Session 2010-12
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CORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 616-ii i

House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

International Development Committee

The Future of DFID’s Programme in India

Tuesday 1 March 2011

DR GARETH PRICE, MALINI MEHRA AND DR ROSALIND EYBEN

Evidence heard in Public Questions 132 - 184

USE OF THE TRANSCRIPT

1. This is a corrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.

2. The transcript is an approved formal record of these proceedings. It will be printed in due course.

Oral Evidence

Taken before the International Development Committee

on Tuesday 1 March 2011

Members present:

Rt Hon Malcolm Bruce (Chair)

Richard Harrington

Pauline Latham

Mr Michael McCann

Anas Sarwar

Chris White

________________

Examination of Witnesses

Witnesses: Dr Gareth Price, Senior Research Director, Asia Programme, Chatham House, Malini Mehra, Founder and Chief Executive, Centre for Social Markets, Bangalore/Delhi/London, and Dr Rosalind Eyben, Institute of Development Studies, University of Sussex, gave evidence.

Chair : Good morning. Sorry, we had a slight hiatus there, so we are somewhat informal. I think one other colleague will join us shortly. I wonder if you could introduce yourselves for the record and we can then proceed.

Malini Mehra: Hello, good morning. My name is Malini Mehra from CSM.

Dr Gareth Price: I am Gareth Price from Chatham House.

Dr Rosalind Eyben: I am Rosalind Eyben from the Institute of Development Studies.

Q132 Chair : Thank you all three very much for coming in to give us evidence. As you will appreciate, the Committee is looking at DFID’s programme in India, which has now been confirmed as continuing on roughly the same level at the moment-and we will actually be visiting India next week and the week after-against a background, obviously, of a certain amount of controversy, which you may or may not wish to comment on. The Government have basically said our objective is to work with Indian authorities, effectively to help them perhaps achieve poverty reduction more quickly than might otherwise be the case. I guess what we want to explore is whether DFID can do that, whether the relationships work and whether they are targeting the right areas. You have a degree of interest and expertise that could help us with that, so thank you again for coming in. The Government have announced they are going to maintain the programme at roughly the same level to 2015. Do you think that is the right decision?

Dr Rosalind Eyben: No. I think we should stay in India but with less money than we are currently spending. I am not sure that there is any proportionality between the amount of money spent and the impact on, and contribution that we can make to reducing poverty in India. On the contrary, I think too much money can had a deleterious effect on supporting the kind of societal transformation that India is struggling to achieve to tackle the deeply entrenched inequalities that exist.

Q133 Chair : I will ask the others to comment, but before they do, obviously from the UK point of view approximately £300 million a year is a significant amount of taxpayers’ money. In the context of the Indian economy and 425 million people living on less than $1.25 a day, £300 million would be unnoticed. In one sense you could argue that it is not a huge amount of money in that context in terms of India’s needs and the real issue is qualitatively how it will make a difference.

Dr Rosalind Eyben: That’s right, and I think the issue of "how much money" can be misleading in that sense. The real challenge is how DFID can be really useful in India in supporting tackling poverty reduction and also the severe gender inequality that is persistent in the country. The way that one goes about doing the work is fundamentally important.

Q134 Chair : Can I just ask the other two to answer the direct question: do you think it is the right decision to maintain the programme at the current level?

Malini Mehra: I think it is the right decision in the short term. I see little rationale for DFID continuing its level of intervention and investment in a country like India, which has more billionaires than Japan and gross domestic product of £4 trillion now, which is larger than the United Kingdom’s even though there is obviously significant increase in the population. I think to pull out at this stage when you have an institutional investment through DFID in a country like India would be a mistake, but I think a gradual withdrawal is absolutely essential.

I think that there is much to say in terms of the quality of the aid agenda in a country like India: £300 million on an annual basis can be a considerable amount of money if targeted at the right user groups. 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 Gareth Price: I would say only that, if you are asking this question in five years’ time and India carries on growing at 9% to 10%, the answer will definitely be that it’s time to start cutting back.

Chair : To be fair, I think the Government has implied that.

Dr Gareth Price: For now, shifting the target towards poorer states makes sense to me. Shifting towards building up a partnership with India on more global issues makes sense, and it will take a lot of time. It seems to me that carrying on with the funding for now presents an opportunity within which that global partnership can be created. But I very much agree with Malini that where DFID has suffered in the past is by not building up political capital in Delhi, amongst the commentariat in Delhi. DFID’s work is not appreciated as much as that of some other donors. That might be partly because of DFID’s work in poverty reduction-for example, you hear a lot of credit given to the Japanese for building the Delhi Metro. Now that is a completely different type of aid and it is not focused on poverty reduction in the same way, but it is the kind of aid that has brought political capital for Japan in a way that the UK does not have.

Q135 Chair : It is interesting you say that because certainly over the last 10 or 15 years UK aid and development has been focused not on political capital but on poverty reduction and how effectively we are delivering that. In terms of focus, DFID is saying that they are- which may compromise the point you made about Delhi-putting most of their funding into three states: Madhya Pradesh, Bihar and Orissa. If you take Bihar for example, $321 is the per capita income, which is really pretty well the bottom of the heap, and yet I think they have a population of 54 million-nearly the same as the UK. Is that not a sensible place to go? Is that not the right thing to do-to go to the poorest states where you might be able to make the biggest impact?

Dr Rosalind Eyben: I think so. I think that is the right decision.

Q136 Mr McCann: Doctor, can I just understand from the practical perspective? If you take money out, that leads me to the conclusion that money is not getting to the poorest people whom we would like it to get to. Then you say that the vacuum created there would allow gender equality to be addressed in some way. Could you explain how that would work in a practical context?

Dr Rosalind Eyben: 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.

How can you support that? It is by supporting innovation that is already going on in the country. India is a very innovative society. They have introduced a whole range of different ways of working that are making a difference in particular places. UK aid can support that by encouraging and facilitating the innovation and the change processes already taking place, particularly organisations inside and outside Government who are prepared to take risks, want to experiment, want to say, "We know throwing money at it-there is a long history of that in India through various state poverty alleviation schemes-does not work very well. We have to think about how to do this in ways that are going to work." That does not require lots of money in the first place. It requires supporting risk taking. It is a bit like venture capitalism: it is supporting risk taking and experimentation. Things might not work, but so much innovation is taking place in India, so many social entrepreneurs could be supported, but it is an entirely different approach.

We used to do some of those things in India quite a lot when the amount of money that we spent was much less. The trouble with great amounts of money is that you then focus on spending the money rather than thinking how the money and the relationships working together are actually going to support the processes of change.

Chair : Obviously these are the sorts of things we want to look at when we visit.

Q137 Richard Harrington: Thank you all for your contribution. You all seem to have radical ideas and I have two questions. If I could ask you particularly, Malini, because your ideas are the most radically different from how the current situation is. I know you have a limited amount of time, but if you were given the £280 million a year or whatever the amount is-a large sum of money- for three years and you could start with a blank piece of paper, it would help absolutely for us to understand in a bit more detail how you would spend it and how it is different from now. I think that is enough of a question actually.

Malini Mehra: I would do it radically differently, as you have suggested, and I would not focus on state aid, which is what DFID has been doing. DFID began with state aid budget support at the national level and then it realised that that is not the best value for your investments. Now it is seeking to do that in some of the worst-governed parts of the country. Orissa, and Bihar are making transitions to better government models but still there is pervasive malgovernment in these states. If you continue that model at a subnational level of pushing your money through the states that are bureaucratic or have no interest in innovation or entrepreneurship, it will be wasted. That is the fear.

What I would do is really focus on the ground level, where the ferment is. Why do we have such a revolution in terms of social enterprise in India? It is because people are getting up off their backsides and taking control of their own destinies. They have to because there is no one who is going to step in there and be daddy for them. But they are doing it under great hardship and with a great deal of jeopardy and vulnerability, because you never know how durable your enterprise is going to be. That is where DFID should be stepping in. I feel that it has to rethink its entire model and provide smaller levels of support-small grants, medium-sized grants-to grassroots organisations, to civil society organisations, and it has got the model completely wrong.

I am an Indian, I can be challenging to my own Government and I would be the harshest critic of my own Government and its failures. Organisations like mine-I do not want to make this a self-interested diatribe-find it inordinately difficult to get support from DFID. I have worked in the UK Government and when I worked in the Government I was aghast to see how disjointed DFID is from the rest of HMG. In India it is kind of the ruler on the hill, in a sense. They have large amounts of money that they have to push out, and so they do not have an incentive to actually look at where the social change is coming from, who the people are who are going to be shaking up the system, and who the people are who can be supported because they are the ones who will put their lives on the line-who are putting their lives on the line-for the kind of social transformation that Rosalind is talking about. It is very difficult to support those people, but if you start now and you make it into a strategically well thought-through process of investment at the bottom of the pyramid then I think you will avoid the cataclysmic effects we are seeing all over North Africa.

My fear is that you will have Egypts. We have already seen it; India has the largest number of insurgencies of any country. Those will grow. The people who are saying the Japanese are great in Delhi are saying it because the only thing that counts for them is infrastructure investment: investment in roads, investment in India’s hardware and they have lost connection with the rural poor and the harshness of life in India.

Chair : I would say that is quite strong stuff.

Q138 Richard Harrington: Just a quick lead on from that. Are there any other Governments providing aid to India that have worked on the model that you are talking about?

Malini Mehra: No. I think this is an area that is really replete with failure. I think that arguably the only Government that actually gets kudos from the Indians is the German Government. Through GTZ, the German technical corporation arm of the German Government, they have identified their forte. Their unique selling point in India is that they bring technical capacity expertise, which is actually valued by the Government. They have developed political capital over the years. USAID is now basically receding from the scene. It is very unclear what level of commitment USAID will have.

Chair : $50 million is all they have at the moment.

Malini Mehra: Which will increasingly go through the private sector, from the latest that I have heard from the administrator of USAID. The Australians: again, small amounts of funding. DFID has a capacity in the remaining years that it may have in India to actually make a change-a pathway to a new form of development partnership.

