The Future of DFID's Programme in India - International Development Committee Contents

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.[64]

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"[65]—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.[66] 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.[67] 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).[68] By 2009-10 DFID allocated 20% of its programme to education, 48% to health and 1% to water and sanitation.[69]

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 Bengal—from 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.[70] 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%).[71] 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."[72]

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 Development Goals.[73] 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 donors."[74] Oxfam 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."[75]

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.[76]

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.[77]

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.[78] 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.[79]

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; and,
  • An increased role for the private sector.

We consider these issues in the remainder of the chapter.

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 states—Madhya Pradesh and Bihar—where 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 inequality.

38. Professor Haddad, of the Institute of Development Studies, explained the importance of helping state Governments directly:

    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.[80]

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.[81] 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.[82]

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.

Focus sectors

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.[83]

In the following section we look specifically at areas where we consider greater emphasis than currently proposed is needed in the DFID programme—sanitation, 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.[84] 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 million—live in India. Among the poor, between 81 and 97% practise it.[85] 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.[86] 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.[87] 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.


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".[88] He explained:

    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 that wavelength.[89]

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 that—and these are the words that are used—they 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.[90]

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 purposes.

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.[91] 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."[92] 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 2043—30 years beyond its 2015 deadline.[93]

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 olds—even though these were the cohort most in need of help.[94] The crucial 'nutrition window' was recognised as the first two years of life—after which the effects of stunting and wasting were irreversible and the effects of inadequate nutrition endured throughout many people's lives.[95] 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.[96]

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 underweight—the 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.[97]

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 2010.

53. DFID published a Nutrition Strategy in 2010,[98] partly in response to our predecessor Committee's recommendation.[99] 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.[100]

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.[101] 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.[102] 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.[103]

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,[104] and 20% of maternal mortality. While statistics are gradually improving—child mortality has declined by an average of 2.25% annually since 1990, and the proportion of women that die in childbirth has halved since 1990—progress 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.[105] 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.[106] 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 Bengal.[107]

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.[108] 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. [109] 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 focus states.

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.[110]

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.[111] 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.[112]

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 scavenging—collecting human waste by hand, for disposal—a 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 schools.

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.[113] 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.[114]

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".[115] 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".[116]

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".[117]

69. India has high levels of inequality—particular 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".[118]

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".[119] 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.[120] 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);[121] 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.[122] DFID has proposed to use a rising portion of its budget—£140 million or 50% by 2015—to 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 sector.

75. We asked the Secretary of State for some examples of how he intended to invest DFID's funding but did not receive much detail:

    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.[123]

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."[124]

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."[125] 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 supply.

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.[126]

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.[127] The Mayor of Bhopal explained how this enabled her to reduce misuse of public vehicles and provide more accountable public services—rubbish 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 appropriate.

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.[128] 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.[129] 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 expertise.

81. DFID proposes to spend £140 million—or half of its budget—by 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 continued.

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".[130]

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.[131]

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 of funding.


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 programmes—the 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.[132] Save the Children told us that one of DFID's civil society programmes in India—the International Partnership Agreement—focuses 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 way."[133]

89. Some commentators thought DFID needed to increase its focus on civil society.[134] Malini Mehra was strongly supportive of DFID investing more in socially progressive civil society organisations which would challenge inequalities.[135] 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 sector levels.[136]

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

65   ibid Back

66   Q 191 Back

67   International Development Committee, Third Report of Session 2004-05, DFID's bilateral programme of assistance to India, HC 124-1  Back

68   DFID, Steering brief, March 2011 Back

69   Ev 95 Back

70   DFID, Steering Brief, March 2011 Back

71   Ev 96 Back

72   Ev w17 Back

73   Ev w2 Back

74   Ev w2 citing John Heath, An Evaluation of India's Programme 2000-2005, DFID, London, 2005 Back

75   Ev w16 Back

76   Ev 87 Back

77   Q 134 Back

78   Q 134 Back

79   Q 133,136 Back

80   Ev 113 Back

81   Q196 Back

82   Q14 Back

83   Secretary of State, Letter to the Chairman, December 2010 Back

84   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

85   Ev 81 Back

86   Institute of Development Studies, 'Beyond Subsidies - Triggering a revolution in rural sanitation, Policy Briefing, Issue 10, July 2009  Back

87   Q92  Back

88   Ev 83 Back

89   Q 92 Back

90   Q 95 Back

91   International Food Policy Research Institute, 2009 Global Hunger Index Back

92   Ev 114 Back

93   Lawrence Haddad, 'Lifting the Curse: Overcoming Persistent Undernutrition in India', IDS Research Summary, Issue 4 Vol 40,2009 Back

94   Q76 Back

95   '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

96   Q76 Back

97   Dr S Vir, Meeting the challenge of malnutrition in India, March 2011 Back

98   DFID, 'The neglected crisis of under-nutrition: DFID's Strategy', March 2010 Back

99   International Development Committee, Tenth Report of Session 2007-08, The World Food Programme and Global Food Security, HC493-1 Back

100   International Development Committee, Second Report of Session 2010-11, The 2010 Millennium Development Goals Review Summit, HC 534, para 24 Back

101   The Lancet, Vol 377, No 9761 January 15-21, 2011 Back

102   Q 60-62 Back

103   Q115 Back

104   Ev 74 Back

105   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

106   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

107   Ev 89 Back

108   The scheme is called Janani Suraksha Yojan and is part of the Government of India's National Rural Health Mission. Back

109   Ev89 Back

110   Q 244 Back

111   Ev w2 Back

112   Q 136  Back

113   DFID-India, Draft Operation Plan Results Back

114   Ev w14 Back

115   DFID, Global Social Exclusion Stock take Report, Annexes, India Case Study, 2010 Back

116   Ev w2 Back

117   Ev w12 Back

118   DFID, Strategic Programme Overview, Presentation, Delhi, March 2011 Back

119   Secretary of State, Speech on Emerging Powers, Chatham House, 15 February 2011  Back

120   Q 213 Back

121   For details of how CDC works see International Development Committee, Fifth Report of Session 2010-11, The Future of CDC, HC 607  Back

122   Q 213 Back

123   Q 234 Back

124   Q 222 Back

125   DFID, Visit briefing, Madhya Pradesh, March 2010 Back

126   Q 200-202 Back

127   DFID, Response to International Development Committee queries, 26 May 2011 Back

128   International Development Committee, Fourth Report of Session 2005-06, Private Sector Development, HC 921-1 Back

129   International Development Committee, Fifth Report of Session 2010-11, The Future of CDC, HC 607 Back

130   Ev w17 Back

131   Q 16 Back

132   Ev 91 Back

133   Q 116 Back

134   Ev w13, w15, w17, w 37, w 65 Back

135   Q 162 Back

136   Q 166 Back

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Prepared 14 June 2011