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Danish Development Cooperation with India - in a Poverty Reduction Perspective CDR Working Paper 98.2, February 1998 Email your order for a paper copy to DIIS order form
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Abstract The paper gives an overview of Denmark's official development cooperation with India, viewed from a poverty reduction perspective. It is one of the products of a research project, entitled 'Comparative Study of European Aid for Poverty Reduction in India', carried out in 1997 by a group of four European and eleven Indian researchers. The paper deals with the evolution and composition of Danida's programme in India in the context of the donor strategy and assesses the project portfolio in terms of relevance for poverty reduction. Moreover, it reviews the donor-recipient dialogue and programme management and discusses selected issues such as donor coordination, institutional aspects of poverty reduction, targeting, ownership and the involvement of NGOs. Through the 1970s and 1980s Danida's assistance to India was split into two parts, one half tied to procurement in Denmark and directed mainly towards the modern sector, and the other half financing projects, most of which had a distinct poverty orientation. A new country strategy adopted in 1997 underlines poverty reduction as the primary goal for the entire Dani da-supported programme (except a small private sector programme and Danish firms' activities financed by mixed credits or the Industrialisation Fund for Developing Countries). Roughly two-thirds of the Danish programme (under the country frame) is relevant for poverty reduction in a broad sense, the remaining third more linked to business interests. This compares favourably with most other donors, and in the future the poverty orientation will be considerably strengthened according to the new country strategy. However, there is an uncertain relationship between some of the planned interventions and the primary objective of poverty reduction. The effectiveness in terms of poverty reduction can be improved through better targeting.
Foreword This paper has been written in the context of a large research project, entitled 'A Comparative Study of EU Aid for Poverty Reduction', a collaborative venture involving research institutes from ten EU countries. Development assistance from EU and EU member states as bilateral donors to India, Nepal, Tanzania, Zambia, Zimbabwe, Burkina Faso and Bolivia has been studied as part of the project. The India study has been carried out in 1997 by a group of four European and eleven Indian researchers. A synthesis report, authored by Aidan Cox, Steen Folke, Lau Schulpen and Neil Webster, with the tentative title, 'Do The Poor Matter? A Comparative Study of European Aid for Poverty Reduction in India', is planned to be published later in 1998. The aim of the India study is to investigate the effectiveness of aid from the European Commission and selected EU-countries in contributing to poverty reduction. By poverty reduction we do not just mean improvement in income or consumption of the poor, but also amelioration of the conditions that are important for such improvement (e.g. health, education). We have conceptualised poverty reduction as a multi-dimensional phenomenon which involves changes in livelihoods, resources, knowledge and rights. [ This is the same conceptualisation as that used in the recent evaluation of poverty reduction in Danish development assistance (COWI, 1996).] We have selected six donors who have in common that they want to strengthen the poverty orientation of their development assistance, namely the European Commission, Denmark, Germany, the Netherlands, Sweden and the United Kingdom. The study has assessed the donor strategies, the donor-recipient dialogue, the recipient's perception of aid as well as the effectiveness in terms of poverty reduction of the programmes as such and a number of selected interventions in nine different 'sectors': watershed, irrigation, forestry, drinking water, primary health, primary education, women's training, urban housing and self-help projects (NGO-supported). In each sector three-five projects supported by one or the other of the EU-donors have been selected and assessed from a poverty perspective. Most of the projects are found in Uttar Pradesh, Orissa, Andhra Pradesh, Karnataka and Tamil Nadu, but one project is located in Madhya Pradesh, one in Rajasthan and one in Kerala. Six major and two minor Danida-supported projects have been assessed as part of the study. The major ones are: Karnataka Watershed Development Project; BAIF Agroforestry Project in Karnataka; Karnataka Integrated Rural Sanitation and Water Supply Project; Women and Youth Training and Extension Project in Karnataka, Training and Extension for Women in Agriculture in Orissa; Tamil Nadu Health Care (Area Development) Project. The two minor ones aim at agricultural and human resource development through NGOs, namely Naujil Integrated Project for Health and Development in Uttar Pradesh and Palani Hills Conservation Council in Tamil Nadu. Detailed assessments of these are found in six mimeographed reports by our Indian colleagues (Banerjee, 1997; Kripa, 1997; Ninan, 1997; Manti, 1997; Rajamma, 1997; Rajasekhar, 1997). The Danida-supported projects are also analyzed in the relevant