID's
focus on social exclusion and on meeting the gender-related Millennium
It cited a 2006 report which had commented: "the degree of
commitment to poverty reduction, and the emphasis on bringing
to bear the themes of gender, inequality and social exclusion
in the design of all projects, sets DFID India apart from other
said "DFID has and continues to play an instrumental role
in reducing poverty in India by supporting innovative and catalytic
programmes in a range of sectors including health and education."
34. The Organisation for Economic Cooperation and
Development (OECD) Development Assistance Committee (DAC) 2010
Peer Review commended DFID on the high degree of alignment, flexibility
and the quality of dialogue with the Government of India. It said
that DFID was perceived as an efficient, effective and appreciated
partner and that the Government of India welcomed the effort DFID
made to align its programmes with Government of India priorities.
35. There were also some criticisms of the DFID programme.
Malini Mehra for example considered that DFID did not always get
full political value for its assistance:
My personal view is that DFID has not got it
right in a country like India, can be much more effective in deploying
the amount of money that it does invest and get better bang for
the buck in terms of political value. At present it gets very
little political value out of the money that it invests in India
on behalf of UK taxpayers.
Dr Price, from Chatham House, expressed similar concerns
commenting that DFID did not always engage with the right people
in India, for example it was not sufficiently well connected in
Delhi. Dr Eyben,
from the Institute of Development Studies, thought that if DFID
had a smaller budget it might be less concerned with spending
the money and more with ensuring that the funding and the relationships
it built would support far reaching change.
The DFID programme 2011-2015
36. As noted, there are three main changes proposed
for the programme from 2011. These are:
- An increasing focus on the
poorest states, in particular Bihar, Madhya Pradesh and Orissa;
- A re-examination of the sectors DFID works in;
- An increased role for the private sector.
We consider these issues in the remainder of the
Increased focus on poorest states
37. As mentioned in chapter one, DFID intends to
reduce the number of focus states to three of the poorest: Bihar,
Madhya Pradesh, and Orissa. Progress in reducing poverty and improving
social indicators has been slow in these states which have some
of the worst indicators. In 2009-10 DFID spent 37% of its budget
in five focus states. In future it plans to increase the percentage
spent in three focus states to about 67% of its programme. We
visited two of these statesMadhya Pradesh and Biharwhere
we met many of the beneficiaries of DFID supported programmes.
We also met state Government officials and discussed their plans
for making progress against the Millennium Development Goal targets.
We found the Government in Bihar to be extremely progressive in
its approach with a strong commitment to reducing poverty and
38. Professor Haddad, of the Institute of Development
Studies, explained the importance of helping state Governments
It is often very difficult for States to get
money from the donor centre. States need to have very strong administrative
systems and capacities to do so effectively. The poorest States
have the weakest tax base and hence the weakest administrative
systems. DFID helps these States to access these central resources
to boost investments in child health, nutrition and education
where they are most needed.
39. The Secretary of State gave us examples of interventions
in DFID's focus states which had helped state Governments strengthen
the quality of proposals to access central government funds including
a project on tax system reform which had increased VAT collection
by about £55 million in four years in Orissa.
In Madhya Pradesh we discussed a programme for strengthening performance
management (SPMG) with the Government of Madhya Pradesh. It was
a small programme which tried to improve the links between policy,
planning and budgeting for poverty reduction. The programme helped
to create systems for better debt management. It had reduced interest
payments as a percentage of gross debt from 8.5% in 2007 to 7.27%
in 2009 resulting in significant savings.
40. However some Government of India officials were
not convinced about DFID's proposed narrower focus. The Ministry
of Foreign Affairs considered that decisions about focusing on
particular states should be made by the Government of India rather
than donors. Professor Toye explained that it was natural to have
some points of irritation in the negotiation of a relationship
between donor and recipient governments. He emphasised that the
Government of India had very clear ideas about aid distribution
as well as the type of aid which donors needed to take into account.
41. DFID plans to spend an increased proportion
of its budget in India's poorest states. We understand that the
reasons behind this include not wanting to spread resource too
thinly. However DFID must ensure that the Government of India,
at national and state levels, fully understands and agrees with
DFID's aims and objectives since the Government of India has primary
responsibility for its own development. DFID's work in helping
state Governments to access central funds and manage resources
better has been very successful and should remain a key part of
DFID's programmes in its focus states.
