A Market For Development


With a Rs 2,000 crore spend, the UK government’s Department for International Development (DFID) has been the largest grants donor in India for several decades. The grants do not compare to other donors in India — since donations from the United Nations, European Union and the US government’s donor agency USAID do not match even half of DFID’s aid. In an interview with Samrat Chakrabarti, DFID’s India chief, Michael Anderson talks of his organisation’s efforts to partner with the Indian government even as he addresses the various criticisms levelled against DFID.

As India’s largest donor till date, does DFID have any conditionalities in place to ensure that the grant money is well spent?
DFID has a very precise policy. We impose as few conditions as possible because we want to work in partnership with the government but we do require absolute scrupulous financial management. Additionally, we carry out fiduciary risk management wherein we do an analyses of all the risk and impose recommendations regarding changes in public financial management in particular. We also have a policy on human rights and where there are gross violations of human rights we withdraw our aid. But we have never had to invoke that in India.

Would you say that DFID endorses free market driven development programmes, given your partnership with the World Bank?
There are tonnes of problems with the World Bank and I don’t want to defend them. But just because DFID also follows a pro-market approach, it does not necessarily mean that there is some great global agenda sweeping in. The UK government’s Department for Business Innovation and Skills, in fact, think we are a bunch of tree-hugging loony lefties who have no time for the market at all. They think we are absolutely off and left field. DFID is genuinely interested in what works and what is the evidence of what works. And as an organisation we have shifted our position on issues several times based on evidence of what works well. We try not to be ideologically bent in any one way.

There has been a fair amount of criticism levelled against DFID and its programmes. One specific criticism has been that DFID pushed for cash crops like jatropha in water scarce regions like Madhya Pradesh.
The MP Rural Livelihoods Programme is designed to give grant funds through the gram sabhas where the people in villages set up micro plans — based on what they would like to do. The programme provides people with the relevant expertise and support. My understanding is that there is a government programme on jatropha. DFID has not played a part in designing that government programme on jatropha. We are definitely not pushing for jatropha or cash crops in general. If this is happening on the ground then it is entirely contrary to instructions going out from here.

To step back, government funded donor agencies are routinely viewed with suspicion — the feeling is that they push their own agendas or those of corporate players.
The allegation that we push corporate interests is untrue. Unlike the United States and Japan, DFID aid is completely untied since there is no legal requirement that our aid goes to British companies. Both US and Japan do that.

If we implement any aid programmes which are benefiting UK industry players or anyone other than the poorest, then we can be challenged in the courts in the UK. That translates into a strict discipline regarding our objectives.

At a recent meeting with senior bureaucrats, I was asked why DFID was here in India since no British companies bag contracts the way Japanese and US companies do on programmes sponsored by their countries. We are here to reduce poverty. It is a political win in the UK to be addressing poverty. A key part of the electorate really supports it. It is just good old politics.

What is your opinion of the publicprivate partnership model? DFID seems to be a strong believer in it.
A lot of it depends on the strength of the market and the strength of the government. Public-private partnership (PPP) solutions in Maharashtra may not be the same as PPP solutions for Bihar. What I can say from the UK experience is that PPP worked really well in some areas, like say building hospitals, while there are other areas where we moved beyond PPP to privatisation and the consensus is that it just didn’t work. But just to sound a warning, there is a tendency to consider PPP to be the answer to everything. And I think the UK experience shows that with a PPP you need a strong regulatory framework which means a pretty strong state implementation ability. The approach has to be nuanced.



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