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Aid – a weapon in a battle for big business interests

This article is over 8 years, 10 months old
After Britain cut aid to India, Dave Sewell looks at the real reasons for the shift – and how states use aid to further their own interests, not poor people’s
Issue 2342

The British government has decided that India is no longer poor enough to receive overseas aid.

Yet there are more people living on less than 80p a day in India than any other country in the world.

Many ordinary people in Britain back aid because they rightly want to alleviate poverty.

But aid often reinforces poverty. And those in control of most aid, Western governments, use it for their own ends.

So Britain’s decision wasn’t made because India is getting richer—although India’s ruling class is getting wealthier at the expense of ordinary Indians. It has more to do with defending British business.

In 2011 the government had planned to spend £1.2 billion over five years on aid to India.

But India’s government awarded a £7 billion contract for building Typhoon fighter jets to French firm Dassault last year—instead of Britain’s BAE.

Ex Tory minister Andrew Mitchell admitted that Britain’s aid to India was “partly designed to win the bid”.

The Department for International Development (DFID) administrates the aid. Current minister Justine Greening sees development as a tool to help British businesses.

She spoke about “hurdles” that British firms faced in “doing business” in Africa last month.

“My message to British business,” she went on, “is DFID will work to remove those unnecessary hurdles”.


DFID’s aid has certainly been used to promote neoliberalism.

In the Indian state of Andhra Pradesh aid was used to drive through free market reforms in the 1990s and early 2000s.

It plunged poor farmers into debt and thousands killed themselves.

At the time DFID called Andhra Pradesh its “flagship focus state”. It spent £5.9 million on a pro-reform thinktank.

It paid £1.5 million for an “implementation secretariat” to work out which state services could be shut down or sold off.

And it hired consultants from the right wing Adam Smith Institute to do it on six figure salaries.

It even put money towards redundancy payments for 45,000 public sector workers who were laid off.

Professor Jayati Ghosh chaired an inquiry into the suicides. She said, “The crisis of suicides [is] very clearly a result of public policy.

“And this has been guided by and substantially determined by agencies like DFID. They bring in an attitude towards privatisation as well as specific policies.”

New Labour abolished explicit “aid for trade” conditions. But DFID gets the same results by demanding that recipient governments get a seal of approval from the International Monetary Fund or the World Bank.

Britain’s rich owe an enormous debt to India’s poor. But aid has only ever been about maintaining control.

The politics of aid

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