42. In addition to shifting the geographical focus,
DFID intends to change its sector focus for the period up to 2015.
The Secretary of State has proposed:
providing a progressively increasing proportion
of our aid in the form of capital for pro-poor private sector
investment; and reshaping the grant element of the programme to
maximise results on key Coalition priorities girls' education,
maternal mortality, family planning, nutrition, water and sanitation,
and climate change.
In the following section we look specifically at
areas where we consider greater emphasis than currently proposed
is needed in the DFID programmesanitation, nutrition, maternal
and child health and social exclusion.
43. India is off-track on meeting the MDG target
to reduce by half the proportion of people without access to adequate
sanitation. Only 29% of households have access to 'improved' sanitation
facilities. The practice
of open defecation is a particular problem. Of the 1.1 billion
people worldwide practising this highest risk sanitary practice,
more than 50%638 millionlive in India. Among the
poor, between 81 and 97% practise it.
Open defecation results in poor hygiene and infection pathways
that cause sickness, inability to work and high healthcare expenditures
that undermine livelihoods. It impacts on education performance
because ill children are unable to attend school, and causes women
in particular inconvenience and suffering.
Poor sanitation also has substantial implications for poverty
reduction and economic growth. The World Bank has estimated that
open defecation costs India US$54 billion per year or $48 per
head. This is more
than the Government of India's budget for health.
44. In Bihar we met with local communities and discussed
open defecation practices. We discovered that the women sought
the privacy afforded by improved sanitation; however some men
were less keen and said they would not necessarily use toilet
facilities if these were available, which highlighted to us the
importance of hygiene education. In Bhopal we visited a slum where
municipal toilets had been installed. Each family paid a monthly
sum to use these and children were being taught good hygiene practices.
In many places we visited, including schools and hospitals, where
good sanitation is crucial, it was clear that sanitation facilities
were limited and of poor quality.
LINKS BETWEEN SANITATION AND NUTRITION
45. Professor Robert Chambers of the Institute of
Development Studies, argues in written evidence that "the
links between open defecation and poverty and child nutrition
are likely to be more significant than has been generally recognised".
The normal tendency is to think about getting
food into children; there is availability of food and access to
food, and that is what most of the programmes are about. They
are direct. When you look at it, however, there is the whole issue
around absorption of foods, and the parasites carried in the gut,
which are actually stealing food from children and from mothers.
There are the diarrhoeas, which get an awful lot of attention,
and are killers. It is about 350,000 children a year that are
estimated to be killed by diarrhoeas.[...] However, there are
other things going on in the body of a child that do not get noticed,
because they do not manifest in the same dramatic, measurable
way. There is a phenomenon called tropical enteropathy, which
means that bacteria get into the bloodstream and have to be fought
with antibodies. The antibodies require energy, and so that is
another drain on the child's nutrition. Then there are other pathogens:
there is hookworm, for instance, which is a major cause of anaemia,
I am informed. 200 million people in India have hookworm. When
we look at things like mothers' anaemia, we look at deaths in
childbirth, and one can ask: to what extent is it the result of
these fecally-related infections? There are so many of them: schisto,
hepatitis, polio, trachoma, typhoid, some epilepsies, and liver
fluke. [...]Medical and nutritional thinking simply is not on
46. We were told that it was relatively inexpensive
to change hygiene practices in local communities through Community-Led
Total Sanitation (CLTS) which had proven results in Himachal Pradesh.
Professor Chambers set out for us what this involved:
CLTS, which was developed by an Indian, is radically
different. You do not teach anything. You do not give anything.
You simply go to a community and you facilitate their own analysis
of what is happening. They make a map, they use yellow powder
to show where they go and I am going to use, if you will forgive
me, the word "shit", because we use the word shit. [...]Nothing
is hidden. It is all brought out into the open. People go and
stand in the place where it happens, and there are other details
that I will not inflict on you. The point is that it dramatically
brings home to people thatand these are the words that
are usedthey are eating one another's shit. After about
two hours of this, usually someone will say, "We are eating
one another's shit. We have got to stop this." There is very
strong disgust. There is a lot of laughter, as well, but it is
a community decision that they will all do something. What this
means is that the poorest people, very often, are helped by the
people who are better off, because it is in everybody's interest
that they should become open defecation-free.