sections - on watershed projects, forestry, women's training, drinking water, health and NGO projects - of Chapter 6 in the synthesis report. Hence they are dealt with only summarily here. Taken together the eightprojects give a fairly representative picture of the most poverty oriented parts of Danida's assistance to India. The purpose of this paper is to give an overview of Denmark's official development coop eration with India, viewed from a poverty reduction perspective. It deals with the evolution and composition of Danida's programme in the context of the donor strategy and assesses the portfolio of projects in terms of relevance for poverty reduction. Moreover, it reviews the donor-recipient dialogue and programme management and discusses selected issues such as donor coordination, institutional aspects of poverty reduction, targeting, ownership and involvement of NGOs. Although the paper can be read independently, it should be seen as a background paper for the synthesis report which deals with the same issues at a more aggregate and comparative level. Similar background papers are being prepared for other donors. There are five main sources for this paper. One is documentary material obtained from Danida in Copenhagen and the Danish Embassy in New Delhi. This includes both published and unpublished sources. Danida's assistance is well-documented, and I have benefited from the readiness to give me access to available material. The second source is extensive interviews with programme officers in the Danish Embassy and Danida's Watershed Development Coordination Unit in New Delhi. I am very grateful to Bjarne H. Sørensen, Carsten Nilaus Pedersen, Bjarne Jensen, Jette Lund, Jens Bjerre, Mahendra Pal, Jens Raunsø Jensen, Søren Damgaard-Larsen, S.L. Seth and Tinni Sahwney for having patiently answered all my questions and for sharing their views. A second round of discussions involved the three first-named persons as well as Jes Boye-Møller and Lone Spanner. The third source is staff members of three Danida-supported projects that I visited, namely T. Padmasini Asuri, Women and Youth Training & Extension project, Kar nataka, N. Nagaraja and C.V. Naik, Karnataka Watershed Development Project, and Sheela Rani Chunkath, Danida Health Care Project, Tamil Nadu. The fourth source is Indian central govern ment officers; interviews were held with Deepa Singh Bagai, Deputy Secretary, Ministry of Finance, Department of Economic Affairs, and V. Upadhyay, Joint Secretary, N. Laharia, Joint Commissioner, and S. Wadhwa, all from the Ministry of Agriculture. The fifth source is inter views with representatives of the multilateral donors, namely Hans von Sponeck and Niels Maagaard fron UNDP and David Marsden and Meera Chatterjee from the World Bank. Thanks to everybody. Finally I want to thank Anders Baltzer Jørgensen for comments on the draft. The sole responsibility for the views presented here of course rests with me. Copenhagen, January 1998 Steen Folke
Overview of Danish aid to India India was one of the first countries to receive development assistance from Denmark. The first small NGO project was initiated in 1959 and in the mid-1960s this was followed by the first Danida-managed project, the establishment of an Indo-Danish dairy cattle farm. Throughout the 1970s assistance to dairy cattle was important in the Danish aid portfolio. Ever since the 1960s India has continued to be one of the main recipients of Danish aid - in most years among the top three. Only a marginal part of the aid has been channelled through Danish NGOs; this will not be dealt with in the following. Danish development cooperation is regulated by a parliamentary act adopted in 1971 which sets up economic growth, social progress and political independence as the main objectives. This act is still in force, but in practice development cooperation has been reoriented in recent years. In the 1970s and 1980s Danish aid to India - as to other countries - was divided in two roughly equal parts. One part consisted of heavily subsidised loans (and more recently grants) tied to procurement in Denmark. In India these loans/grants generally supported the modern sector; they were used to finance e.g. dairy equipment, cement machinery, machine tools, windmills, electronic equipment, optical fibres, a sophisticated marine exploration ship and an advanced waste disposal incinerator plant (which never became operational). In terms of poverty reduction, the impact of such assistance is at best very indirect, and by and large it must be assumed that the benefits of this assistance have overwhelmingly accrued to the more well-to-do. Over the years the Indian side has criticised this part of the Danish assistance for being too costly and not always the most relevant owing to the limited choice as a consequence of the tying to procurement in Denmark. In the mid-1980s the tied loans were replaced by tied grants until 1989 when it was decided generally to abolish the split up of Danish aid in a tied and an untied part and replace this with a more informal aim to ensure that about half of the future bilateral aid would continue to return to Denmark in the form of demand for goods and services. Subsequently this was further relaxed for individual countries (but kept as overall goal for the bilateral aid). The other half of the Danish aid through the 1970s and 1980s was allocated