Why give more aid to India?

In a WSJ blog, Rupa Dehejia wonders if India should receive any aid from the World Bank, especially given the emerging/emergent/emerged superpower rhetoric that surrounds the country; its extravagant spending on events such as the Commonwealth Games; and the massive scams that have been recently doing the media rounds. All valid points, I think. The project in question is an IDA soft-loan to the national roads project, PMGSY. The World Bank has supported the PMGSY since its inception. The author also goes on to ask -  

The flip side is to ask why is the World Bank still engaged in India? Surely, its precious dollars are much more badly needed in the poorest and most backward of its member states, mostly in Latin America and sub-Saharan Africa. After all, when doling out from a fixed pot, aid spending is a zero-sum game: an extra dollar given to India is a dollar not given to a needier recipient

This is a trickier question. Aid spending may be a zero-sum game, but the returns therefrom are definitely not. In this case, there is nothing particularly remarkable about the project - its the usual infrastructure multilateral concessional loans often fund, expecting economic and social dividends from greater road connectivity. At $1.5 bn out of an estimated expenditure of $33 bn, the IDA loan is not even a significant proportion of the total resources required for the project. Why then is the bank interested in funding this Indian programme? And does it make sense?


Some of the recent development debates have been about where aid must focus in order to make the maximum impact on poverty - should it be where the poor live or on governments that lack resources to help its people, even if their numbers are small - and in this debate, predictably, India has been in the spotlight. 


In my opinion, aid to India makes sense. Not just because the good majority of Indians are poor, but also because of the following, some of which are true today and others, that would be true in future -  

• Aid can help improve local accountability and direct local attention towards domestic inequality. That might mean smaller volumes of aid, but directed strategically. This does not mean supporting only advocacy/activist/policy NGOs, but also supporting innovative and experimental approaches to conventional development challenges. Local citizens' groups, NGOs, politicians and government officials have taken on the obstacles to citizens holding governments to account in India in many different ways. The challenge is to keep these movements active and growing.  
• Being present in India is not just to 'give' to India, but also to 'take' home lessons from her. The Indian (or the Brazilian or Chinese) model of governance and economy has important lessons that could be relevant to other developing countries - at least more relevant than just the historical experiences of the west. 
• In spite of all the poverty and HDI indices, countries like India, China and Brazil are important geo-political players. Their collective power was clearly visible in the recent climate talks and international governments and multilateral NGOs have a clear stake in the progress of such global negotiations. One of the best ways to build ground is to participate in domestic debates and fora - go from being an untrustworthy outsider to being a trusted one, with a possibly divergent, but transparent point of view. 
• Donors in India surely realise that it is not as easy anymore for them to stand aloof from the Indian state and dictate terms. It may largely be tough posturing by the government, but in recent months, some prominent donors have been told off by senior officials/politicians for being harshly critical of public systems and for highlighting incessantly, the country's shortcomings. In response, donors will probably become smarter; and attempt to work closely with local actors in pushing for change from within. 
• Involvement in big-ticket projects (infrastructure) in the form of small inputs (technical support) might be one of the ways for donors to remain relevant in the country. Staying relevant is important not just so we aid professionals have a job or because donors have their own agenda (which they obviously do), but also because the aid industry has something to contribute.

International agencies (whether donors or otherwise) and a strong domestic government is a good recipe for a fruitful partnership. Some day, it will not be about foreign governments and multilateral bodies giving aid to India, but about a mix of government and non-government bodies working together to share knowledge and resources; to continue work on improving systems of global governance; negotiating fiercely to further/guard each other's global political positions; to improve our understanding about development and help action what works; and to help citizens across countries understand each other better.