Profiting from ‘peanuts’: the DFID’s new plans in India

The Sunday Telegraph reported at the weekend that foreign minister Nirumpama Rao had proposed in a memo “not to avail [of] any further DFID assistance,” because of the “negative publicity of Indian poverty promoted by the DFID,” while finance minister Pranab Mukherjee described British aid as “peanuts” and said India doesn’t need it. They allowed it to continue after DFID officials told them cancelling it would cause “grave political embarrassment”.

Conservative MP Philip Davies led the reaction, saying: “India spends tens of billions on defence and hundreds of millions a year on a space programme. In those circumstances, it would be unacceptable to give them aid even if they were begging us for it.” Sun columnist Trevor Kavanagh preferred sarcasm to incredulity: “we should weep for a country with more billionaires than Britain, a fortune in Swiss banks and a bigger middle class than Europe,” before bemoaning the injustice of giving aid to a country only for it not to buy your fighter jets: “India is so wealthy it can easily afford £13BILLION to buy the best warplanes in the world. Unfortunately, they’ve just spent it on French Rafales, not British Typhoons despite the £1.2BILLION we’ll hand them over five years”.

But neither Mukherjee, Rao, Davies nor Kavanagh need worry too much, as the DFID secretary of state Andrew Mitchell recently said half of the aid being given won’t really be aid at all. He told the Financial Times the programme in India was being “restructured” to give it the characteristics of a sovereign wealth fund, directing half of the budget towards private sector investments that “seek to lift millions of Indians out of poverty without making a loss”. “As far as the British taxpayer is concerned this is returnable capital,” Mitchell said, adding that the sovereign wealth fund model could be rolled out in other countries, including Uganda, Ghana and Ethiopia.

As the Dodgy Development series published by Corporate Watch showed, the DFID’s programme in India has always had the private sector at its heart, with often disastrous effects on people’s lives, which is why the equally pro-corporate Indian government continues to tolerate it. However, while previously the DFID’s aid programme would facilitate privatisation or corporate expansion into new areas – writing the policies that opened the state of Orissa to mining companies for example – turning the aid itself into an investment that demands a return takes this one step further. It would see the DFID acting in a similar way to the much-criticised Commonwealth Development Corporation (CDC), which a Private Eye investigation said “turned a fast buck funding shady businesses of little benefit to the developing world,” as it looked to make as big a profit as it could from a series of investments in enterprises including shopping malls and mining companies. Ominously, the Financial Times said the programme will help “reinvigorate” the CDC.

How Andrew Mitchell must wish people would take the time to realise his department isn’t as benevolent as they think it is.

See also:
Dodgy Development: Films and interviews challenging British aid in India
December 15, 2010

DFID helps Bangladesh ‘understand the private sector’
July 15, 2011

‘Educating’ tribal leaders about the ‘benefits’ of development in Ghana
August 19, 2010

Dodgy Development V: Power to the people?
May 05, 2010

Dodgy Development IV: ‘A DFID colony’
May 05, 2010