Q139 Pauline Latham: It is a question for all of you really, because I would like all of your views. We know that India has a big space programme, which is costing them a lot of money. We cannot afford one of those. We are in a very difficult situation in this country and the people who elected us are very angry that so much money is being spent on international development. Now I do not have a problem with it but a lot of people that I speak to do. How can we justify spending all this money on India, from Britain, when they have got their own space programme? Do you feel it is for their Government to sort out and they should be spending money and directing it into their own projects, or should we really continue to spend as much as we are obviously planning to?

Dr Gareth Price: I remember doing a project a few years ago; I was looking at India’s foreign aid programme. One of the issues was India providing food aid to other countries. The question is, when there are so many hungry and malnourished people in India, why is India giving food to other countries? The answer is there is plenty of food in India; India is self-sufficient in food. It just lacks the capacity to get the food to the poor people who need it, and the same kind of thing is true with the space programme. If those people were not working on the space programme, it is completely irrelevant; it is a very bifurcated society. There are people here working on space programmes and there are the 400 million rural poor. The two things are completely different.

Q140 Pauline Latham: So you do not think the people working on the space programme could be redirected to work out a logistical system that would feed the poor?

Dr Gareth Price: The issue is that, in the rural areas, India lacks the capacity to generate employment, to have rural infrastructure and to have food transfers. It is hampered by corruption and so forth. India does not lack the resources; it lacks the capacity, particularly the human capacity, to resolve the problems of rural poverty. Things like the space programme are completely separate.

Dr Rosalind Eyben: I think India typifies the bigger challenge of whether DFID should be working in middle-income countries where you have extremely high levels of inequality that are not moving, are not budging. India is an extreme example but there are others. I think this is going to come back to the Committee looking at aid more generally in middle-income countries. There are two issues: there are an awful lot of poor people in India. The Chair has already pointed out that Bihar has got 50 million people-that is equivalent to and much bigger than many countries in Africa-with not that much money. Taking the approach that Malini has outlined can make a really useful difference because sometimes from the outside you can support processes of change that are taking place internally. I do emphasise processes of change are already taking place internally. It is not DFID coming in and saying, "We know the answer." That is fatal. It is actually supporting people who can make a difference and helping them do it.

Food: it is not a question of logistics; it is a question of entitlements and of people having a voice to make claims, and supporting those kinds of people. A further point is that because there is so much innovation and experimentation going on in India, but not adequately supported, we can actually learn lessons from them. UK taxpayers can benefit in our own problems of poverty and inequality from some of the very interesting social enterprise and big society work that is taking place in India. So it is not just one way; we get something back as well if DFID is capable of learning and communicating what it has learnt in the UK.

Malini Mehra: I think in a country like India, we should be making much greater demands of the middle class. For the last 10 years people have been so excited about getting rich quick. It has all been about how much income I can keep, how little tax I can pay, how many shopping malls I can become a patron of. It is an incredibly shallow and selfish society. We have this background baggage of 5,000 years of an extremely socially stratified society and no social contract that has developed over those millennia. So having benefactors from the outside come in and say, "Well, we are going to give a little bit of money because we feel concerned about this situation," should be entirely optional.

The great demand should be made of middle-class India to open its eyes and realise just how dire the state of the country is. While we have Indians who get super excited by the fact that we have n number of beauty queens who are winning global contests, that in 2008 we sent a spacecraft to the moon, that we have a national nuclear programme, that we now want a deep water navy, they will not be able to tell you what the literacy rate is for women in the country. They will not be able to tell you how many children go to sleep hungry at night. This is something that no Indian should be proud about. It is something about which we should hang our heads in shame.

My attitude to international aid programmes is that they are entirely irrelevant in a country like India, where people are so obscenely wealthy, yet we have people who are living in a space age and a stone age at the same time. My call from our country people is you have to be absolutely morally indignant about the situation, because unless we arouse that level of indignation and intolerance of the situation, aid will make no difference whatsoever. It will just be around the edges and on the margins.

Q141 Chair : DFID in their information to us have made all kinds of claims about what they have achieved; it may be the colour of the current Government, which wants to measure and quantify things. It is full of substantial claims that they have lifted these numbers of people out of poverty, they have assisted all kinds of health reforms and so forth. They have quantified them and they have said the numbers. From what you are saying, you refute all that. You just do not believe it is true. Perhaps you could also say what are they doing that they should not be doing?

Malini Mehra: Every year when the Parliament sits, the finance Minister introduces the new budget in Parliament, as we had yesterday. Institutions have a vested interest in making themselves look good. If they are asked to produce evidence that results are there, they will come up with any number of things, some of which will be directly attributable to their investments and others that will be perhaps plucked from the air. What I am talking about is, at the very aggregate macro level, there is no sense that I get, as an Indian, as someone who has worked in this field for 20 years, that actually DFID is a valued partner by the Government. I have seen that working within HMG from the inside; I see it on the ground. They are not able to translate the investments that they make on the ground- improvements in health, sanitation, welfare-into actual changes in the kind of structures that hold back progress. I think if at metalevel, at a macro level, you are looking for metrics of success, I would be hard pressed to argue the case for DFID.

Q142 Chris White: My apologies-I meant to ask my question a bit earlier, so the flow might be lost somewhat. You said we should be focusing or targeting aid in the areas that were managed or governed worse. Would that be a fair summary of what you were saying? If we are focusing on specific areas, is there a danger that the Government will perhaps ignore those areas even more, and as we come to the end of our term of aid, will those areas be far worse off than they are now? That is the first part of my question. The second part was to you: you have used words like-to bring people out of poverty- "innovation", "experimentation", "empowerment", "entitlement" and "voice". How do those words connect with the reality? Do people even understand what those words mean? I hate to say this, but it does sound like something out of a business manual. Perhaps if you could put a bit more flesh and reality onto that, it would be helpful.

Malini Mehra: I think it will be destabilising if DFID pulls its funds out of grants that have been made, for example, to attempt to get the city of Calcutta to adopt climate vulnerability mapping programmes-DFID has indicated that it wants to invest in those kinds of planning reforms-and yes, there will be a shortfall. But frankly, these are things that the Government of India should be supporting. In the immediate term, it will lead to destabilisation and people will lose jobs and that will not be the best thing to do. As I said, this has to be a phased-out approach, just as DFID has done in China. The Government-the state Government, the national Government-have to realise what their responsibilities are because ultimately we are talking about political priorities that are set at the state Government level and at the central Government level. The feeling strongly in India, for people like me, is that the Government is not getting its political priorities right because for too long, the voices that have prevailed in political circles are of those who want to get rich quick.

Q143 Chris White: You paint a very clear picture and you present the threat and what the scenario could be. DFID has failed the Indian people. How is there going to be a better dialogue with the Government to push forward the reforms that should happen?

Malini Mehra: I think you are really on a hiding to nothing in terms of partnership with the Indian Government on this. It is extremely difficult because Indian bureaucrats are not ones to take dialogue with UK officials very kindly. They are a supercilious bunch of bureaucrats.

Chris White: The British or the Indians?

Malini Mehra: There is a strong Indian professional attitude that is pretty much along the lines of, "We are running our own county now." It is a kind of post-independence blues. "We have not got it right for 60 years. We do not need you to come along and tell us how to run our own affairs." I think that kind of narrative really should be binned because the narrative between the UK and India should be about strategic partnership.

In terms of finding partners within the Indian political circle, I think DFID has lost its way slightly because it has not been employing people with sharp political skills. In terms of these skill sets, that has been area of considerable deficit. It gets people with development expertise, with other technical areas of expertise, but it has not been able to accrete to itself people who bring good political nous, political understanding: "Here are the champions who you may want to support, have dialogues with. Here are the people who you should stay away from because they are pariahs." That is the kind of political intelligence that the Foreign Office or the High Commission should have been bringing. I think both have failed. Hence I think that the UK Government is left at a loss because you have not necessarily cultivated the kind of relationships with a new generation of politicians who could be the reformers.

Just to give you one example, in the climate change and energy arena, we have had perhaps the biggest steps taken in the shortest space of time because one individual made the difference. This is Jairam Ramesh, the Minister for the Environment and Forests, who was appointed in May 2009. He is a reformist and an independent, even though he has the strong support of the Prime Minister and Sonia Gandhi, and he was given political coverage, so to speak, to unleash a whole set of reforms. Effectively he was a one-man motor of change in what he did. Now a DFID or a High Commission could have spotted, "Here is this man. He is likely to go far in Government. How can we actually get within his radar and start cultivating a relationship so that his multiplier effect is much greater?"

The simple point is there needs to be people with greater political skills who are actually brought into the assessment of how to create and get greater value and greater leverage for the Government on this. The essential difficulties of working with a Government that does not actually value you remains. So how do you get out of that? You get out of it by finding more innovative ways of working with non-state actors. They can be businesses, but certainly they are civil society organisations. That is really where the innovation is coming from. I would caution that we should not assume the wave that we have seen of social enterprise is going to continue on an upswing. I think it will be buffeted in the ways that we have seen-the whole micro-finance, micro-credit community buffeted. It will require support. The question for DFID and the UK Government is, in what ways can we provide nimble forms of support that will enable us to make investments at the scale that is needed?

Dr Rosalind Eyben: If I just follow on, because I agree with what Malini is saying, but to make just an additional point about it. I have used words like "voice" and "entitlement". In my written evidence I give two examples, one from the National Slum Dwellers Federation. They have successfully organised themselves in many parts of India, and indeed led the way globally-this comes back how we can learn from India-in enabling people in urban slums around the world, including in Africa, to mobilise themselves, stop themselves being evacuated from where they are living, make claims for employment and stop being harassed. They have also shown the importance of a home in order to run a micro-enterprise.