Other types of programmes which distributed toilets
and other sanitary hardware, were not as successful in changing
practices and the hardware was not often used for its intended
47. The Secretary of State told us that DFID would
specifically seek to give five million people better access to
sanitation and two million people access to clean water. He said
that for every £1 of UK aid the Government of India would
probably provide £20 worth of investment in the sector.
48. Poor hygiene and sanitation is costing India
$54 billion a year or 6% of GDP. Yet many of the problems associated
with it can be addressed at community level relatively inexpensively.
In particular the Community-Led Total Sanitation Programme (CLTS)
offers a road tested, low cost alternative to expensive programmes
based on distributing sanitation hardware. Sanitation is the first
step to improvements in health yet DFID allocates only 1% of its
programme to water and sanitation and over 40% to health. DFID
should switch resources from health to sanitation and give sanitation
a much higher priority in the programme to 2015 including rolling
out support to CLTS. We also recommend that any future investments
in sanitation should be linked to and carried out in conjunction
with hygiene education.
49. India scored 23.7 in the 2009 Global Hunger Index,
putting it in a category where levels of hunger are considered
to be 'alarming', and close to levels in Burkina Faso and Zimbabwe.
Nearly half of Indian children are under-nourished. This amounts
to one-third of the world's under-nourished children. As Lawrence
Haddad states in his written evidence, "It is the persistence
of under-nutrition in the face of India's economic growth that
is truly extraordinary."
Under-nutrition is the cause of one-third to one-half of child
deaths in India. This trend has changed little in the past two
decades. In 1992-93 52% of infants under-three were underweight;
in 2005-06 the figure was 46%. In Madhya Pradesh the figure is
as high as 60%. This means that Millennium Development Goal target
one on child nutrition is unlikely to be met until 204330
years beyond its 2015 deadline.
50. Professor Haddad highlighted that in India malnutrition
levels were slow to reduce despite high levels of economic growth.
He explained that despite government programmes, there was "a
huge amount of exclusion of access to nutrition programmes."
This was often related to gender or caste, but also included under-three
year oldseven though these were the cohort most in need
of help. The crucial
'nutrition window' was recognised as the first two years of lifeafter
which the effects of stunting and wasting were irreversible and
the effects of inadequate nutrition endured throughout many people's
lives. He also identified
shortcomings in capacity to tackle mal and under-nutrition, with
no ministerial lead from the Government, despite a declared commitment
to do so.
51. In India we were told that poor children were
often low birth weight, partly due to myths about under-eating
during pregnancy to have an easier delivery, and fell below normal
(WHO) growth standards by three months. Dr Vir, a nutritionist
we met in India, explained:
Mere unavailability of food at family level is
not the primary cause of being underweightthe real problem,
in fact, is in not feeding a child adequate amount of food required
during this period of accelerated growth. A study of the National
Institute of Nutrition indicates that in families where 80% adult
women were consuming adequate calories and proteins, only 30%
of young children under three years were.
52. The Government of India set up a Nutrition Council
in May 2010 which first met in December 2011. It concluded that
Indian nutrition efforts should be much more focused on the nutrition
of mothers and babies for the 1000 days after conception. This
accords with the global Scaling Up Nutrition '1000 days' campaign
launched at the UN Millennium Development Goals Summit in September
53. DFID published a Nutrition Strategy in 2010,
partly in response to our predecessor Committee's recommendation.
In it, DFID identified India as one of six priority countries.
During our 2010 inquiry on the MDG Summit, the Secretary of State
accepted that DFID "can" and "must" do more
on nutrition. DFID has committed to fund nutrition research over
the next few years.
54. We fully support DFID's emphasis on tackling
under-nutrition in India and working with the Government of India
on this important issue. The persistently high rates of child
under-nutrition in India concern us greatly and must be addressed.