to projects with a gradually more explicit direct poverty reduction focus. Since the mid-1970s Danish aid has generally been guided by the basic needs concept. In India the main emphasis has been on primary health and provision of drinking water in rural parts of the country, but there has also been a number of projects in the agricultural and animal husbandry sectors. Most of the Danish assistance has been focused on four states, namely Tamil Nadu, Karnataka, Madhya Pradesh and Orissa. In all these states (and Kerala) there have been drinking water projects. In Tamil Nadu and Madhya Pradesh there have been primary health projects. Denmark has also given considerable support to the national leprosy and blindness programmes. In addition to this there have been numerous smaller projects both in the sectors mentioned and in other sectors (education, fisheries, etc.). [ For a more extensive account of the Danish assistance to India until around 1990 see Folke (1992).] Since the late 1970s the poverty reduction objective has figured prominently in Danish development assistance, but it is interesting that it has never been included in the act (from 1971) which regulates Denmark's international development cooperation. An official commission set up to scrutinize the principles guiding the development aid in 1982 recommended inclusion of the poverty reduction objective into the act, but this was not accepted by parliament. There has continuously been some ambiguity about the status of the poverty reduction objective. Until the late 1980s the split of the bilateral half of Danish aid into one half tied to procurement in Denmark and another half allotted to projects, provided a convenient administrative way of dealing with the ambiguity. In the 1990s tying has become informal, but it remains an important objective to involve the 'Danish resource base', i.e. to rely on Danish goods and services, as much as possible without compromising other objectives. Since around 1990 a number of important changes has taken place in the Danish aid to India. The most important was a parliament decision in 1992 that aid to India should be phased out. The reasons for this were many. India was seen as doing quite well on its own in terms of economic development - and too little to help the poor. The country was also criticised for its policies vis-a-vis its neighbours, for its role in the Kashmir conflict, for its human rights problems, the level of military spending, etc. The decision, however, was reversed in 1995 after a social-democratic led government had replaced the former conservative-liberal government. Among the factors contributing to this change of mind was a genuine concern for the vast numbers of poor people in the country as well as business interests in India's emerging market (under liberalisation). In 1994, i.e. in the interim period, a new country strategy was adopted; this will not be dealt with because it was made redundant with the 1995 decision and it was replaced by a new country strategy adopted in 1997. Other important changes were linked to Denmark's overall aid policies. The elimination of formally tied assistance has already been mentioned. Since the mid-1980s the policies have emphasized environment and gender concerns and there has been a shift towards more participatory methods in implementation. In the 1970s and 1980s Denmark had four main recipient countries for its bilateral aid, namely Tanzania, Kenya, India and Bangladesh. From the late 1980s onwards this system was gradually replaced by one based on development cooperation with 20 programme countries, of which India in practice remains one (although in principle it dropped out in 1992-95). Relatively speaking this change implies that there is less money available to the four countries which were main recipients previously. But in this context it should be added that Denmark - in contrast to most other donors - has continued to expand its development assistance so that in recent years it has been just around 1 per cent of GNP (1.06 per cent in 1996). In 1994 Denmark adopted a new strategy for its development cooperation, known as 'Strategy 2000' (Danida, 1994). In this strategy poverty orientation is characterised as a 'fundamental principle' of Danish development assistance. The strategy outlined contains three main elements, viz. sustainable and socially balanced economic growth, developing the social sectors and promoting popular participation. The poverty orientation was further reinforced in subsequent policy papers. One such policy paper (Danida, 1996a) for the first time operationalised the poverty reduction objective and discussed problems in its implementation. Another one (Danida, 1996b) put the poverty reduction objective squarely as the overarching objective of Danish development assistance. So recently the poverty orientation of Danida's programme has been significantly strengthened - at least at the level of policies and guidelines. [ Udsholt (1997) provides an excellent overview of the poverty reduction objective in Danish aid policies.] At the same time 'Strategy 2000' heralded a shift from project aid towards sector-programme-support and this was operationalised in the last mentioned document (Danida 1996b). It entails a concentration to two-four sectors in each programme country and increased emphasis on policy dialogue and capacity building.