I also give an example about migrant workers and how DFID has supported the mobilisation of migrant workers who are employed under absolutely shocking exploitative conditions. That is about voice; it is about people organising themselves, being facilitated and getting access to some resources to enable that to happen. It is those who have to challenge the middle class. I think there is a whole issue about dialogue directly with the Government. I think sometimes that is possible. I think Malini gave a good example. I think sometimes at state level you find very enterprising and committed IAS officers who really do want to make a difference, and DFID staff need to be able to find them. All that requires flexibility and responsiveness. It is very difficult if you are going to set targets; if you are going to say, "This is what we are going to do for the next three years" and then try and deliver it, because many of these things are opportunistic. Who is there trying to bring about change? If we give it support, will that really start a wave of change in this place? It requires very skilled DFID staff, who are there for a considerable period of time. It requires flexibility; it requires a lot of relationship building, a lot of analysis.

Let me just give you an example. Some of the words that I used are buzz words. DFID could say, "Yes, we are supporting poor people’s accountability. Within three years, 6 million more poor people will hold their state accountable." When you give those kind of figures, you are actually running a great risk of achieving nothing because, "What will you do?" "Oh well, we have supported report cards"; I think we know what report cards are. So 6 million people have received a report card that they can complete thanks to our spending money. That is nonsense; that does not make any difference. Pre-established results, not being able to be flexible and responsive and look for where processes of change are happening is actually a waste of money. If DFID continues pursuing that line in India and elsewhere, I think the money is wasted and should not be spent.

Q144 Anas Sarwar: Firstly, can I apologise for being late? I am sorry; I promise there was no offence intended on my part. I want to move on to India as a donor rather than a recipient country. The figures we have seen show that India’s total foreign aid budget for 2010 was approximately $785 million. I just wonder what your thoughts are about what the main motivations for Indian aid are.

Malini Mehra: I am not sure the Government itself would be able to answer that question. I think it depends very much from issue to issue. If you look at the amount of money that is going through the World Food Programme in terms of supporting food donations for Afghanistan or Burma, that is clearly to do with a neighbourhood policy that is around containment of conflicts, unrest and terrorist activities.

If you are looking at environment issues, another arena I am familiar with, after Copenhagen and after it was criticised by members of the Alliance of Small Island States-the Maldives and other small island states in our region-the Indian Government decided it was time for a sweetener and so the President of the Maldives was brought over by money from the Indian Government. India is now investing in the Maldives. These are obviously designed to increase the prestige and the voice of the Indian Government vis-à-vis international climate negotiations in that specific instance. So where India sees that it has a self-interest in promoting a foreign policy agenda, it will be able to dig into its coffers and bring out the money.

The question to be asked is, why doesn’t India make the same kind of political prioritisations when it comes to addressing the chronic and persistent issue of stagnation of nutritional status of women and children in India? Despite economic growth over the past 20 years, you can see that such growth and nutritional status for women and children have peeled apart. In terms of what to do about these kind of things, going back to the kind of refrain that is running through our chorus of recommendations, do not forget the role of multilateral organisations here. I think that the days of bilateral cooperation are perhaps limited; they are numbered. The role of say a World Bank, an Asian Development Bank, other multilateral bodies, will continue to grow in importance. India is taking a strong interest now though its membership of the executive bodies of the International Monetary Fund and the World Bank in steering the direction of these organisations.

Q145 Anas Sarwar: Just on that point, do you know what breakdown there is in terms of India’s bilateral aid money and money going to multilaterals of that $785 million?

Malini Mehra: I would not know that, sorry. The last point on this issue of the multilateral donor route is also to remember that they are particularly influential organisations. I am thinking in particular of IFPRI, the International Food Policy Research Institute, which is based in Washington DC. They do amazing research work, and have done for many years, on food security. Now these kinds of organisations have a way in to influence the agenda, but they could go by the wayside if their funding was knocked. Please bear in mind that it is not just through the official multilateral routes. There are also other organisations that need to be supported to have the kind of direct route of influence that I think all of us are suggesting.

Q146 Anas Sarwar: Two further points. Firstly, what do you feel is distinctive about the type of aid India provides? Secondly, for us here in the UK, we are seen to be one of the leading economies in the world, despite the difficulties we have had in the last couple of years, but a certain percentage of the British public still gives us a hard time for having an aid programme anywhere, India particularly. There is still scepticism about why we spend billions of pounds giving money to developing countries when there is poverty here in the UK. I just wonder what the Indian perception is of a country where one-third of the world’s poorest live, and of their own Government giving $785 million to other countries when they have such vast levels of poverty, deprivation, undernourishment. I just wonder what level of engagement takes place with civic society in India about what countries to target, where they are spending aid money and whether they should have an aid programme as a country.

Dr Gareth Price: I think India’s aid programme itself is not presented as an aid programme because it is not an aid programme. There is a very small bit of training that has happened since the 1950s, but the vast bulk of it is lines of credit, which help Indian businesses. It is described as mutually beneficial. It is helping Indian companies, which sometimes do have a comparative advantage in making products for developing countries in irrigation and so forth. It is presented as South-South Cooperation and is essentially just support for Indian businesses to go to whichever country the Commerce Ministry has just visited.

To follow up on Malini’s point on climate change, when they started their new aid policy in 2004 one of the key issues was UN Security Council reform; that they needed to reinvigorate relations with a whole load of countries that they had ignored in the 1990s, particularly in Africa and the small island states, in relation to climate change. So a whole load of new relationships were built up, and so from an Indian perspective it was not seen as aid, it was seen as trade. That was the extra thing underpinning the relationship.

Malini Mehra: In direct answer to your question, there is no debate happening in India about India emerging as a donor nation. Most people will be ignorant of the fact that India gives the figure that you mentioned, the $785 million. It is not something that you see in the papers; it is not how the Government presents itself-that we are giving money, we are becoming a donor Government. It will only, if ever, do that in the context of, as Gareth has already said, promoting South-South Cooperation and increasing our influence in international circles.

Chair: You’ve all been delightfully provocative, which is why I have lost my order of questions. I shall bring in Chris White.

Q147 Chris White: This is really one for all of you. It has been reported recently that not everyone in India welcomes aid from the UK. I just wondered what your assessment of that point was.

Dr Gareth Price: I think you have to divide India up, and it is a country where the average does not make any sense. The poor people would like it; civil society groups would like it. The people who do not like it are the Delhi commentariat types who make policy because they feel it is a bit shameful and because they know it is a reflection of India’s own failings, as has been highlighted a lot.

People also question motivations. You hear this most specifically in terms of foundations giving money rather than Governments. You will hear a lot of people who will question why all this money is going into HIV/AIDS when many more Indians are dying from TB: "There is some kind of agenda here." On the question of the UK in particular, lots of people say that there is a post-colonial guilt kind of reason-that is why DFID is giving aid-which is obviously something separate for DFID that does not apply to GTZ, Japanese aid, AusAID or whichever. So yes, those voices definitely appear. They appeal to the sort of middle class that Malini has described very well, but it is separate to the question of: if you are interested in poverty reduction, should you actually be listening to those voices or do you go around them? But do they exist? Most certainly.

Dr Rosalind Eyben: I think that links back to the former question about India as a donor and the fact that the Government of India does not see itself giving aid to support poverty reduction in other countries, just like China, Brazil or the new emerging donors do not see it that way; they see it as South-South Cooperation or mutual economic interest. In terms of an image of DFID supporting poverty reduction, clearly in India, only if you really think that the sustained poverty reduction inequalities are an absolute scandal, in the way that Malini put it, would you look to see whoever can work with us in tackling this. So I think those people are likely to be in favour of British aid, provided, as I said, that British aid itself seems to be really working hard to achieve those poverty reduction goals. Because India is not homogenous you are clearly going to get lots of people who do not see aid in that way and therefore they would not be in favour of UK aid.

Q148 Chris White: I suppose the big question is, if the UK ceased aid to India, would poverty increase or decrease?

Dr Rosalind Eyben: It all depends how. I know as Members of Parliament you always think about money, because that was why the House of Commons was established, to vote money, so you think about money. Actually, a lot of this is not about how much money; it is about how we can support and influence change.

Q149 Chris White: Can I rephrase the question. If we ceased financial aid to India, would poverty increase or decrease?

Dr Rosalind Eyben: I think if we combined financial aid with the kind of political and social relationship building that we have been talking about, we can help reduce poverty. Therefore if we pull out on that premise, it is not that poverty will increase but poverty will be sustained. There is less chance of changing things. The amount of support that we can give to change is fairly small, but once again I repeat there is no necessary proportionality between change happening and the amount of investment in it. There is no necessary connection. You can throw lots of money at something and nothing changes. You can put a little bit of money in it at the right moment, supporting the right people, and you can actually have a major impact.

Malini Mehra: It is a very difficult question to answer because it is not a hypothetical zero-sum proposition. DFID would like to claim that 100% of what it does is about poverty reduction, but of course much of that will not be about poverty reduction especially if it is talking about reforms in institutions; for example, supporting research programmes between the IBS and the Indian Administrative Service. Those will be much more indirect impacts in terms of reducing poverty in India. Put in those ways, I think clearly the intuitive response is, if DFID were to pull out tomorrow, there would be a negative impact in the short term; I think there are no two ways about it because people’s livelihoods will be affected and the kinds of investments that are currently being made, which are making the difference around the margins. If you are actually improving access to sanitation in parts of rural India where there was none and it was affecting women’s health and nutritional status, then removing those funds is going to have a negative impact on those women. It is not whether you take the money out. I think it is inevitable that that the aid programme will come to an end at some point, but it is what you are going to be replacing it with in a very conscious, purposeful, well-thought-out way, by bringing in the internationals and by working much more effectively with non-state actors.

Q150 Chair : You mentioned the registration card and the malnutrition figures; it has been suggested to us by other witnesses that the sort of thing DFID could usefully do is monitor where the indicators of poverty are falling. In other words, where the malnutrition is, which will help to demonstrate that it was the Dalits, or the hill tribes, or other disadvantaged people and that would help to drive policy by exposing the extent to which either they are being neglected or actively discriminated against. Do you not feel that there is any validity in that or is that interfering in internal affairs and not something that an aid programme should be doing?

Dr Rosalind Eyben: Well, interfering is what an aid programme should be doing. The problem is that the challenge for international aid anywhere is that of course we are interfering. If you are not interfering then we are obviously not making any difference. That is one of the paradoxes I am afraid; you cannot say we are not interfering. A belief in reducing poverty is a belief, an ideology; lots of people do not believe that poverty needs to be reduced. This is an uncomfortable statement but you have to take it on board that if we support aid- give aid to another country-then we are actually trying to change something. In somewhere like India, we are trying to change Indian society. So there we are. You have got to live with it.