DFID has identified India as a focus for its new Nutrition Strategy
and has said it plans to work with the Government of India to
target 3.9 million children under-five with nutrition programmes
by 2015. We welcome the Secretary of State's emphasis on the 'first
1000 days' of a child's life. We recommend that DFID refine its
programme to focus on the first 1000 days rather than under-five
children more generally.
55. While health has received far more attention
from donors and the Government of India than sanitation, the Indian
health system has many failings, as highlighted in a recent special
edition of The Lancet.
Professor Haddad told us that in a World Health Organisation ranking
of health systems India came out at 112, below Bangladesh at 88
and Sri Lanka at 76.
More specifically he pointed out that public health spending,
as a percentage of GDP was 1%. He recommended this should be increased
to 6%. Dr Osrin, from University College London, discussed the
need for greater leadership within the health sector and for rationalisation
between the private and public provision of health care.
Maternal and child health
56. India has some of the highest rates of child
and maternal mortality in the world. Globally, India accounts
for 21% (1.83 million) of all under five deaths, 25% of all neonatal
deaths, and 20%
of maternal mortality. While statistics are gradually improvingchild
mortality has declined by an average of 2.25% annually since 1990,
and the proportion of women that die in childbirth has halved
since 1990progress is slow. The MDG target of reducing
maternal mortality by two-thirds by 2015 will not be reached.
57. A key part of the challenge in improving maternal
and child health in India relates to the country's lack of skilled
health workers. The WHO estimates that 2.5 professionals per 1000
are needed to ensure that skilled attendants are present at births.
The Indian public health system has only 1.35 health professionals
per 1000 patients. Because of India's staff shortages, only around
half of births are attended by a midwife or other skilled attendant.
This is turn contributes to complications and deaths during childbirth.
58. DFID says that it has supported reforms that
have meant that vacancy rates for doctors have declined by 15%
in under-served districts of Madhya Pradesh and Orissa, and that
its assistance to the Government of India has resulted in the
availability of 362 more doctors and 2033 more nurses in West
59. In 2005 the Government of India introduced a
conditional cash transfer to incentivise births in health facilities.
This has helped to reduce significantly maternal deaths.
In Madhya Pradesh, DFID reports that its funding for government
transport schemes for expectant mothers has also contributed to
a huge increase in institutional deliveries, from 0.93% in 2006-07
to 42% in 2009-10. However DFID says that the MDG target on quality
of institutional deliveries remains a concern. 
Increases in the number of institutional deliveries has not been
matched by improvements in the quality of care during labour and
delivery or in neonatal care. It is aiming to address this in
60. The Secretary of State also highlighted the links
between girls' education and improved health care outcomes:
We need to make sure that we focus on the education
of girls, because girls who are educated get married later, have
fewer children, and have children later. This starts quite early.
We need to make sure that there are more safe birth attendants,
and easier access to hospitals. [..]There are also issues around
family planning. We are trying to ensure that 500,000 mothers
deliver more safely. That is our particular aim of a result to
be achieved. As you will know, we are seeking to make sure that
contraception is much more widely available in the poor world,
for reasons with which we are all familiar.
61. In Madhya Pradesh we had seen an example of a
fairly sporadic attempt to collect data about which castes and
tribes used state maternal and child care facilities. We asked
the Secretary of State to fund research on which groups of women
and children did not access hospitals or midwives paying particular
attention to scheduled caste, tribe and Muslim groups. The Secretary
of State said he would consider this.
62. India is making slow progress in reducing
maternal, child and neonatal deaths. Progress is most slow in
the poorer states and amongst the poorest people. DFID's new programme
should have a strong focus on this area. To ensure such investments
are properly targeted to achieve results among the poorest, we
recommend that DFID fund a group of epidemiologists, or other
appropriate researchers, to collect data over a given period on
caste, tribal and religious affiliation of those who access maternal
services or have institutional deliveries. This should enable
the Government of India to make more informed decisions about
how to target its interventions in this important area.
63. India has high levels of inequality. The exclusion
of certain scheduled castes, tribes and religious groups, such
as Muslims, and people living with disabilities has resulted in
high degrees of poverty amongst these groups. Christian Aid points
out that the 2010 Multidimensional Poverty Index breaks down poverty
across four social groups in India and shows that 81.4% of scheduled
tribes (Adivasis) and 65.8% of scheduled castes (often called
Dalits) are poor, compared with 33.3% of the general population.
