India should reject British financial aid

Pep Montserrat for The National

News that the UK will continue to give aid worth $1bn to India should surprise and infuriate Indians. India's growth will be easier to achieve and sustain if its government puts people and poverty ahead of weapons and space missions.

News that Britain will continue to provide India with aid worth almost half a billion dollars a year for at least the next four years has caused a minor storm this week in the UK media. Some groused that a billion pounds in aid is rather a lot for a country whose economy might soon overtake its former colonial master. Others pointed out that India has found funds for a space programme and nuclear weapons, while Britain itself lacks the former and endlessly debates scaling down its own nuclear weapons systems.

In the middle of a wave of belt-tightening measures by a UK government fond of preaching about austerity, the scale of the aid to India is surprising. For good measure, the media tossed about the name of Lakshmi Mittal, an Indian steel tycoon who is also Britain's richest man. A country that can afford to spend on prestige projects such as a space programme or last year's Commonwealth Games, the papers suggested, is not a country that is poor enough to receive aid.

There is something in that. For even though Indians individually desperately need the aid Britain sends, India itself should still give it back.

How to square that apparent paradox?

Start by looking at what events such as the Commonwealth Games and India's satellite launches mean to ordinary Indians. These projects speak to the self-image of the country, to the sense of how Indians see their place in the world.

A country's self-image matters. On my last trip to India a few months ago, I was struck by how proud Indians were of how their country is viewed by the outside world. The evident poverty in which significant numbers of the country still live were brushed aside as a problem that would soon be solved: the eyes of these Indians were fixed on the country's gleaming growth rates, its nuclear weapons, its statesmen on the world stage. The new-found respect in which India is held was a source of pride even to those who were not obviously sharing its spoils of success.

All to the good. The more confident Indians feel about their place in the world, the sooner they can claim their rightful place among nations.

But there is a danger that in focusing on the stars, you miss the ground beneath your feet. India is full of wealthy people - there is a statistic floating around that the country has more dollar millionaires than Britain - but it is far from a rich country. Parts of it are as devastatingly poor as anywhere on the planet.

The World Bank says more than a quarter of India's urban population live below the national poverty line; the figure is slightly higher in rural areas. More than half of India's poor live in seven of its 35 states; many of these states, like Bihar and Uttar Pradesh, are also among its most densely populated. Hundreds of millions do not have enough to eat or access to clean water.

If the numbers are staggering, the individual reality is worse. Walk the streets of Old Delhi and you see poverty that shocks in its intensity, the desperate squalor of children without limbs begging, of old men in rags covered in flies. Seeing such poverty in isolation is bad enough; set against the material wealth of many urbanites, it is incomprehensible. These people are not only starving; they are dying on the streets of India's capital.

Part of India's challenge stems from something that has also made it successful: the comparative weakness of the state in providing essential services. India's chaotic government cannot come to grips with some of the hardest challenges of its major cities. The chief problem is infrastructure: the roads are clogged and public transport is impossible. Getting anywhere in major cities is an exercise in fumes and fuming. Sanitation is particularly bad: all across India, people urinate openly in the streets. Levels of public defecation are unacceptably high. In quality and access, electricity and water are uneven.

But Indians have turned the weakness of the state into a positive; the country has become rich because of its many small, private companies. Where the state has failed, entrepreneurs have stepped in, creating technology and services that the world wants.

That is how India's poverty will most probably to be alleviated - through economic growth and technological progress. Both of these will be easier if the corruption and bureaucracy that plague India's bloated state can be tackled. These are the areas the government needs to look at, urgently. Prestige projects such as the Commonwealth Games and the space programme can help, argue India's optimists; the Games by improving the image of India abroad, bringing investment, and the space programme by pushing forward scientific research. Yet they are not vital to the chief task. The money and the effort of its engineers and scientists could be better spent on solutions for the bottom millions.

Refocusing its resources is important for India's long-term future. Poverty in India is one of the greatest ills of the society, affecting the health and productivity even of its well-off citizens. It is also vital for stability - India's long-running Maoist insurgency in the east is fuelled in considerable part by the extreme poverty of those regions. If tackling its poverty problem means reallocating resources to people and poverty rather than weapons and space missions, well, future generations of Indians will be thankful.

In theory, tackling such huge challenges would require all the money India can lay its hands on, including aid from Britain. Yet India should still reject that aid. If a country's self-image is important, imagine the message turning down aid from Britain would send. Many Indians still look to Britain as a model, culturally, socially and economically. Turning down the aid would go far towards breaking with its past.

It would also say something about the type of country India is becoming and wants to become. No nation can consider itself great when so many of its citizens live in squalor. For the Asian tiger to take a leap forward, it may need to take a few small steps back.

This isn't a pessimistic position, nor even a realist one. It is an optimistic position, an aspirational policy. India's boom is changing the region; its transformation into a rich country will change the world. Yet its rise and its power will be easier to achieve and sustain if it takes as many of its people along as possible. That would be good for Indians today, and good for India's tomorrow.