In terms of supporting monitoring, more evidence and information about poverty and instances of poverty, where it changes and where it does not, there is nothing stopping us doing that. I am sure we have done it in the past. It is not that DFID does it directly; it supports Indian organisations who are trying to do this and get more evidence out there.

Malini Mehra: I totally agree with that proposition, which is to provide a stronger evidence base for policy making in India. I will give you two examples of where it is has definitely worked. At the grassroots level we have things called social audits; social audits have already been mentioned. In the state of Andhra Pradesh, you have now a number of examples of social audits that have been held by villagers themselves and these have effectively looked at how much money has gone into parts of the state authorities they connect with directly, and they are able to track how much of the benefit from those investments into the state authorities come back to the village. In one very interesting example, the villagers found out that actually the local administrator had purchased a certain amount of soil. He had received $4,000 for the purchase of the soil and that soil had never made it to the village. As a result of the social audit, the villagers were able to take this up and that man was then disciplined-something happened. But that kind of transparency can certainly build greater accountability and improve the participation of the rural poor.

The second thing is in India what is interesting now is how much competition there is within and between states. We have heard about the competition to attract foreign direct investments, but now you have organisations that are doing rankings-so socioeconomic rankings, environmental rankings-between states. There is an influential piece of work done by IFPRI on the free security agenda, which is the Global Hunger Index. I think three years ago, they started to do a hunger index at a sub-national level in India. That was very eye opening because it showed that you could have a state like Punjab, which was 32nd out of 88 in terms of the state of hunger in that country, but a state like Madhya Pradesh was actually 84th out of 88. This has been very interesting from a citizens’ advocacy point of view and it has also strengthened the hands of those policy makers in Delhi who want to make sure that the central Government funds are actually allocated on a basis of need and not just who has got the strongest political voice in those states.

Q151 Mr McCann: I think the question I was going to ask has been overtaken by events. Perhaps I could just put it to Dr Price and ask if this is the correct assessment because I think everybody has said the same thing: India wants to increase its influence on the international stage and therefore I was going to ask the question, in terms of achieving that status, did the fact that it was both a donor and recipient of aid affect its ability to get there? Judging from what you have said and your answer to a previous question, they do not believe they are a donor country because they believe that it is not aid but it is actually about trade with other counties.

Dr Gareth Price: In terms of its relations with Africa and so forth, yes, that is premised on trade. The training and cooperation of officials from other countries has been going on since the 1950s. That is one bit of the aid that would be proper aid aid, if you like.

Mr McCann: Did it define it as aid?

Dr Gareth Price: Yes, the direct cooperation, which is quite small scale, the training officials, that would be defined as aid; well, South-South Cooperation is helping people in those countries but it is technically aid as well. A lot of what it gives within the region to, say, Bhutan and Nepal would be counted as aid, but again a lot of the assistance for Bhutan is to build hydroelectricity, which then goes back to India and Bhutan gets money for it.

Q152 Mr McCann: So is it tied aid? That is the definition that we would have used.

Dr Gareth Price: The training and cooperation is not, but the rest of it is all pretty much tied aid.

Q153 Mr McCann: Therefore, the question would be then, does India not see that as a challenge to be seen as a recipient of aid and a donor of any type of aid programme?

Dr Gareth Price: This was introduced in 2004 and they banned aid from most donors at that point and then they let in five, including the UK and the EU. At the time, they banned all incoming tied aid and introduced a policy that was almost solely tied aid, which then they relaxed a little bit because they were criticised. So they are aware and there has been a shift, marginally, within the last few years, in Africa for instance, not just to target aid on countries that are resource rich to try and be a little bit more benevolent. There is an awareness, I would say.

Q154 Pauline Latham: Before I come on to my question, going back to that, if they banned all aid coming in in 2004 and then relented and allowed us, why did they let us come in when they do not actually like us and do not appreciate what we do and feel that it is a bit of guilt from our point of view but also, if we are giving aid, guilt from their point of view because they are not providing for their own people?

Dr Gareth Price: The countries that they let back in were all permanent members of the Security Council plus the European Commission and they were large donors. The logic was that the small donors cost so much to administer-the Netherlands or the Norwegians let’s say. This came just after the Gujarat riots, when lots of Muslims were killed, and those donors in particular were seen to be politically critical of the Indian Government and I think some threatened to withdraw their aid, until the Indians, at that point ruled by the BJP, said, "If you are going to be so blatantly interfering in our political affairs and critical and it is small scale, you are not wanted."

Q155 Pauline Latham: We are giving all this aid to India and they are giving aid elsewhere. It seems totally illogical to me that we are doing that. Surely we should just be giving the aid to the other countries and bypassing India altogether. That is what people here will think.

Dr Gareth Price: I suppose the argument against that would be that what India is giving to other countries is low-cost irrigation equipment that they can do because big Indian companies have got a massive history of doing things at very low cost. They can do things that we would be struggling to find a British company that could compete with-Kirloskar making irrigation pumps in Senegal for instance.

Malini Mehra: I guess it is not effectively like for like. I think one has to put this in the context of the bigger picture of India’s increasing nationalism in terms of its relationship with the rest of the world, and its incomplete story in terms of how it sees itself. India is extremely nervous about changing the nomenclature from a developing country to a middle-income country. In India you will still hear references largely to India being a developing country and setting itself against the OECD, setting itself against the developed world. That perpetuates this pervasive north/south-ism, which then infects any argument that is political with a small or a capital "p". It certainly by no means sees itself as a donor nation and if it started to talk about itself as a donor nation it would put in jeopardy its extremely valued developing country card, which whenever it comes to international negotiations, whether it is to the World Trade Organisation or the climate change negotiations, India cleaves to.

Pauline Latham: It is all in the name really.

Malini Mehra: The nomenclature is extremely important and that is why so much of this becomes controversial.

Q156 Anas Sarwar: On the answers that both you and Dr Gareth Price gave, and following up on Michael’s question about the $785 million that is classed as aid but the Indians do not see as aid, I am just wondering who classifies it as aid, if they are not reporting it to DAC or they are not reporting to the OECD. How is it classed as aid? Because it sounds as though some of the work, like training officials, has been going on since the 1950s, so that is nothing new; obviously India has got an expertise they’re training people in, and just because they are a developing country does not mean they should stop training people in an expertise that they have. That is the first point. The second point is if they are making investments in neighbouring countries, for example the low-cost irrigation, and if there is a return coming to the country-that is, an investment is made, they are making money, it is helping growth, it is helping investment, it is helping employ people in India- that is not aid, that is again trade that is helping India grow as a country, which in itself is helping to take people out of poverty and create employment. So who classes it as aid and is it aid? Should it be even called aid or is it just India making investments and getting returns that they hoped they would do once they are a developed country? Is it part of the process of becoming a developed country?

Chris White: Just a supplementary on Pauline’s question and part of what Anas is saying, you talk about low-cost irrigation equipment, which sounds to me like a massive oversimplification of India’s aid programme. Would you say there was no financial aid? Is it just in goods and services?

Dr Gareth Price: There has been financial aid in things like writing off debts of highly indebted countries. In terms of their lines of credit-I have not got the latest figures to hand on what the lines of credit are-there is an interest subsidy in that, so that counts as aid in a sort of financial transfer. India’s contributions to international organisations have risen, so I think it is about $400 million.

Q157 Chris White: What I would say is that your answer to the previous question was not an entirely full answer in suggesting that India was just passing over things that they found easy and cheap to produce.

Dr Gareth Price: No, I think that is how it is presented. So a line of credit is set up- between and India and Senegal is the example often given in India-and then that was the irrigation. Suddenly 50,000 hectares of Senegal were irrigated because of an Indian firm. That is an oft-quoted example and a lot of the other things that have been done for Africa have used Indian low-cost, easy-to-maintain goods. Another example is Afghanistan. So India gave a load of buses to Afghanistan and so did Japan. The Japanese buses broke down; the Indian buses are still going. So their technology is adaptable to the region. It is not traditional aid at all.

Q158 Anas Sarwar: But they are doing that and getting a paid return, or are they doing that and just taking the hit themselves and therefore giving that aid?

Dr Gareth Price: The buses to Afghanistan were a gift. The irrigation in Senegal is utilising a line of credit.

Q159 Chair : It is creating employment in India presumably-making the buses or the equipment?

Dr Gareth Price: And political goodwill internationally and so forth.

Malini Mehra: And they will make humanitarian gestures. When the floods happened in Pakistan in August last year, India not only offered to send a large number of doctors, which I believe the Pakistanis did not want, but made grant payments of up to $500 million. There are different classifications but the key point is in India we do not have conversation around India emerging as a donor county. I think that that poses the question: why not? Because the kind of questions you are raising here should be raised in the Indian Parliament and they should be raised by Indian NGOs of their own Government. Right now we do not have the level of transparency and scrutiny that is expected of you in this country and we should have.

Dr Rosalind Eyben: I think the issue is that of course India is not part of the OECD. When you look at South Korea, when it became part of the OECD it then of course had to be bound, more or less, by the DAC principles. What is aid and how do you do aid? What happened in South Korea is that at that moment there started to be a debate in the country: "Are we a donor? What does that mean? What does giving aid mean?" It is obvious, I think, for countries like India, China and Brazil that are not members of the OECD that that categorisation of giving aid does not exist.

Q160 Anas Sarwar: What about the principle of it all? Are we saying that if a country that is receiving aid from the UK have an expertise to give and train people, they should not give it because they receive aid? If they have got neighbours who they need to support when it comes to difficulties, should they be allowed to make a contribution to them or help them out? For example, in Afghanistan, that has had a massive impact. If things do not settle down in Afghanistan, trouble will leak into India; you saw for example the Mumbai terror attacks. Are we saying that, because they are a developing country that receives aid, they should not be allowed to support their neighbours and try and create a more stable political situation for themselves? Thirdly, if they received aid from the UK, should they be allowed to do things in Senegal and in Nepal that creates employment in India? Are we saying that, as a principle, if you are receiving aid from the UK, you should not be allowed to do these things?

