India, Britain and the Aid Row

Rafale fighter jet

Little noticed, last Thursday, India tried to undo the damage which its order for French made warplanes did to David Cameron’s government in London, with finance minister Pranab Mukerjeree calling UK’s Secretary of State for International Development, Andrew Mitchell to soothe ruffled feathers.

Labour party MPs and London dailies had torn into Cameron’s Conservative party led coalition government attacking it of giving 1.4 billion pounds in aid over 5 years to India while being unable to get an order for fighter aircraft.

What started out as agnst against not getting a lucrative multi-billion dollar aircraft order turned into a media war over why Britain should or should not aid India's impoverished millions. That it has poor millions is of course not in doubt, despite its boast of being the seventh largest economy in the world.

British newspapers pointed out quite appropriately that India has its own aid programme for African and Asian nations which is far larger than what it is recieving from abroad and had on many a occassion made it clear that it did not need aid.

Jingoistic Indian coloumnists also said basically the same thing: "We don't need aid." with many privately and impolitely adding "Britain can stuff its money ...."

Before we review the issue, lets recap for those who came in late on the news as it played out :

• India had preferred the French Rafale jet fighter over Typhoon, manufactured by a British led European consortium in selections made earlier this month. The French aircraft was preferred as it was cheaper and considered more versatile than Typhoon, whose upgrades have been long delayed.
• A London based daily had then highlighted how Mukherjee had in answer to a Parliamentary question said foreign aid was not needed to buttress its case that Britain’s development assistance to India should be discontinued. Others editorialised that the money given to India could have built hospitals in the UK.
• That Mukherjee’s comments in Parliament had been generic and not specifically aimed at British aid was lost in the din of the media battle. What all this did was to make Britain's India engagement politically extremely `hot’ for the Cameron government, which is credited with having brought the two governments closer in economic and strategic terms, after years of bilateral relations being in a state of mild freeze, not improved by Labour's younger Miliband trying to lecture India on Kashmir on one relationship building visit!
• “We felt a call at this juncture was needed to scotch unnecessary and wrong press reports and to undo any damage to our otherwise close bilateral relations,” said North Block officials, explaining Mukherjee's call.

Britain has been continuing the aid programme by arguing at home that it strengthens its influence in India, a key market while also  helping lift people in poorer parts of the country out of poverty.

The problem for Britain is that besides being unable to get the Typhoon order; last year, India pledged $ 5 billion in development assistance to Africa, besides another $ 1 billion in direct aid - $ 700 million in insitution building and $ 300 million in building the Ethiopia-Djibouti railway. A year bafore, India had announced a $ 1 billion aid package for Bangladesh to help build roads, ports and railways. In war-torn Afghanistan India has already spent some $ 1.5 billion in rebuilding roads, power stations, telecom networks, a new Parliament building and last year added a pledge of another half a billion dollars to top it up.

If a country can go around spreading largese to other poor nations, can it also ask for or recieve aid? Thats what the British tax-payer may well ask.

Related to this is the question - Why do countries give aid to each other - simply on humanitarian grounds?

Humanitarian considerations plays a role. Aid flowed to Haiti when disaster struck it. Even though the West supported Pakistan's brutal regime in 1971, individual contributions flowed to refugees from its Eastern wing living in miserable refugee camps in India.

But aid is also a way of winning friends abroad. Which is why the Cameron government is keen to fund drinking water programmes and more in India. Which is why India wants to build railways, ports abroad, supply rice to neighbours even when its own millions have little to go around.

The benefits for those doling out aid or help, are sometimes immediate - China managed to get contracts to gas fields in Africa almost at the same time as it offered roads there. It was almost like a barter deal. Sometimes it takes time, but far outweighs the help recieved in the first place. India has been saying thank you to Russia for standing by it in 1971 for decades, despite the dissolution of Soviet Union. It continued with an artificial rupee-rouble rate to protect Russian interests, even when the rouble had become worth pennies. There is an element of thank you when India orders none too great Russian fighter jets, grossly over-priced aircraft carriers and outdated nuclear power plants.

Its contracts to France - Mirage, again nuclear power plants and Rafale - have similar elements of thank you for the support France gave to India's quest for nuclear parity with China besides other things.

As one former British MP whom I met soon after the aid row surfaced, said: "If you are in it for the long haul, you disregard short term losses." Britain has in the past drawn much benefit from its `special relationship' with India. It sold helicopters in the 1980s which were described by the then Indian Prime Minister as “white elephants”. Earlier in the 1950s, it sold outdated fighter aircraft, whose parts cost more than the aircraft !

Where does that leave the question of whether India should or should not get aid or even more importantly from the Indian point of view - accept or not accept aid? Soon after Pokhran -II, when many countries came rushing with pious condemnation of nuclear India with added threats of withdrawing aid, the Vajpayee government quite rightly told them to a) shut up and b) to keep their aid to themselves.

The Congress government when it came to power, endorsed Vajpayee's or rather his National security advisor Brijesh Mishra's views and continued the aid ban imposed on minor European powers. Quite a few countries whose aid programme were stopped, still regret the loss of what they now see as a lever with a rising power.

Foreign aid is a miniscule fraction of India's GDP or for that matter even of total government sector spending. India as a nation could do without it. But can those dreadfully poor people who are getting something out of it, do without it? Can they wait till New Delhi or lets say in a specific case – Orissa – wait till Bhubaneshwar, finds time to look their way?

To tell those who are benefitting from what little foreign aid is coming in, that the programme is being stopped because some upper middle class urban Indians feel their ego, inflated by India's rising GDP and nuclear power status, has been punctured by news that Mother India still takes aid, may not exactly be acceptable to those poor people.

In any case, like good baniyas, which Indians have been for centuries, our motto on aid should be "let it flow, if it’s without strings attached." Its for those who are buying a good consience or better relations to decide whether their millions should be spent here or somewhere else.

Footnote:

Baniya  : Merchant