27 July 2011

India: Taking Control of its Aid Money

The government of India has established an agency to oversee how development money is spent in the country. The Guardian reports:
The agency will reportedly be called the Indian Agency for Partnership in Development, overseeing $11.3bn (Rs 50,000 crore) over the next five to seven years.

The move has been welcomed by policymakers who say a central agency will halt leakages, curb delays, slash operation costs and prevent projects being rushed through by individuals misusing their discretionary powers. Furthermore, aid would no longer be driven by territorial divisions and regional interests, making way for a cohesive aid strategy...

The agency will have to ensure quick decision-making and insulate aid from political considerations if it is to deliver aid effectively. Experts say that India's legal framework monitoring government procurement should be strengthened to boost accountability and to prevent it from falling prey to corruption.

The concerns over aid management are timely. Earlier this year, the government auditor revealed that $22.6bn (Rs 1 lakh crore) in foreign aid given to India was lying unused due to poor planning by various ministries.
This is really exciting news. Increased accountability and transparency will help to stem the mismanagement of funds. It does bring up the question of whether India should start being weaned off international aid; a conversation that has continued to stir within England.
The creation of the aid agency, believed to be modelled on the US international development agency, USAid, raises the question of whether India should be dishing out aid at all when it still receives international aid and suffers from rampant poverty and poor development. But supporters of India's foreign aid programme say aid helps the country's domestic agenda indirectly by opening economic doors, ensuring regional peace and boosting business opportunities in recipient countries.
These conversations should continue as there will be a time, in the near future, when countries like Brazil and India will take the complete lead on addressing domestic poverty issues. This day should be encouraged, but the transition will not be easy. DFID has been making some moves forward, but still has committed £1bn in aid to India through 2015. Donors and organizations are likely to point at the work that still needs to be done while others will say that the majority of the responsibility should reside in the nation itself.

What do you think it will take for this transition to take place? It is inevitable. When will India be seen as simply a trade partner as opposed to an aid recipient?