Malini Mehra: No, I think patently not. I think this is a country in transition. The question that I would want to ask my Government is, do you want to be a member of the OECD? China has allowed itself to have an assessment of its economic and environment programmes by the OECD. So China is effectively a shadow member of the OECD. I believe India is not quite that far ahead. On this journey to becoming an emerging power, questions have to be asked about what kind of clubs you want to create for yourself. Are we going to have a basic club replace the OECD? Are we going to have an OECD-plus including new membership? Mexico and South Korea are already members; Poland was one of the last Eastern European countries to join. Within that context and within that process of transition, I think it would patently not be realistic to say to a country like India, which is currently receiving donor aid, which does have multilateral organisations giving money to India, that "because you are receiving money from other countries, you should not be giving money to anyone else." That is not how the situation works. The key question is: where do you want to be in five and 10 years? What is the future as you see it in India? If you continue along these lines you will be, de facto, a donor. Under which guidelines would you be observing your donor practices?

Dr Gareth Price: The one big financial transfer that is significant is to Afghanistan, where India is taking a massive gamble and that is proper aid. India is using Indian NGOs-the Self Employed Women’s Association is working in Afghanistan-and that is, if you like, proper aid and it is being done because India fears that the West will pull out and India will be left to pick up the pieces. That is done for very strategic reasons. If Afghanistan goes wrong from an Indian perspective, that gamble will not be repeated and I think India will step back from doing traditional aid. I think it has taken a big risk in Afghanistan. It is the fifth largest donor; it has pledged $1.3 billion and given about 60% of that last off. It is also very popular within Afghanistan, because when you are using Indian NGOs, that $660 million goes a lot further than utilising British aid workers or US experts.

Q161 Pauline Latham: We talked earlier about food aid and the space programme, and you were saying that they can get food aid from outside and give it to other places but they do not seem to be able to get it to their own people. You said they could not get it to their own people because it was corruption, lack of infrastructure and all the rest. Wouldn’t they be better off improving that infrastructure and training people to get that right? Obviously getting rid of corruption would be an amazing step forward, but that is not likely happen in the short term. If they could move towards that, they could then feed their own people properly and we would not have malnutrition and the issues that are obviously causing so much hardship to particularly the women and the girls. If they have got plenty of food and they can get it out to other places, they can improve infrastructure, they can send it elsewhere; why can’t they give it to their own people in their own states if they can get it elsewhere, because they must have some sort of infrastructure somewhere that works in order to be able to give it away. Then also, if they are going to continue to expand their role as a food donor to the World Food Programme, what conditions do they need to be able to do that? Is what I am asking clear enough?

Malini Mehra: Yes, I think the question is very clear. The question is who wants to take the first stab at it because we have all got something to say.

Dr Rosalind Eyben: I think it is really not an issue of infrastructure and logistics. It is an issue of political will, which comes back to Malini’s earlier point. It is about India not being a homogenous place. You have this middle class; there is a kind of a political elite aspiring to be an international heavyweight. Giving food aid to other people is part of your regional political strategy, etc, etc. There is a whole reason for doing that that is completely different from why people in parts of Orissa are dying of hunger.

Pauline Latham: It is like the old-fashioned thing that happened here. You showed all your visitors into the front room, but your own family were not allowed in there because they might mess it up. It is that sort of attitude that you have got.

Dr Rosalind Eyben: It is an indifference among much of the ruling elite, despite the old Gandhian tradition. I mean you must be fair; there is also a strong tradition of compassion and solidarity in India. Over the last few years, as the middle class has grown and the consumer society has entered India, that tradition seems to be shrinking.

Pauline Latham: That is very sad.

Q162 Chris White: I am sorry. Because the middle class has grown in India, how does that reduce the level of compassion? I do not understand how those two thoughts are linked together really.

Dr Rosalind Eyben: It was Malini’s earlier point that people are just focusing on buying more and more consumer goods.

Pauline Latham: Me, me, me.

Dr Rosalind Eyben: Having bigger and bigger weddings.

Chair : Hasn’t there been a social tradition in the past that if you do well, you should put something back? Also, that is part of lots or religions and faiths. I honestly thought it was part of the Hindu and the Muslim traditions and so on. So why is that disappearing?

Malini Mehra: I am a sceptical Indian.

Chair : We would never have guessed.

Malini Mehra: I am extremely cynical about the usual narratives that we wheel out at this point about the Gandhian tradition. It is very hard to find young people who cleave to Gandhian ideas and values because our society has changed so much in the last 20 years. That is not just because of the exposure to the West or globalisation. No, we are one of the happiest globalisers. We were the happiest globalisers 400 years ago when it was our cultural values that we were trying to spread around the world. I think it goes back to some very deeply embedded problems within our society.

One can ask the question, in a country where you have the largest number of underfed children in the world, why do you have people who have high levels of disposable income choosing to give their money to building temples in Wembley or in Sarnath, as opposed to actually challenging the Government, getting engaged through the local community organisations with the major systemic reforms that we need in India. Why is it that in India we have more mobile phones then we have toilets for people? The level of discontinuity and obvious obscene disparity in India is something that most people now in India do not like to talk about. One always gets in trouble in India when you make generalisations because there is always a large group of people in the corner who are waving their flag and saying, "We are completely different." You have legions of people who are part of social movements, and they still are trying to do something about addressing the inequality divide in India.

The key point is in how India manifests itself in the public image of itself. It is not about the backward poor; it is not about the Dalits; it is not about the North East, which people do not even think of. If you think of yourself as an Indian, you do not think of yourself as someone who comes from the North East because they look different from us. What does that say for a country that is so diverse ethnically? But these are some of the social challenges and social-cultural challenges that are not just there because of something that has happened in the last couple of decades; it is because of our background-the baggage that we carry that we have not had a deep enough interrogation of.

We have also not had the kind of revolution that there was in China. I am surprised that we have not talked about the China factor. China in 1977 had the same level of GDP, just after the Cultural Revolution, as India did. Very different choices were made economically and politically thereafter, but on any indices, certainly if you are looking at those that affect women and children, China is far ahead. I do not know where to come to an end on this because there is just so much to say, but it has to do, as I said at the beginning, with asking more of Indians. We have to ask more of ourselves. This is not about other people doing things for us; it is about ourselves recognising the social deformities that we have.

Pauline Latham: And setting up a decent tax system that can then stop these inequalities and help the people who are right at the bottom of the pile.

Malini Mehra: Absolutely. There are just so many things to do. Rather than just give you a story of the blood and gore, there are excellent examples of things that are happening. For example, in terms of corruption, in Bangalore there is a probably internationally funded Indian NGO called Janaagraha, and they have come out with a corruption-busting website called ipaidabribe.com. As happens to many people, you cannot live your live without paying bribes-you have to-but most people keep quiet about it and pretend that they are as pure as the driven snow. This website is designed to alert people, "I went to this part of this Government institution, and this is who I paid and that is the name of the person." This is all about transparency-going back earlier to the kind of things that you can promote.

I was at Davos a month back, and I mentioned this to a panel of the high and the mighty Indians, and it was actually televised to India-this was NDTV debate from Davos. I mentioned this example and everyone was like, "Fantastic, I want to go there now," and the Home Minister said, "Well, it is great that you are doing this." My challenge was they do not like to use the word corruption any more. They have found a whole new vocabulary that disguises this. They do not talk about corruption. So this was what we are doing, and his reaction was, "Well, we should strengthen the voices of people like yourselves to do more and you should use mobile phones to text their names, etc." Clearly there are all of these kinds of examples and innovative ideas but they have to be supported from somewhere. Again, going back to questioning what role DFID should play, it should support these kinds of radical, culture jamming, disruptive efforts to transform the society from the base up.

Q163 Chair : We should be a subversive agency, should we? We have to move on a little bit because there are a lot of things that we would like to ask and it is fascinating to get your answers, but on development and climate change, what is India’s current role? Clearly they are a significant carbon emitter, and as economic growth happens they are likely to be more so, although in the discussions I have had they have said, "Well if we get it right we can bypass some of the worst examples of carbon emissions that the developed West did and we can go to a low carbon solution." Is that in fact something that they are engaged in and how do they see the international negotiations from their own perspective in this context?

Malini Mehra: In India, I would distinguish between the debates that are taking place in terms of the negotiations, the UNFCCC negotiations, and the kind of action and debates that are taking place at a domestic level. 2007 was a real watershed in India because you had An Inconvenient Truth, which was screed in Indian cinemas, the IPCC was awarded the Nobel Peace Prize, and of course Dr Pachauri is the Chair of the IPCC. These two things went hand in hand in creating a real spike of interest, and you can actually see that in terms of the number of articles that appeared in the Indian press about climate change. So for the first time it started to be talked about as an issue that India might have an interest in.

Prior to that, climate change was not something that was discussed outside groups of experts, either those who were working on issues around impacts on water security or agriculture in India. But largely it was dominated by those people who were following the minutiae at the very arcane level of the discussion since Kyoto. The argument was pretty well known, which was that climate change is a problem, but it is a problem largely of the making of the West and the West has to sort this problem out. We are the victims of this global release of greenhouse gas emissions, and so our role in this is to try and secure as much environmental space for our growth, because the key thing for India is to grow its way out of poverty, and we recognise as a country that relies largely on coal and imported oil for our energy base that we are going to be, in the short to mid term, carbon emitters but we have to be given space to do so.

Since the last two years, that official viewpoint has been nuanced, and it has been nuanced largely to do with the emergence at a very public level of the Environment Minister that I was talking about. Up to that point the prevailing orthodoxy was virtually sacrosanct: climate change is something that India should keep quiet about at the international level; our main focus should be on ensuring that Annex 1 countries reduce their emissions as demanded under Kyoto and the US should join the Annex 1 countries. Since Copenhagen, and leading up to Copenhagen, the narrative stared to change and it was because you have this reformist Environment Minister who was appointed in May 2009 and basically already had quite heretical views on this issue as an Indian. He was quite sceptical of this formula, which was the equity-based formula that we should have the global environmental space divided up according to the population of a country, which means India gets loads because you have got 1 billion as your denominator. He nuanced it. He started introducing the arguments that India is a highly vulnerable country, we need to understand our degree of vulnerability and we should also seize the future-so recognise that carbon constraints could lead to India’s underdevelopment. We have the capacity to invest in technology now so that we emerge as a winner in the low-carbon transition.

