Aid is a poor answer to povertyby Ian Birrell / November 14, 2012 / Leave a comment
Published in December 2012 issue of Prospect Magazine
Should Britain give aid to India? For a hefty majority of people in this country, the answer is clear: it is absurd to keep handing our money to one of the world’s biggest economies. India is a fast-growing, middle-income nation rich enough to lavish money ($1.3bn by next year) on a space programme and to have its own aid agency with a budget worth $11.3bn over the next five years.
So India has become the prime battleground in the dispute over whether Britain should spend rising amounts on aid while enduring austerity at home. This booming nation remains the biggest recipient of bilateral development assistance. The row, which erupted yet again in October during a House of Lords debate, was fuelled by Pranab Mukherjee, now India’s president, who has dismissed foreign assistance as “peanuts.”
What India demonstrates so clearly is how the aid debate has been mugged by economic reality, wrong-footing both sides. Critics are wrong to argue there is no point giving money to wealthier nations; it is no longer the case that the world’s poor are found in the poorest nations. But supporters are wrong to focus on foreign intervention to end poverty; the issue is now domestic inequality.
The coalition, responding to the hammering it received following Mukherjee’s comments, has indicated that the current tranche of aid to India—£1.6bn over eight years, ending in 2015—will be the last. As the government reacts to voters’ concern and seeks to boost the effectiveness of aid, it is also scaling back handouts to other thriving middle-inc…