Donor Country Strategy A new country strategy for India was adopted in 1997. The strategy underlines the poverty reduction objective as the primary goal for Danish assistance to India. In the future Danish assistance will be concentrated to four sectors, namely agriculture, drinking water, health and energy & environment. In practice this means continuing in the sectors that have been most important for a long time (the energy & environment sector, however, only in the 1990s). But in terms of the state focus, there will be a concentration to only two states, namely Karnataka and Madhya Pradesh. This means that assistance to Tamil Nadu and Orissa will be gradually phased out - in a way that tries to ensure the sustainability of the project results. In addition to the main poverty oriented programme based on the sector programme support concept, there will be a minor component aimed at facilitating Danish business collaboration with Indian counterparts under a private sector development programme (established in 1993). Danish firms can also obtain subsidised mixed credits or obtain support from the (Danish) Industrialisation Fund for Developing Countries. As already mentioned introduction of the sector-programme-support approach in the future will entail increased emphasis on policy dialogue and capacity building. It also implies a more systematic effort to bring about national (as opposed to Danish) ownership of the programme. But the country programme as such will hardly be revolutionised. In Orissa and Tamil Nadu it is envisaged that most projects will be phased out, but for several major projects this means continued support for the next five years or so. In Madhya Pradesh and Karnataka a number of the future activities will be in continuation of already existing projects. Generally this is true of interventions both in the health, drinking water and agricultural sector. The smaller (and more recently established - in terms of Danish aid) energy & environment sector is partly an exception to this overall pattern. However, by far the biggest single planned intervention in the five-year period is in the health sector and of recent origin, namely support for the national polio eradication campaign, implying a Danish contribution of 233 mill. DKK (1996-2000). Without in any way questioning the relevance of this, it may be assumed that a contributing factor in thedecision to assist this programme was the need to get something through the pipeline which would require a minimum of administrative effort after a period (1992-95) when it had been decided that Danish aid to India should be phased out and no new project ideas had been elaborated. The new country strategy has been a completely donor driven affair. In the process of its conception and finalisation, dialogue with the Indian government has remained on the courtesy level. Seen from Danida the need for a new country strategy was a consequence of two unrelated events. The decision to reintroduce India as one of the programme countries in itself necessitated a new strategy to replace the transitional one from 1994. Moreover, there was a need to embody the new policies and operationalisation guidelines of 'Strategy 2000' and the subsequent policy documents in a new country strategy. The new strategy must be seen as a major step forward in so far as the poverty reduction objective is now clearly stated to be the overarching objective for all assistance under the country frame. As background for the formulation of a new strategy a number of sector reports were prepared by Indian consultants. A Danish consultancy firm was given very short time to synthesise the sector reports (Development Associates, 1996). Consequently these tended towards cautious recommendations in continuation of the existing programme and at the same time left it to political decisions (in Danida) to effect any major changes. The continued weight accorded to the health and water & sanitation sectors is evidence of this - as well as of the poverty orientation of the strategy. But the poverty reduction objective in practice does not rule supreme. This is revealed by the selection of sectors and states (see below). Danish aid also has important cross-cutting gender and environment objectives. These may of course be pursued in harmony with the poverty reduction objective, but there is also a risk that particularly the environment and the poverty reduction objective may be in conflict. Moreover, the existence of a number of different objectives in itself implies a risk that the poverty reduction objective in practice is relegated from its primary position. Sector Strategies The transition from project assistance to sector-programme-support under the new country strategy provides new opportunities but also entails new risks. Concentration to a limited number of sectors - four - is likely to improve aid effectiveness, but it would have been even better to concentrate further. The sector approach entails a possibility of moving beyond isolated projects, but at the same time makes it more difficult to plan and implement integrated interventions (across sectors). Increased emphasis on capacity building is warranted, but it remains to be seen whether this will benefit the sectors per se or whether it will also strengthen the poverty orientation. Great expectations are vested in strengthening policy dialogue, but in the Indian context it is an open question how effective this dialogue is going to be. The Indian authorities both at the union and state level are a formidable counterpart, generally with clear policy preferences and backed by a competent and well-entrenched bureaucracy. One of the overall objectives of the sector programme concept is to ensure recipient ownership, and this will notprove difficult at the government levels in India. But poverty reduction is not necessarily the number one concern, neither at the union nor at the state level. Hence it is uncertain how pro-poor the concrete programmes implemented with Danish support are going to be. More elaborate sector strategies have yet to be worked out. Most of the components in the new country strategy build strongly on activities which have already been under implementation for a number of years. But in comparison with the past, the sector-programme-support approach implies that more effort and money are going to be spent 'higher up' in the sector than on the ground. This may provide a better framework for concrete pro-poor interventions, but there is also a risk that the poverty reduction objective is forgotten and disappears in the bureaucratic jungle.