His voice was still a lone voice. He did not manage to get everyone in the house of parliament rising up and applauding, "What sensible and wise views you have on the matter." He remains a relatively solitary figure within the Cabinet. He has, however, managed to get rid of most of the old guard who were in his Ministry. When it comes to the international negotiations, he has taken the bull by the horns and he leads the negotiations himself. In Cancun, you saw India given so much kudos by the Mexican organisers because Jairam Ramesh had introduced much more imaginative, constructive ways of thinking about issues like monitoring and reporting and what role developing countries could play in terms of curbing their own emissions.

Q164 Chair: Does the fact that China is pursuing in its own way a somewhat similar policy have an impact in India? They recognise that they want growth but will poison themselves to death if they do not do it in a low-carbon way.

Malini Mehra: Yes, but I think the background to China’s policy making on climate and energy is different from India’s. China made a strategic decision at the central level of Government that was very serious-minded about the need to account for the environmental costs of China’s growth. They made the decision to invest a huge amount comparatively of R and D in clean energy and clean technology. In India, we have not seen that level of focused public policy attention at central Government level, which is why you have mavericks like the Minister of the Environment who are trying to push the whole centre of gravity of Government single-handedly. He is not succeeding. As we saw yesterday when the budget came out, the statement was made that the environment should not act as a brake on development. I am paraphrasing, but effectively that was said.

Therefore, in terms of the bigger picture domestically, a number of very impressive steps have taken. For example, just looking at energy efficiency, India recognises that, on climate and energy, renewables and energy efficiency are definitely the way to go. Investment in solar power has been given a huge amount of political importance. India has done things on the energy efficiency side, such as, since last year major appliances from refrigerators to air conditioners now have ratings. You have the Government coming out and monitoring its greenhouse gas inventories. It is now releasing them every two years. A new national network of climate change scientists has been pulled together to understand the impacts of climate change on India. So, we will not have repeats of what happened with glaciergate, where India was saying that basically the rest of the world was wrong; the laws of physics did not apply in India and our glaciers were not melting, thank you very much. We have seen a number of positive steps taken largely at Government level with the leadership shown by that Minister and at a national level by greater engagement by civil societies, states and some businesses on this agenda.

Q165 Chris White: The question is: how is India moving towards more access for its population to energy?

Malini Mehra: Providing energy for all is an official Government objective. They are seeking to do it in a number of ways, one of which has been through seeking smarter grids, so extending grid coverage to India’s 650,000 villages, because effectively one is talking about providing rural electrification, and extending the capacity of the reach of the official grid. The grid would then be fed by a variety of renewable resources, wind and solar in particular. That is one route. They are also looking at, but not giving it due emphasis critics would charge, decentralised energy solutions. India has tremendous potential for decentralised solar energy delivery in terms of heating and lighting for villages, and we have got models such as SELCO that have proved their viability. This is an issue that again gets caught up with a good level of commitment behind changes in policy direction but is relatively ineffective if you are looking at the implementation and at the kinds of resources that have been given to that kind of change in policy.

Just yesterday something quite interesting happened. There are two important pieces of policy change that indicate what can be done. In last year’s budget, as a result of the intervention of the Minister of Environment, India put a cess-a levy-on coal for the first time, so you now pay something like 50 paise for every tonne of coal produced. This is at both the production end and the import end. The annual revenue from that is about $500 million so exceeding the annual budget of a DFID. That money will go into a national clean energy fund. They did that last year. This year they have said there is increasing concern about the level of subsidy that is given to kerosene. For example, in India kerosene is subsidised but solar is not. So if you are a solar entrepreneur you are penalised, but if you are peddling kerosene and using that as a primary lighting solution for rural households, you are subsidised. They changed the subsidy policy for kerosene yesterday and said that instead of giving a subsidy to kerosene they would give cash transfers. Some important changes are occurring.

Q166 Mr McCann: Dr Price, you have suggested in the past that the best way for the UK to have an impact on broad issues like climate change is to build up specific sustainable and practical projects. How effective do you think the UK Government’s engagement has been with the Government of India on climate change? Is there any way they could do it better?

Dr Gareth Price: I agree that climate change policy in India is very much as Malini said. In climate change negotiations, India does not like to be seen as a blocker, and I think that is where China comes in. The shift in India’s position partly came from the idea that it did not want to be isolated.

Perhaps I may add one more thing about Jairam Ramesh, because I am also a fan. The question is: what would happen were he to go, which is plausible? I think the question of engagement with India is: which bits of India are you engaging with? I think this has run through the conversation so far. You can engage with India’s private sector, with India’s Government and with civil society groups, and that applies on all issues including climate change. 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.

Q167 Mr McCann: In terms of DFID’s engagement with the private sector on the importance of increasing their resilience of the poor to the impacts of climate change, how do you feel that can be improved? Would that effectively bypass the need to connect with Government if they went direct to the private sector, or is Government involvement always necessary?

Dr Gareth Price: Frequently, if you engage with India’s private sector then the Government follows, whereas I think the assumption in the past has often been that you need to get the Government’s go-ahead and, as we have heard, the bureaucracy of Government can be somewhat sluggish, whereas the private sector is often much more innovative, like civil society groups. The private sector more than civil society groups has the potential then to push the Government, I would suggest. I do not know whether Malini wants to add anything.

Malini Mehra: I think you have to choose your partners here carefully. Within the private sector also you have got three of the large industry associations in India: the Confederation of Indian Industry, which is the largest; FICCI, which is the second largest; and ASSOCHAM. Typically, there is sibling rivalry amongst all of them and they do not like working with each other, so in the past HMG have singled out one for a particular process. So you have a UK-India low-carbon partnership or whatever. Unfortunately, on the India end, the association that is a member of that low-carbon partnership is headed by a man who is a climate sceptic, so you are not going to achieve as much if that is the philosophical orientation of your partner organisation. It is a question of better intelligence and finding private partners who want to be players in their environment. What we have been doing for the last few years is trying to get the simple message out to key leading Indian businesses that "this is in your own interests"; act now because even if there is not a policy framework that is going to support what they are doing, just as happened in the ICT revolution in India it was business that was ahead of the curve. The Indian Government came back after that and provided the enabling environment that then allowed India’s ICT revolution to occur.

So there is much to be said about some very positive steps that have been taken to support Indian businesses. There is an excellent JV between a UK-based medium-sized enterprise and an Indian SME: CleanStar Regenatec. What they do is provide clean fuel to replace diesel in generators. It is a very well-known example but you can come up with many like that. The key thing is not to leave it at just the level of private sector engagement but to think what your political, with a small "p", strategy is going to be to have a multiplier effect. That strategy is missing in so much of what is done. It is not just at Government level; it is at the NGO level. We do one thing and think that is it; it is done and dusted; the project is finished and the report is sent back to the funder, instead of thinking where it will lead to.

On climate change, in 2007 and 2008, I had so many conversations with foreign missions in India. What they wanted to know was, "How can we get the Indian Government to change its position by Copenhagen?" I was like, "You are talking in terms of a 10-month or one-year programme. It does not work like that. You are in this for the long term." The saving grace for us was that in May 2009 Jairam Ramesh was appointed and everything was dumped out the window. You had someone who basically came and shook everything up, but if he had not been appointed then by the Prime Minister we would have had pretty much the same kind of fiasco in Copenhagen that we had in Bali.

Q168 Pauline Latham: If we can change the subject slightly, two weeks ago the Secretary of State talked at Chatham House about the creation of joint FCO and DFID teams in BRIC countries. Is that happening? Are there joint strategies in India, and are these with the federal Government or state Government? If it is happening, are there more areas where greater cooperation between the two is possible? If it is not happening, why do you think that is?

Dr Rosalind Eyben: I do not know whether it is happening or not. I can reflect on greater cooperation. I think there is enormous potential for greater cooperation generally between the FCO and DFID. However, I think the terms of that cooperation have to be very carefully explored. Malini already talked about being political. I agree with her it is really important that DFID staff understand the political context in which they are operating in the broadest meaning of the word "political". Sometimes the FCO has a very narrow definition of "political"; they tend to look at what Gareth has talked about as a commentariat in Delhi. They are not actually thinking very much what is going on with the Naxalites, or, if they are, they see it from a counter-terrorist perspective and not looking at those issues of poverty and inequality that we have been talking about.

When I worked for DFID and headed its office in Bolivia we had extremely close and good working relationships with the embassy. It is often just a question of personalities I think, but it is something that could be very much encouraged without one organisation playing the dominant lead, because people are bringing complementary skills. Part of the issue is that the FCO is often thinking about how it can improve British business opportunities in the country and make sure that India agrees with us at the Security Council. Those are the kinds of FCO preoccupations. DFID is in India because it wants to support poverty reduction, so the risk of cooperating too closely with the FCO is that sometimes the DFID staff may forget why they are there. That is the challenge.

Q169 Mr McCann: We have wandered into this question a few times already, but I think what we have established by previous answers is that this is about DFID staffing in India and relationships. I took it from evidence you gave previously that you believed there was too much concentration on relationships at local and state level and not enough at national level where that can make a difference. That is a general impression I got from everyone, but you might have a different point of view. I will come back to that one. In terms of DFID staffing you mentioned earlier on that perhaps there should be longer postings. Finally, Malini, when you were talking about the lack of politics, you said there were not enough people with sharp political skills in DFID. Questions on that: would more political advisers within DFID having a role in India have an impact on the FCO’s responsibilities in their area? In terms of DFID’s staffing, should there be longer postings in order to build those relationships internally? Finally, how do you deal with the relationship at governmental level in terms of taking it away from state and local level and getting it up to national level?