The data available on poverty among various social groups shows
that social exclusion reinforces vulnerability and the vicious
cycle of poverty.
Dr Eyben said:
These issues of structural inequalities are extraordinarily
hard to get rid of in India despite the commitment of the Indian
Constitution, which India committed to when it became independent.
It is not working very well. These are really tricky, complex,
deeply embedded historical inequalities. It is not just a matter
of throwing money at it. It is a question of supporting innovation
and experimentation to enable people in poverty to imagine the
world differently. It is really a process of empowerment.
64. In India the Committee met several NGOs, funded
by DFID, working with scheduled castes to raise awareness of their
rights and held discussions with Dalit communities in Madhya Pradesh
on manual scavengingcollecting human waste by hand, for
disposala practice which is illegal yet continues in many
states. Women told us that the health implications of manual scavenging
included increased incidence of miscarriage. Children told us
lower caste children continued to be discriminated against in
65. We were very impressed with the work of the NGO
Jan Sahas Development Society which had received funding from
DFID's Poorest Areas Civil Society Programme. The person in charge
was herself from the scheduled castes and had been educated to
university level through the work of the NGO. While there were
laws prohibiting caste and other types of discrimination there
appeared to be few mechanisms for enforcement. It was clear to
us that until discriminatory cultural practices were no longer
acceptable, it would be difficult for those in Dalit communities
to improve their livelihoods.
66. Gender inequality is also significant. While
only 50% of Indian children go to secondary school, only 40% of
these are girls. DFID plans to focus on girls' education and seeks
to increase the number of girls in secondary education in eight
low income states by 578,000.
The submission by One World Action commented that DFID tended
to focus on alleviating the symptoms or consequences of poverty
rather than the underlying causes. For example, in relation to
gender disparities, the NGO said that DFID had focused on girls'
low enrolment and attendance rates, but without adequate investment
in challenging the gender inequalities which underpinned and perpetuated
these adverse trends.
67. Christian Aid was positive about DFID's work
on social exclusion pointing out "good practice and consideration
of social exclusion at a programme level".
However the organisation also argued that this should be more
widespread and not restricted to DFID's work with civil society
organisations. It also suggested that DFID "should develop
greater understanding of the way in which gender discrimination
intersects with other forms of discrimination, such as ethnicity
and caste, to further compound the inequality of access, opportunity
and empowerment which leads to multiple discrimination".
68. The National Programme on Dalit Rights acknowledged
that DFID focused on social exclusion in a variety of its sector
specific programmes; however it said this was neither consistent
nor entrenched. It suggested "embedding exclusion with more
consistency, and with a stronger intensity, will require a far
more concerted corporate 'push' in these areas than has taken
place so far".
69. India has high levels of inequalityparticular
castes, tribes, and religious groups do less well than others
because of entrenched discriminatory practices and despite laws
against such behaviour. We met groups of Dalits, including children,
who were beginning to challenge social norms about their role
in society. We were impressed by their brave and determined outlook.
However it will be virtually impossible for most of these children
to change their social status while other parts of Indian society,
and social institutions, tacitly accept this level of exclusion
and discrimination. We recommend that DFID place greater explicit
emphasis on tackling inequalities throughout DFID's programmes.
70. DFID's focus on girls' education, in particular
at secondary level, is important for tackling gender discrimination
and will help in relation to DFID's objectives in maternal and
child health. We strongly support this new initiative.
Working with the private sector
71. DFID has said it intends to increase its collaboration
with the private sector in India. As part of its objective of
wealth creation DFID says it wants "to unlock the potential
of the private sector to deliver jobs, products, infrastructure
and basic services in areas which desperately need them".
72. The Secretary of State has said he wants to see
a "serious and steadily increasing proportion of our aid
used to support entrepreneurs willing to take the risk of starting
and scaling up private investment".
DFID wants to encourage private investors to make pro-poor investments
in India's poorest states. He said the eight poorest states in
India only attracted 2.4% of foreign direct investment and one-fifth
of overall investment.