Portfolio of Projects Sectoral Composition From the start of the Danish aid programme in India in the 1960s until and including 1989, 1.8 bill. DKK had been disbursed for aid tied to procurement in Denmark (i.e. the 'modern' sector), whereas 1.7 bill. DKK had been disbursed for untied projects (i.e. in principle poverty oriented). In that year, as already mentioned, the formal split up of tied and untied aid was abandoned. Through the 1990s the sectoral distribution of Danish aid has been as indicated in the table overleaf. It can be seen that assistance to the modern sector from covering roughly half of the total in the early 1990s has dwindled to around one-fourth in the mid-1990s. In most years health has been most important among the remaining sectors, but agriculture has increased its share and drinking water tapered off. Aid channelled through Danish NGOs has remained marginal, generally around 5-7 per cent. The low level of disbursements in 1995 and 1996 is a consequence of the 1992 decision to phase out Danish assistance. Most of the concrete interventions have been in the form of projects, but in some cases Danida has supported Indian national programmes. Virtually all the major interventions in the Danish portfolio of the 1990s were initiated in the 1980s. A number of projects are in their second (five-seven year) phase and some are under way to their third phase. So there has been a great deal of continuity in the Danish programme. Disbursement of Danish aid to India, 1990
Source:Danida. The disbursements in the 'modern sector', shown in the table, primarily refer to tied loans and grants authorised in the 1980s. In the first half of the 1990s money from these grants financed windmills, spare parts for a marine exploration ship, equipment for production of optical fibres, and tools for tool rooms. By 1997 nearly all these projects had been terminated. From 1993 onwards the small private sector programme, supporting the establishment of collaboration between Danish and Indian firms, has been a novel way of assisting the 'modern' sector. The following is a list of the main projects under implementation in 1996 with project period and total amount indicated. For projects that have been through more than one phase, the table in most cases refers to the phase that was ongoing in 1996. But in some cases, especially under health and water, the table (and the amount shown) covers two phases. The list also provides a rough categorisation of their relevance for poverty reduction, but not indicating whether they have been successful in achieving this objective. This is based on a simple classification: 1) Direct: Interventions which address poverty reduction (in a broad sense) directly and seek to target the majority of the benefits to the poor. 2) Indirect: Interventions with a plausible link between the activity and poverty reduction - explicit or implicit - which can be expected to bring substantial benefits to the poor, though others may also benefit. 3) Other: Interventions which may bring benefits to the poor, but the linkage between the intervention and poverty reduction is less clear or likely to occur only in the long run.
Source:Indo-Danish Development Cooperation Programme, Status Reports, Royal Danish Embassy, New Delhi, October 1996, plus own categorisation). A simple calculation gives the following distribution of the interventions: Direct poverty reduction: 22% Indirect poverty reduction: 43% Other: 35% This must only be taken as a very rough indication of the project's relevance for poverty reduction, and it does not take into account the differences in project periods that vary a great deal. An alternative calculation could divide the total amounts by the number of years of each project, but since the whole exercise is necessarily crude, this is not considered worthwhile. In any case this distribution compares favourably with that of most other donors in terms of relevance for poverty reduction. Roughly two-thirds of the programme is considered relevant for poverty reduction and only one-third less relevant or irrelevant. However, there is still room for improvement. Through more careful targeting, no doubt, it will be possible to increase the share of direct poverty reducing interventions from the current level of 22 per cent. Moreover, it is likely that the share of 'other' interventions will be drastically reduced in the coming years. Under the new country strategy all interventions under the country frame in principle must contribute to poverty reduction. Although it remains an important objective to look after Danish business interests, in the future this must be done in novel ways that go hand in hand with thepoverty reduction objective (and outside the country frame through mixed credits and the Industrialisation Fund). The following gives a brief overview of the main projects in the sectors which are most relevant for poverty reduction: Agriculture, etc. Three types of projects have dominated in the agricultural sector: Animal Husbandry Total appropriation: 43 mill. DKK (1989-98). As mentioned support for animal husbandry was important already in the 1960s and 1970s. In the 1990s it has remained so but on a much more limited scale and with a different approach. Whereas the early projects, focusing on dairy cattle, were perceived as benefiting mainly the slightly better-off farmers, more recent projects have tried to address more explicitly the needs of small and marginal farmers and even landless labourers. In the 1990s there are two animal husbandry projects, one in Orissa, the other in Tamil Nadu (and one under way in Madhya Pradesh); all put emphasis on smaller animals like goats, sheep and poultry which are affordable for poorer people. Training of Farm Women and agricultural extension Total appropriation: 233 mill. DKK (1982-2000). In the early 1980s the first project (in Karnataka) supporting the training of farm women was an innovative feature in the Danish programme. Since then more or less similar projects have been established in Tamil Nadu, Orissa and Madhya Pradesh. The Tamil Nadu and Orissa projects are currently in their second phase and the Karnataka project is just about to embark on its third phase. All the projects focus on agricultural training of women, who are actively involved in cultivation and animal husbandry, but the approach has varied somewhat from project to project and from one phase to the subsequent. In the Karnataka project the main emphasis has been on training in training centres whereas in the other projects most of the training is carried out in the villages. The Karnataka and Orissa projects have been assessed under this study. Watershed Management and Soil & Water Conservation Total appropriation: 190 mill. DKK (1989-2001). This group of projects was initiated in the late 1980s. The watershed management projects focus on tree planting and soil conservation and improvement. Such projects are being implemented in Karnataka, Orissa and Madhya Pradesh (recently started). The project in Karnataka has recently moved into its second phase. This has entailed a change in the approach from top-down to more participatory methods, and suchmethods are also applied in the Orissa and Madhya Pradesh projects. In addition there are two soil & water conservation projects on marginal lands in Tamil Nadu. These have been beset by problems, both of technical (e.g. inappropriate shelter belts) and socio-economic character (e.g. absentee landlordism). The Karnataka project has been assessed under this study. Apart from this a number of minor (Indian) NGO-run projects have been supported through a fund for assistance to minor development projects in rural districts (total appropriation: 20 mill. DKK). A couple of these have been assessed under this study. The money for these projects has been channelled through the Council for Advancement of Peoples Action and Rural Technology (CAPART). However, there have been so many problems in the functioning of CAPART - including financial irregularities - that it has been decided to discontinue this assistance. However, in addition to the many small projects one fairly large project has been financed through CAPART, an agro-forestry project in Karnataka run by the NGO Bharat Agro-Industrial Foundation (total appropriation: 20 mill. DKK). The project has focused on tree planting on waste lands for the intended benefit of small farmers and agricultural labourers. The agro-forestry project has been assessed under this study (but will be treated as a forestry project in the following). Health In the 1980s and 1990s there have been two major types of projects in the health sector: Primary Health Care Projects Total appropriation: 604 mill. DKK (1981-2000). Both in Tamil Nadu and in Madhya Pradesh these projects were started in 1981; in 1996 the Tamil Nadu project moved into its third phase, whereas the Madhya Pradesh project is on the threshold of its third phase. Both projects are part of the government of India 'Area development programme' within the health and family welfare sector. The main emphasis has been on construction of primary health centres and sub-centres in rural areas, training of health workers and supply of drugs and equipment. In the 1980s there was some donor-recipient tension in the projects because of differences over whether to prioritise primary health or family planning. Recently added weight has been given to institutional and capacity building measures. The Tamil Nadu project has been assessed under this study. Support for National Programmes to Combat Blindness, Leprosy, Polio and Tuberculosis Total appropriation: 644 mill. DKK (1978-2001). Since 1978 Danida has supported the national blindness programme which aims at reducing the number of blind and visually handicapped. The Danish contribution has mainly been in training and infrastructure (phase I) and more recently (phase II) with an emphasis on institution building and formulation of strategies. Since 1986 support has been given to the national leprosy programme which aims at eradication of leprosy.The Danish contribution addresses administrative, training and patient treatment needs, mainly by way of introducing and trying out on a limited scale innovative methods. Since 1996 the national polio and tuberculosis programmes have been assisted by Danida. The Danish assistance to the polio programme involves supply of vaccine and equipment and support to the establishment of a monitoring system. In the tuberculosis programme the (much smaller) Danish contribution will assist implementation in a number of largely tribal ('adivasi') districts of Orissa. Apart from these major interventions there has been a number of smaller projects in the health sector, many implemented through NGOs. Water and Sanitation Total appropriation: 823 mill. DKK (1980-2000). In the 1980s and 1990s there have been Danida-supported rural drinking water projects in Orissa, Madhya Pradesh, Karnataka, Tamil Nadu and Kerala. Most of the projects have been through more than one phase, and the Karnataka and Tamil Nadu projects have just entered their third phase. In the first phase the projects concentrated on the supply of drinking water, either through hand pumps or piped schemes. Sanitation components were added later and at the same time more effort was devoted to the maintenance of the water schemes. The third phase projects aim at strengthening the role of local government institutions (under Panchayati Raj) in planning, monitoring and maintaining drinking water and sanitation installations. The new country strategy envisages that in the future Danish support will also be