Malini Mehra: There is definitely a skills deficit in terms of political science orientation, but it is not just about political science; it is really having people who are attuned to their environment. This is across the board; this is at central Government level, at local level and at state level. It is about people who follow what is happening in public policy and politics, are engaged in their society and know that they are not going to do business with a Shiv Sena on this issue because of their politics. Sometimes one finds a level of political naivety not only in DFID but in the High Commission function that is extraordinary. I do not want to get into mentioning names or anything.

Q170 Mr McCann: Does that mean that the impact of the programme is then nullified or has no effect whatsoever?

Malini Mehra: It is arguably diminished because you are not building into the programme design and implementation strategy an understanding of the political context and how it should perhaps be changed, because unless DFID sees itself as an active agent for change all it will be doing is funding other people to do things.

Mr McCann: A change agent? Is that not a danger of getting involved in the politics of the country?

Malini Mehra: No. That was why I said "politics with a small ‘p’", so you are not funding political parties, just as you do not fund religious organisations, but you are quite clear what the direction is in terms of values and ethics.

Q171 Chair: Is the physical separation of DFID and the High Commission by a lot of Delhi traffic a good or bad thing?

Dr Rosalind Eyben: I do not think that is the issue.

Chair: I ask that question because quite often many countries we go to make a virtue of the fact that the DFID office and the High Commission or embassy office are located on the same campus; in Delhi they are on opposite sides of the city.

Dr Rosalind Eyben: I can talk more about DFID because I am more familiar with it. I think it is isolated too much from the wider Indian society, which they need to understand. They do not get out and about enough. It is not their fault; there are too few staff managing too much money; they spend too much time reporting back to London and do too much internal transaction. They do not get out and about, and the only way they will have that political sense and look for how they can best support the processes of change is they should be out; three out of four weeks they should be out of the office, and they are not. It would be really interesting for you to look at people’s diaries and ask how much they travel around India.

Malini Mehra: In terms of the physical separation, I think it is problematic. In Delhi you have officials from the High Commission who spent some time in the DFID office simply because they were growing and there was not enough space. I think that has had a positive impact. Too often working within HMG I have found that DFID think they are on a different page from HMG’s objectives in country. Rosalind put it very well. DFID thinks it is in country to promote poverty reduction at all costs and that is it, so it wants to keep these blinders on and feel that it has nothing to do with those people in the High Commission who are pursuing much more avowedly commercial or political agendas. This is a very well endowed part of Government that makes other Departments feel like second-class citizens, and that is not healthy. So the relationship should be improved. There should be a coherent approach followed, recognising that different Departments have different objectives but understanding where all this fits in terms of promoting HMG’s agenda, which should not be just about driving trade and commercial links but about helping to transform a country like India in the way that most of its people want it to change.

Dr Gareth Price: I completely agree with that. I think that from the perspective of policy making by the Indian Government there is an assumption that there is a British strategy, or a German strategy or whichever. Given that DFID has so much money that leads to an assumption that maybe this aid is being done to increase market access for British firms or to buy Indian engagement on Afghanistan, for instance. There needs to be coherence on their side of how the DFID bit fits together with the other British aspirations for its relationship with India. If that is not there, they all end up failing.

Chair: I would suggest that the last 12 or 15 years of untied aid and poverty focus have completely passed by our engagement with India.

Q172 Pauline Latham: There are relatively few bilateral donors in India. How effective would you say their coordination is at the moment? DFID provides a lot of funding to multilateral agencies. Would it be better for the UK, and would it have greater impact, if more was channelled through multilaterals rather than bilaterals? Would that be of benefit to India or the UK?

Malini Mehra: I think the short answer is: yes, that is inevitable. Certainly, it was something I spoke about at the beginning of the session. I think that coordination has really been quite pathetic so far. The stories of multiple funding of similar projects are legion in a country like India. Even within the EU, where you expect Member States are reasonably well coordinated, that has not been the experience. They will tell you that they are much better now, but frankly it is too little too late, because they are now at the end of their tenure in India. It has led to duplication and a complete lack of leverage.

The three European Union Member States that are most influential in India are the UK, France and Germany. I would put the Germans at the top of the list. The Danes were a middling influence in the run-up to Copenhagen, but if they had got their act together we would have seen greater impacts arguably, but they do not do it. The reasons for that are also numerous. It has to do with seeking prestige as a country, so perhaps with Catherine Ashton’s external action service there will be improved coordination. One finds that at a broader level also in terms of bilateral coordination with the multilaterals. One point of caution, however, is the expectation that if we just divert the flow of funds from a DFID to a World Bank or ABB in India it will make a huge amount of difference. It may not happen overnight because over the years DFID has already cultivated a certain cadre of expertise, professionals and technicians with whom it works in areas it understands, so you cannot just close up shop and hand someone else a key. Whatever is done must be done in a very well thought-out, purposeful and intelligent way over a realistic span of time.

Chair: I do not know whether you might be able to give us some notes. You have mentioned a few times your admiration for the German approach. It would be interesting-not now-if you were able to give us any kind of expansion on that. Germany spends $50 million a year; the UK spends nearly $500 million a year. It is a very big question. If we can get all the purchase we need with $50 million why on earth should we be spending $500 million? It would be genuinely interesting to know what the cost factors are.

Q173 Pauline Latham: If I may follow that up, is it that you admire the German system or that India has less of a problem with Germany because it does not have the past it has with the British system?

Malini Mehra: That is probably a factor. I do not know how important it would be. At the risk of great generalisation, I think there is a difference in approach. The Germans with their much smaller amount of money are able to make much greater political capital out of it, and they do it because the impression one gets is that this is a very clear, effective engineering approach to the problem. They bring established technical competence in key areas that they work on. The Government and the business community work together and there is not the kind of dissonance that one finds with DFID or the High Commission, so it is a very well-oiled machine that does the job well-efficiency.

At a level of culture and personality, there is a fit, because Indians appreciate a scientific and engineering approach to a problem; certainly, the political parties do because, as in China, in many cases their background will be in engineering. If they are not bureaucrats who have gone through the IAS they will have trained in engineering or whatever somewhere else, and they have less time for what they see as the soft focus approach to poverty reduction that a DFID brings. But fundamentally I think that the Germans have understood and achieved a better relationship with the Indians because of the way in which they have approached the problems.

Q174 Richard Harrington: Perhaps we may move briefly to what is a huge area to do with the economy, trade, growth, etc. As I am sure you are aware, the Indian Finance Minister announced the aims of double-digit growth and something that I would ask you to comment on, which is what we would call here the inclusiveness agenda. I am still of an age where we call it effectively redistribution of wealth, which is what it really amounts to, to use a 1945 Labour Party expression that has fallen out of favour now with our colleagues.

Chris White: Not with Michael.

Richard Harrington: In all seriousness, despite these words by the Finance Minister do you feel that the Government of India, assuming that is their intention, has enough power, resources and political will to ensure that the benefits of economic growth become more inclusive, or do you think it is just politicians’ hot air? Do you think that donors such as DFID can have any impact on this aim?

Dr Gareth Price: I think there is a large bit of India that is growing very well and there is a lot that is not growing at all, so I think you are a little harsh. I do not think they are talking about the redistribution of wealth; they are talking about some growth in the 450 million in rural India. At the moment what you often have is a negative impact of economic growth on them, particularly from mining and people losing their rights to land and so forth. You have a big chunk of people who suffer from growth, so it is the opposite of inclusive.

The rhetoric since this Government has come in has been on increasing allowances for the poor and focusing on education infrastructure. The problem we have been alluding to and talking about all morning is that it lacks the capacity to do so and people in the fast-growing middle class are aspiring to work in India’s private sector. The quality of people you need in those areas is not there. In terms of resources, India has plenty but it is human capacity to implement things that’s missing.

Q175 Richard Harrington: For example, in this country central Government with the political will had the power to use taxation, both personal and corporate, as a way to bring about social ends. Is this fanciful in India, or do you think that, for example, higher corporate taxes make a difference? Is it enforceable? Is it plausible, or will it just have to come from general growth, hoping that the number of areas affected by it are extended?

Dr Gareth Price: My PhD, for what it is worth, was on North East India. When I first went there in 1995 people talked about the need for a cold storage facility for agriculture and that could do lots to boost agricultural incomes to get those poor people up the value chain. Fifteen years of strong economic growth later, they still have not got a cold storage facility in North East India. The lack of political will is obvious at times and is sometimes the standard.

Q176 Chair: Isn’t that one of the areas that DFID has identified? They have talked about providing livelihoods in rural areas. I think they specifically mentioned refrigeration, for example, or processing capacity as one of the areas they want to go into, so is this an indication of a partnership that might be developing?

Dr Gareth Price: It is the kind of thing where more of those at the bottom who are mostly working in agriculture can start to move up the value chain. If half the produce is going off, that is problematic. But, yes, it is a way that DFID could help, but it is more an example of the lack of political will to implement that inclusive growth, or whatever you want to call it.

Malini Mehra: No doubt there will be many members of Cabinet who sincerely believe in the term "inclusive growth". I think the Prime Minister sincerely believes in it, but I think they have really lost focus on how to bring about inclusive growth, because it means that you talk every day-meeting in, meeting out-about the issues that we have been talking about that require emphasis: education, health, sanitation and basic needs. Until you do that we will we will continue to talk about inclusive growth, because the issue lacks the political emphasis and importance it deserves.

In the interim, there are so many people who have the capacity to make money quickly, because Indians are phenomenally entrepreneurial. Like with the CDM-the clean development mechanism-as soon as it was announced, you had Indians lining up at the door. They will smell out an opportunity, but they do not have the same gift for actually focusing on equity. If they had devoted as much attention to equity and social justice issues at the bottom of the pyramid as they did to amassing obscene amounts of wealth at the top of the pyramid then we would not be here discussing these issues, because the idea of DFID investing in India would be nonsense.

The challenge for the Indian state over the last 20 years since liberalisation is that when I went to school most people wanted to join the Indian Administrative Service. The sheen has completely come off our political system and the Government. What people now want to do is set up their own companies. Some of the brightest people we hire leave the company and set up a web-based company. That is where the attention is right now and that will be a real threat. While I suggest that DFID should support non-state access, at the same time we need a competent, honest, reliable and effective state administrative system. That is where a lot more emphasis needs to be placed. It is about human resource development.