DFID was considering three ways of working: to boost the availability
of risk capital to encourage private sector companies to invest
in the poorer states, for example through CDC or the donor coalition
Private Infrastructure for Development Group (PIDG);
by providing technical support to improve policies governing businesses;
and by providing grant support for micro-finance, renewable energy
and state level urban projects.
73. DFID said it was confident that commercially
focused funds were already taking advantage of the potential opportunities
at the bottom of the pyramid by providing low cost services at
scale. DFID has
proposed to use a rising portion of its budget£140
million or 50% by 2015to generate the following results:
- five million clients reached
with savings, credit, insurance
- 60 firms reached with equity and loan guarantees
- 35 new Public-Private Partnership deals in infrastructure
74. The Government of India told us it was happy
for DFID to work with the private sector but that this should
be as a separate bilateral relationship rather than through the
Government of India. It was not convinced this should be part
of the aid relationship since India already had a vibrant private
75. We asked the Secretary of State for some examples
of how he intended to invest DFID's funding but did not receive
Mr McCann: In Madhya Pradesh, we witnessed
a microfinance project where a woman bought a buffalo. she was
paying the money back, and she was selling the milk. I can understand
how that project works. Regarding the £140 million, can you
give me one example of a project, any project, on that higher
scale and with that larger investment, that you hope would take
place between now and two or three years hence? [...] What do
you have in mind as a practical situation of a village or an area
in Madhya Pradesh or Bihar that will give a practical example
of how the money that the British taxpayer spends will be put
to good use?
Andrew Mitchell: [...]The great beauty
of the private sector is that you do not have to have a prescriptive
line on this. In my view, the answer is not to say: "This
is the precise nature of the investment that should take place
here. Who is going to get on with it?" It should be more
demand-led than that. What we are trying to ensure is that supply
of capital is able to address that demands, through a whole series
of different approaches.
76. We also asked the Secretary of State why he was
prepared to invest such a large part of the aid budget for India
in a largely untested area. He explained that he aimed to scale
up gradually from about 20% of the budget to 50% by 2015. He thought
this was the best way to structure the programme and would ensure
"British taxpayers got the best value for money."
77. In Madhya Pradesh we discussed a DFID funded
Power Sector Reform project to help the state reduce losses from
the power sector which amounted to 34% of the state budget in
2005-06. DFID was providing £18.5 million over a six year
period "to help create an efficient, accountable and financially
viable power sector that ceases to be a burden on state finances."
The funding had helped bring in advisers and consultants and as
a result losses had been reduced by 80% since the start of the
project in 2006 with expected savings of £280 million over
5 years. The power sector would still lose about £200 million
this year, but the improvements had already attracted new investment
into urban areas because there was now a reliable electricity
78. We asked the Secretary of State to explain why
DFID should pay private consultants to help the State of Madhya
Pradesh increase its revenue from the power sector rather than
simply pointing them in the right direction. It was clear to us
that the savings could have been predicted; and that instead of
providing gift aid, pump priming funding could have been offered
and been repaid when the project accrued savings. We wondered
if DFID was inadvertently paying for things which the state Government
could and would otherwise pay for. The Secretary of State explained
that at the time DFID had assessed it would not and that DFID's
intervention would have demonstrated the effectiveness of the
technical assistance. He said he would not rule out similar investments
in the future.
79. Another DFID project in Madhya Pradesh was helping
the city of Bhopal to track the use of public vehicles through
the application of a Vehicle tracking Management System (VMS).
DFID provided £118,000 for technical support and support
in operations and maintenance over three years. The Government
of Madhya Pradesh provided the capital costs (GPS and IT servers).
DFID estimate that all costs will be recovered over three to four
years through increased efficiency in services and fuel savings.
The Mayor of Bhopal explained how this enabled her to reduce misuse
of public vehicles and provide more accountable public servicesrubbish
collection, bus services to the city. We considered this
to be another example of a project with worthy objectives, including
reduced corruption, for which loan funding would have been more
80. The International Development Committee in the
last Parliament recommended that DFID develop "a considered
and co-ordinated strategic plan with appropriately resourced,
practical and time bound plans for the full implementation of
existing private sector development policies needs to be developed
and implemented" in its report on Private Sector Development.
We did not consider that DFID had the right staff or linkages
with the private sector to sustain a coherent approach to private
sector development. We have since looked at the operation of CDC
and made suggestions for improvement.