offered for the supply of drinking water to some towns. The Karnataka project has been assessed under this study. Future Sectoral Composition The 1997 country strategy envisages an annual 'country frame' around 200 mill. DKK, but growing from 1997 to 2001 as can be seen in the table below. The sectoral composition planned is as indicated in the table overleaf. It can be seen that health will remain the largest sector, but with a declining trend from roughly half to one third of the total. At the end of the five-year period agriculture and water & sanitation will each account for one fourth of the total. In principle all assistance under the country frame is supposed to contribute to poverty reduction and this of course is to be commended. Outside the country frame, there will be Danish financed activities under the private sector programme, mixed credits and ventures supported by the Industrialisation Fund for Developing Countries. These may occasionally contribute to poverty reduction, but that will be more coincidental and generally not the case. Planned sectoral distribution of Danish aid, 1997
Source:Landestrategi Indien, Danida 1997. On the whole the choice of sectors is conducive to the pursuit of a direct poverty reduction strategy. In the health and water sectors, there is a great potential to aid the poor; the experience so far has generally been positive, but it is not entirely clear how great weight poverty considerations will be accorded in the interventions to be supported in the future. Some concrete interventions are planned so as to also accommodate Danish business interests, e.g. delivery of cooling equipment and vaccine for the big polio programme or the movement from rural to urban contexts of part of the future support for water & sanitation. Selection of environment & energy as a sector of growing importance in the future is also linked to business interests - in addition to the ecological concerns. Although some interventions here no doubt will also benefit the poor, it is likely that the greater part of the planned interventions in this sector will be of doubtful relevance to the poor (e.g. wind energy, industrial pollution, environmental master plan). In the agricultural sector it is not clear how strong the emphasis on reaching the poor will be (e.g. in watershed projects or in support to grain storage). But of course the agricultural sector is tremendously important for poverty reduction and much will depend on the design and implementation of the planned interventions. State Apart from limited contributions to national (all-India) programmes - especially in the health sector - most Danish aid through the 1980s and 1990s has been concentrated to four states, Tamil Nadu, Karnataka, Orissa and Madhya Pradesh. Of these the two former are in the middle and the two latter near the bottom in terms of per capita income among the major Indian states. The decision to concentrate further to only two states, namely Karnataka and Madhya Pradesh, in the new country strategy was the most controversial element in the process leading to the adoption of the strategy. The Danish embassy felt that although there would be likely effectiveness and efficiency gains from further concentration it would also be very painful to pull out from states where Danida had been present for many years and was still heavily involved. The selection of Karnataka and Madhya Pradesh can be seen as a compromise between lofty ideals and more mundane interests. There was considerable internal discussion between the embassy and Danida head quarters over whether it would be more appropriate to select Orissa and Madhya Pradesh as the priority states in the future. This was based on the fact that these two states are much poorer than the other two priority states. In Karnataka per capita income is 50 percent higher than in Orissa and in the latter there is a large proportion of 'adivasis' (very poor 'tribals') which has increasingly become a target group for the Danish aid. In favour of choosing Madhya Pradesh and Orissa would also be the fact that they are contiguous and that this would open up possibilities of working across the border in poor regions of both states. In favour of Karnataka it was argued that a vigorous implementation of the Panchayati Raj in this state provides a good context for Danish support, and this argument is not without merit. But in that connection it is interesting to note that the recently initiated second phase of the Watershed Project in Karnataka does not at all involve the Panchayati Raj institutions. An interesting aside to this discussion is that James Manor in a paper with similar arguments had recommended that Swedish assistance in the future be concentrated to precisely Madhya Pradesh and Karnataka (Manor, 1997) - a recommendation which was not followed. But it has probably been a good deal more important that Karnataka - and in particular the capital, Bangalore, widely projected as a dynamic city, the new electronic software capital of India - is much more interesting than Orissa from the point of view of Danish business interests. A Danida private sector adviser has been stationed in Bangalore since 1993 and several Danish firms are either established or on their way. The projects Danida has supported in Karnataka and Orissa up to now are in many ways similar: drinking water, watershed, training of farm women, livestock. In terms of targeting the poor most of the projects in Orissa have been superior to those in Karnataka. But it has been a great deal more difficult administratively to work in Orissa than in Karnataka. This, however, in itself is a reflection of the fact that Orissa is poorer and generally less developed than Karnataka. So from a poverty reduction perspective it must be criticised that Karnataka was preferred to Orissa.