Q177 Richard Harrington: Following on from what you have just said, the Secretary of State said publicly-I cannot quite remember the wording-that basically we intended to focus DFID aid through private enterprise a lot more. But I do not understand from anything you or he said how DFID can engage better with the private sector. Is it simply awarding contracts or helping to set up businesses? Do you have any views on that?

Malini Mehra: I think that is an extremely short-sighted and dangerous strategy, because everything that I am telling you is that Indians are entrepreneurial but selfish. They will succeed and then make all their money. You will have a Lakshmi Mittal who is the richest man in Britain. What is he doing about poverty in India? Some of us have an enormous capacity to make money and yet we are not concerned about the social diseases in our society, which are manifested in poverty. If all you are doing is pumping money through these private sector agencies whose primary purpose is commercial aggrandisement where is the developmental impact?

Q178 Mr McCann: With the greatest respect, is that not for the politics of the country to sort out, in the same way that the politics of this country sort it out with the democracy that is available? Is there a problem of fundamental democracy in India that does not allow that to take place?

Malini Mehra: I do not think that democracy does not permit it to take place. We had the people who chucked out the last Government. This Government has been in office two terms and was returned with a solid mandate because people felt they are a bit more serious about more inclusive growth than the other lot. It is not such a failure of democracy. Democracy is a great thing that we have going for us, but it is about a much more complex situation. As we say in India, you are only an Indian when you are outside India. When we are in India we are divided by so many other characteristics: caste, ethnicity, gender, etc. Therefore, this is about a national project that lost its way in the last 20 years and is about rebuilding the nation and focusing on human capital development as the way out of our problems of poverty.

Q179 Richard Harrington: Malini, you think that this private enterprise conduit for British taxpayers’ funds is fundamentally flawed.

Malini Mehra: If that is all it does?

Richard Harrington: Yes.

Malini Mehra: If that is all it does and you are channelling only through for-profit commercial entities, you have a problem, because the question then arises: how is that benefit in a conscious way going to reach the people it has not reached so far?

Q180 Richard Harrington: Exactly. It is really all about what the objectives of this money should be. The acid test of DFID, as we have said before, is to do with poverty reduction. Very clearly, in your opinion using the private sector to achieve this objective is fundamentally flawed. I certainly have a lot of sympathy with that argument.

Dr Rosalind Eyben: I imagine that if the aim of working with the private sector was to establish, encourage and influence a sense of corporate social responsibility so that millionaires do pay their taxes rather than indulge in tax evasion and try to take a lead in influencing public opinion-that India has to have a national project, as Malini put it-and if you frame the support to the private sector to encourage it to become more socially responsible, then I could see there was a case for it.

Q181 Chair: If the Daily Mail and Daily Express were here-they tend not to attend our meetings-I have to tell you they would have two front-page stories for tomorrow from the evidence you have given us, basically saying, "Why on earth are we giving India a penny?" You have given us pretty well all the arguments we need to turn round to say to the Secretary of State, "You have blundered; you should not be there." Is that really what you think?

Dr Rosalind Eyben: No.

Chair: I know you have not said that, but you have given us such powerful arguments, possibly taken out of context. Nevertheless, I think they would confirm the idea of most British taxpayers that India is not a place where we should be spending development money.

Malini Mehra: I do not think DFID really has a future in an emerging India and it has not done its job as well as it could have. How many years have we had DFID in India?

Dr Rosalind Eyben: British aid in India goes back to the 1950s.

Malini Mehra: Perhaps these kinds of inquiries should have been held 10 years ago.

Chair: They were.

Malini Mehra: They would have obviated the need for one now. Oh, they were. I am sorry. Obviously, the penny had not dropped so no one had thrown the penny in.

Mr McCann: You are too young.

Q182 Chair: As a Committee we take evidence in all of these inquiries. It is very refreshing in lots of ways. Normally, what we are being told by people is that DFID is a leader, a pioneer and a trailblazer; it is innovative, creative and it makes a difference. You are telling us it is none of these things in India. Apparently it is everywhere else but not in India.

Dr Rosalind Eyben: It is not everywhere else.

Malini Mehra: And also India is different now. We have seen our society change in so many ways in the last two decades, and in the last decade in particular. These kinds of arguments that you are hearing from us now perhaps would have been less valid 10 years ago, but they are increasingly valid now. If doing the same thing over and over again does not have an impact it is time for a change, and it is good that the Committee is having a rethink on this.

Dr Rosalind Eyben: You may recollect that with the retrospective terms of agreement in the 1970s it was in India that UK British aid first had a poverty focus. That was right back in the 1970s and 1980s before the rest of the world. Some of the money that we spent in India had to have a poverty focus. At that moment what was then ODA in the late 1980s and 1990s did some really interesting, innovative work in both rural and urban development with a much smaller amount of money and a very sharp poverty focus. That innovative cutting edge has deteriorated over the years for a whole range of reasons, so the issue is not whether we should stop aid to India now but whether DFID can manage to change the way it works so it can continue to support and strengthen its capacity to support change and innovation in India for poverty reduction.

Q183 Pauline Latham: There is a proposed EU-India free trade agreement. What do you think the main advantages and disadvantages of this are? Do you think it has any impact on whether India can continue to manufacture very cheap medicines, for instance?

Dr Gareth Price: It has been talked about for a long time. I have not written about free trade agreements with India for a while until they actually sign them. I would be tempted to wait and see. There are issues with things like child labour and environmental protection that the EU wants to put in and India is adamant it does not want in. In relation to generic medicine, essentially India is protecting its pharmaceutical manufacturers who produce generic drugs; the EU is sticking up for pharmaceutical companies in its Member States that do not. Either India is trading one sector off against another or the thing won’t be signed. I very much doubt that a deal would go through that would remove access to markets by Indian pharmaceutical manufacturers of generics, though there have been 20 or so instances of Indian generic pharmaceuticals being stopped in the Netherlands under existing IP regulations.

Pauline Latham: So, it is wait and see?

Dr Gareth Price: Yes.

Malini Mehra: I think as a general point opening up India’s industrial sectors to foreign competition is a good thing. That is how we separate the wheat from the chaff in India. If it can be done in such a way that good practice is encouraged, even expected, and there is a legal requirement for that built in, India will be forced to deal with many of the abuses that we see, whether it is child labour or environmental substance dumping. I do not want to do down the many Indian companies that are setting best practice trends globally. They will have an opportunity to win in that kind of context.

Q184 Chair: You mentioned in passing corruption, petty bribery but also the fact that people do not pay their taxes and the money goes astray on contracts and so forth. Transparency International puts India 87th on the list of corrupt countries. How widespread is it? Assuming it is widespread, what impact, if any, can donors or DFID have on this? Is there anything they can do that might contribute to either exposing or reducing it? Again, how would that be viewed?

Malini Mehra: I think it is top to bottom. There is no space in the Indian body politic or society where you will not find graft, bribery and corrupt practices in operation. As anyone who has been following the Indian press for the last few months knows, there has been a series of pretty high octane scams, which have been the stuff of pretty much 80% of what politicians have been talking about and the media have been writing about. The Government and Prime Minister unfortunately have not acted with their conscience on this. Seeing that, I think very few Indians would have any sense that there would be redress against corruption at the governmental level. There has been ample opportunity with the 3G scam, etc, for the Government to do the right thing and sack the errant Ministers, but the measures taken have been too little too late.

In terms of what you do about it, we have a very active civil society movement against corruption. There are many business leaders who are now speaking publicly about it. They feel they are hemmed in, because even though there may be a general policy of zero tolerance towards corruption from the top level down you do lose business; it is a consequence of doing business in India. For example, the Tatas is a business house that is seen as the most reputable and least corrupt of the many industrial houses. There have been many instances of them losing very prominent contracts as a result of their policy of zero tolerance towards corruption. DFID could support the work of organisations like Transparency International in India and so support the efforts of those organisations that have the capacity to blow the whistle. We have some positive laws on the books in terms of supporting whistle-blowing. We have a Public Right to Information Act, so DFID should support people, provide funding for legal aid organisations and build up the whole infrastructure to enable people to hold their Governments and authorities to account.

Chair: I think you have given us a pretty aggressive insight into what is wrong, what might be done and what the challenges are. To be fair, what all of you have said is that DFID should be there, if not necessarily on the scale that it is. It needs to be qualitatively better; it needs to be better focused. Frankly, we need to take with us the transcript of this evidence because you have given us a focus on an awful lot of pretty tough questions we will need to put to DFID staff we meet in India and the Minister when we get back. After all, we invited you here to give us that sort of insight to help us focus.

Pauline Latham: We are going on Tuesday. Your coming today has focused our minds much more clearly on a lot of the things we need to be asking people over there. It has been helpful.

Malini Mehra: I am glad that we have been provocative and helpful to you. As an Indian, I feel that the problem is not DFID; the problem is India. We need to demand much more of our social consciences and take a much greater level of personal responsibility. Perhaps that can come through in your engagement with officials. What are you doing about it?

Chris White: It will be good to have a follow-up when we get back.

Chair: Yes, it would. That might have to be informal rather than formal. Obviously, DFID for example is now concentrating its efforts in fragile states and difficult states, so it is actively going to some of the more difficult places, which in itself raises lots of questions as to whether it can or what it can do. This Committee has limitations in what it can achieve, but the questions we are trying to ask are: what is DFID’s USP? What can it do? What does it do right? What does it do wrong? What works and how can it be replicated? As a Committee, we all believe that we should deliver on our 0.7% and that the UK should have an effective aid programme, but we worry all the time that money goes to waste or does not achieve and does not deliver. Anything that helps us to drill down to the core of that and, hopefully, in the process ensure that what we do is done is more effectively is clearly what we think the Committee is about. Clearly, we depend on getting evidence from people like you who have direct knowledge. I thank all three of you. You all given very different insightful perspectives that are really helpful to us. Thank you very much.