CDC ought to be playing a role in India, but it is still unclear
what this role will be in DFID's plan. We are still concerned
that DFID does not have the right private sector expertise in-house
and recommend it work with appropriate bodies which do have such
81. DFID proposes to spend £140 millionor
half of its budgetby 2015 through the private sector in
India. While we understand that DFID's funding is intended to
demonstrate that it can be profitable to invest in the poorest
states, DFID has not provided us with sufficient detail on which
sectors are most appropriate in terms of returns and for maximising
the poverty impact. The decision about how much to spend through
the private sector should be dependent on achieving greater clarity
on what the most effective investments are likely to be.
82. In addition we do not consider it appropriate,
in general, for aid to private companies to be provided as a grant
or a concessional loan because to do so would skew the market
and undermine free competition. It also runs the risk of "picking
winners" which often fails and can simply shore-up unviable
business practices. Instead, funding for private sector development
should take the form of repayable loans.
Ways of working in India
83. Although India is a large recipient of UK bilateral
aid, this aid is small in relation to the Government of India's
budget and in relation to the Government of India's own spending
on poverty reduction and inclusive growth. DFID's impact therefore
lies in its ability to demonstrate best practice in particular
sectors and states, so that its work may be replicated on a wider
scale across the country where appropriate. To a large extent
this has worked well and it is something we would wish to see
84. Oxfam pointed out that "while bilateral
aid is relatively small in comparison to the Government of India's
social spending, it is highly valued because it provides small
incremental financial contributions to test new ways of improving
governance and delivery on the ground, often drawing on DFID's
experience in other countries. Learning from many DFID-supported
interventions has been integrated into national and sub-national
policies to ensure more effective delivery to target groups".
85. Professor Toye also highlighted the value of
catalytic demonstration projects:
You can do this [...]with a combination of demonstration
projects. You don't need to cover the country with them, but you
have to show that what you are proposing actually works on their
soil, with their people. Then there is what's called sectoral
policy dialogue, where you then talk to Indians: "What did
you think of that? Were you impressed in any way? Do you agree
with us that it did, in fact, take a lot of people out of poverty?
Can you see any snags about generalising this?" It is this
kind of consultative and partnering policy dialogue at a sectoral
level around demonstration projects. [...]You have to have a baseline
study. "We went in there, we found out what the people were
like before we did our project. Now we've changed the way that
health is done." [...]Using rational evidence-based demonstrations
to talk to people, talk to the Government, about its own policies.
86. The value of DFID's work in India is enhanced
when it can demonstrate new ways of doing things which work and
these are scaled-up by the national Government. DFID has a proven
track record in this and the Government of India is appreciative
of DFID's efforts. This way of working should form the basis of
future programmes in India since it does not require large amounts
WORKING WITH CIVIL SOCIETY
87. While much of DFID's work is through national
and state governments, DFID also works with civil society organisations.
DFID will spend 2% of its aid budget through civil society organisations
in 2010-11. It funds two programmesthe Poorest Areas Civil
Society Programme (£25million from 2009-14) and the International
NGOs Partnerships Agreement Programme (£20million from 2009-14).
88. Because civil society organisations work directly
with communities they are often best-placed to help the poor organise,
mobilise and claim entitlements.
Save the Children told us that one of DFID's civil society programmes
in Indiathe International Partnership Agreementfocuses
specifically on the area of social exclusion. "The idea is
that NGOs such as Save the Children would work at community level
to make sure that excluded families were aware of and did access
social programmes, and were assisted in organising themselves
to be able to claim their rights in a more structured and organised
89. Some commentators thought DFID needed to increase
its focus on civil society.
Malini Mehra was strongly supportive of DFID investing more in
socially progressive civil society organisations which would challenge
Dr Price pointed out the need for DFID to ensure its work permeated
below government levels:
The engagement with Government needs to enable
the real engagement, if you like. That is, an annual discussion
on climate change, let's say, which then allows work to be done
with such-and-such civil society organisation, or such-and-such
private company that is putting in solar grids. How well is that
going? I think it is frequently stuck at the Government level
with the assumption that that means something of itself when actually
it needs to be deepened at the lower civil society or private
90. DFID's work through civil society organisations
is extremely valuable, especially in tackling social inequalities.