Donor/Recipient Dialogue The opinion in the Danish embassy is that too little is done both at Union Government and State levels concerning poverty reduction. The Danish Ambassador expressed the view that by and large the policies are quite good, but implementation is the big problem. According to him one of the main purposes of development aid is to influence implementation methods. The existence of the various IRDP, employment, etc. programmes as well as the public distribution system of food (fair price shops) is acknowledged as relevant for poverty reduction, but insufficient. It should be noted, though, that more is done in India than in most African countries. In the negotiations between Danida and the Indian government poverty reduction is entirely pushed by donors. The same applies to other concerns such as gender and participation. The annual bilateral aid talks are very formal. They review the status of the programme sector by sector and project by project and address specific problems. But there is hardly any policy dialogue involved. It has already been mentioned that the new country strategy was a completely donor-driven affair. The Danish Ambassador views policy dialogue as difficult. What is needed is essentially a 'no objection certificate'; dialogue will be there at all levels during implementation. A MoF/DEA representative essentially said the same: 'There is no need to quarrel with donors - since taken together they more or less cover the whole'! However, during the annual talks issues of concern can be taken up by both sides. Recently the Government of India side has voiced concern over the money spent outside the agreed 'country frame'. The Danish side on the other hand has criticised the 'lend on' system which passes Danish grants on to the States as 70 per cent/30 per cent loans/grants. Like other donors Danida has pushed hard in order to be able to deal directly with the states, i.e. bypassing at least the line ministries in Delhi and to some extent even the Ministry of Finance. A concerted effort was carried out at the recent 'India Development Forum' meeting in Tokyo (September 1996), but this is strongly resisted by the Government of India. The donors cherish the idea of a less bureaucratic approach. The Government fears to lose control and also argues that in dealing directly with the states the donors may end up spending more money than warranted. There is also an understan dable fear that development aid may become even more lopsided in its distribution if donors are allowed to deal directly with their 'pet' states. Even so the central grip on the flow of money is being loosened. In this respect there are differences between the sectors and line ministries. The health sector is relatively centralised, and Danida has for many years had a fruitful dialogue with Indian health officials at the Centre. In agriculture it is felt that it would be a lot easier to interact directly with the State departments. In 1996 the Ministry of Finance organised meetings on a sector basis with the respective line ministries and State departments plus Danida.
Organisational Structure and Personnel Compared to other donors Danida's administrative set-up is somewhere in the middle regarding the division of labour between headquarters (Ministry of Foreign Affairs, South Group, Copenhagen) and the embassy. It is not as decentralised as ODA/DFID but much less centralised than the EU or BMZ/KfW/GTZ. Policy guidelines are worked out in Copenhagen and the embassy evidently is subordinate to headquarters and receives its instructions in all matters. However, the embassy has the initiative in many areas as well as responsibility for implementation. If used properly this can entail a great deal of influence both on decisions and actual outcomes. The new country strategy, for example, was drafted in the embassy, but the final version was obviously approved in Copenhagen. In aid policy matters the Ministry in Copenhagen (and ultimately the minister) has the final say - as in the case of state selection. Viewed from the embassy the process was too centralised, for instance it had no part in the dialogue with the Danish 'resource base'. In terms of personnel there are 4-5 Danish development counsellors in the embassy with aid administration as their primary responsibility and organised on sector lines. In addition there is an almost similar number of Indian professional staff. The Deputy Chief of the embassy is chiefly responsible for development, but the Ambassador himself is both overall responsible andpersonally committed to development cooperation (after a long and distinguished career in Danida). On the whole development cooperation is by far the largest item on the embassy's agenda and weighs heavily in terms of manpower needs. A special feature of the Danish set-up is the large number of advisers spread in all the states where Danida supports projects. There is a total of about 35 advisers out of whom about half are expatriates, mostly Danish, but also some from the Netherlands. The rest are Indians on Danida contract. In some of the projects there is a complement of three advisers, i.e. a chief adviser, a technical adviser and a socio-economic adviser. In other projects there is just one adviser. The pros and cons of this set-up will be discussed under 5.6. Here it suffices to note that in comparison with most other donors - and in relation to the relatively small size of the Danish programme - Danida has a very well developed administrative capacity, especially based on its large field presence, but also the embassy staff. Even so there is a 'disbursement pressure' on everybody which tends to work against the preference for a fairly large number of not so big, but administratively complicated projects. This occasionally leads to including a big and (relatively) uncomplicated venture such as the support for the national pulse polio programme which Danida initially turned down - in order not to prejudice its future strategy - but subsequently agreed to support. Another special feature of the organisational structure is the existence of one or more special sector units inside or outside the embassy. In the past there has been such units in health and drinking water. At present there is a 'Watershed Development Coordination Unit (WDCU)' outside the embassy which was started about three years back. Its main staff is a Danish programme coordinator and two highly competent Indian specialists (one more technical and the other socio-economic). It plays the major role in administering Danida's watershed projects, but it also has to refer to the embassy. In the initial stages it has proved very difficult and frustrating to establish the division of labour and the required collaboration between the embassy and the WDCU. The advantage in having such a unit is that it unites technical, socio-economic and administrative expertise in an area which has been one of the high profile areas in Danida's as well as several other donors' programmes. It has also been envisaged that this unit could take care of donor coordination, so that Danida would become the lead agency in the sector, but so far there have been no resources to pursue this. And on the whole the amount of time that has been spent on procedural and practical problems, personal backbiting, etc. is so great that it has put a question mark on its viability and replicability. Recently, however, it has started functioning better. |
