Britain's £1.2-b aid to India will focus more on private sector

Britain has struck a deal with India over the provision of £1.2 billion worth of aid for the next few years, which will give the private sector a prime place in its plans.

Details of the delayed plans have been published in an operational document and follow a review announced by the British government last year. At the time Britain announced it would be cutting down the number of countries it focused on and also pledged to be more targeted in the areas it worked on in those countries. India – controversially to some particularly within the Conservative Party – remained on the list of aid recipients. Aid to 16 other countries was scrapped: those no longer receiving aid range from Vietnam and Niger to China and Russia.

In India, British aid will be focused on Bihar, Orissa and Madhya Pradesh, with £280 million a year allocated up until 2015, instead of working with centrally-sponsored schemes of the national government. Wealth creation projects, focusing on women, will account for the largest spend – £341 million over the period, through which the government hopes to reach around 3 million people, and create around 35 public private partnership deals in infrastructure. It will encourage private investment in small and medium sized enterprises, agri business, energy and affordable housing. The support will take the form of grants and returnable capital to increase investment flows and scale up commercially viable concepts and will include support for microfinance projects. Education projects will receive just over £200 million over the period, while projects to get people more involved in governance processes will receive £165 million.

PRO-POOR POLICIES

“Our support will help these states to develop and implement pro-poor policies, and make the most effective use of resources available from the Government of India,” said the Secretary of State for International Development, Andrew Mitchell, in a written statement to the House of Commons. “We will also help unlock the potential of the private sector to deliver jobs, products, infrastructure and basic services. Anticipating some of the objections it was likely to face from some British politicians, the report defends the size of the aid package, pointing out the fact that despite India having a larger number of people below the poverty line than sub-Saharan Africa, total aid is around $1.50 a person against $28 in Africa.