As we have recommended that DFID increase its emphasis on social
exclusion, DFID will need to increase its funding to dynamic Indian
civil society organisations with a proven and measureable record
in challenging social exclusion.
64 Secretary of State, Speech on Emerging Powers, Chatham
House 15 February 2011 Back
Q 191 Back
International Development Committee, Third Report of Session 2004-05,
DFID's bilateral programme of assistance to India, HC 124-1
DFID, Steering brief, March 2011 Back
Ev 95 Back
DFID, Steering Brief, March 2011 Back
Ev 96 Back
Ev w17 Back
Ev w2 Back
Ev w2 citing John Heath, An Evaluation of India's Programme
2000-2005, DFID, London, 2005 Back
Ev w16 Back
Ev 87 Back
Q 134 Back
Q 134 Back
Q 133,136 Back
Ev 113 Back
Secretary of State, Letter to the Chairman, December 2010 Back
Ev 90. According to the WHO improved sanitation refers to adequate
access to excreta disposal facilities that can effectively prevent
human, animal, and insect contact with excreta. Improved facilities
range from simple but protected pit latrines to flush toilets
with a sewerage connection. To be effective, facilities must be
correctly constructed and properly maintained. Back
Ev 81 Back
Institute of Development Studies, 'Beyond Subsidies - Triggering
a revolution in rural sanitation, Policy Briefing, Issue
10, July 2009 Back
Ev 83 Back
Q 92 Back
Q 95 Back
International Food Policy Research Institute, 2009 Global Hunger
Ev 114 Back
Lawrence Haddad, 'Lifting the Curse: Overcoming Persistent Undernutrition
in India', IDS Research Summary, Issue 4 Vol 40,2009 Back
'Stunting' refers to low height for age, and 'wasting' to low
weight for height. Vinod Kumar Paul et al, 'Reproductive health,
and child health and nutrition in India: meeting the challenge',
The Lancet published online 12 January 2011, p.2 Back
Dr S Vir, Meeting the challenge of malnutrition in India, March
DFID, 'The neglected crisis of under-nutrition: DFID's Strategy',
March 2010 Back
International Development Committee, Tenth Report of Session 2007-08,
The World Food Programme and Global Food Security, HC493-1 Back
International Development Committee, Second Report of Session
2010-11, The 2010 Millennium Development Goals Review Summit,
HC 534, para 24 Back
The Lancet, Vol 377, No 9761 January 15-21, 2011 Back
Q 60-62 Back
Ev 74 Back
Vinod Kumar Paul et al, 'Reproductive health, and child health
and nutrition in India: meeting the challenge', The Lancet
published online 12 January 2011 Back
47% of births are attended by skilled health personnel. Figures
for 2003-08 (UN Statistics website). This is an increase from
33% in 1992. Back
Ev 89 Back
The scheme is called Janani Suraksha Yojan and is part
of the Government of India's National Rural Health Mission. Back
Q 244 Back
Ev w2 Back
Q 136 Back
DFID-India, Draft Operation Plan Results Back
Ev w14 Back
DFID, Global Social Exclusion Stock take Report, Annexes,
India Case Study, 2010 Back
Ev w2 Back
Ev w12 Back
DFID, Strategic Programme Overview, Presentation, Delhi, March
Secretary of State, Speech on Emerging Powers, Chatham House,
15 February 2011 Back
Q 213 Back
For details of how CDC works see International Development Committee,
Fifth Report of Session 2010-11, The Future of CDC, HC 607 Back
Q 213 Back
Q 234 Back
Q 222 Back
DFID, Visit briefing, Madhya Pradesh, March 2010 Back
Q 200-202 Back
DFID, Response to International Development Committee queries,
26 May 2011 Back
International Development Committee, Fourth Report of Session
2005-06, Private Sector Development, HC 921-1 Back
International Development Committee, Fifth Report of Session 2010-11,
The Future of CDC, HC 607 Back
Ev w17 Back
Q 16 Back
Ev 91 Back
Q 116 Back
Ev w13, w15, w17, w 37, w 65 Back
Q 162 Back
Q 166 Back