‘We are going to be limited to working in the health sector’

‘We are going to be limited to working in the health sector’

New Delhi:The US Agency for International Development (Usaid) will limit its activities to the health sector and phase out programmes in education, energy, infrastructure and other areas after Washington, DC, said it expects to cut development aid to India by almost one third to $81 million (about Rs338 crore), citing India’s strong economic growth and shift to a donor nation.

George Deikun, the agency’s mission director in India, spoke to Mint recently on the sidelines of an event to announce a new partnership with the India Infrastructure Initiative (III), for which the second-largest foreign development agency operating here will provide mainly technical assistance and small amount of funding. Edited excerpts:

Washington recently cut development aid to India by nearly one third. What will that mean for programmes on the ground here?

It means we are going to be limited to working in the health sector. Activities like you’ve seen today in the capital markets area, in energy efficiency, in improvement in the quality of basic education, workforce development, disaster management are zeroed out once the pipeline dries out, which will be sometime in our fiscal year ’08 and for some fiscal year ’09, but no new funding as of 1 October in those sectors. Our programme will still be robust, in the areas of health, HIV/AIDS prevention, treatment and care, maternal child health, polio eradication, some work in the tuberculosis area and reproductive health activities in Uttar Pradesh.

Will there be any kind of a geographic shift or will resources move from place to place? Will support for anything increase?

We will continue our work in the health sector where we are now currently working, which is the areas of maternal and child health care in the North Indian states, reproductive health in Uttar Pradesh. The HIV/AIDS work is concentrated principally in the southern states. We’re now currently involved in Tamil Nadu and Maharashtra. In Karnataka we launched this year a major programme in HIV/AIDS. We also do some work in Andhra Pradesh and are starting to look at Kerala. We will continue those commitments. With (US) President (George) Bush’s doubling of Pepfar (President’s Emergency Plan for AIDS Relief) funds, we’re hoping India may even get some additional funds that would allow us to expand our HIV/AIDS work into the North-East states.

How important are public-private partnerships like the tie-up with the India Infrastructure Initiative going to be?

It’s not only from an institutional point of view an important strategy for Usaid, but it’s really what India needs now. The country has got a public sector that really is trying to define its role in terms of policy and regulation and is really looking to the private sector to make up the gap in both social development and infrastructure. Being able to forge these public-private partnerships is essential in terms of where India is heading with its economic growth. It’s also important for us because we are seen as providing real value-add in terms of policy and technical assistance. We’re helping to facilitate the transfer of management practices from American institutions and our Indian partners are providing some of the costs of that. In fact, our programme is currently leveraging at $4 for every $1 we invest here, and that includes the health sector.

How do you balance concerns on making a “bankable," financially viable project that also benefits and reaches those below the poverty line, which is one of the stated aims of Usaid?

One of the problems in India, and not just in India, is that the poor pay for services and pay more than middle or upper class people. They are coping with getting electricity and water and vying for sanitation for their own needs without support from institutional programmes. There is a purchasing power there. The whole question is, how do you reach that in an affordable way? The issue of tariff structures is a political issue here.

I think sometimes governments and policymakers aren’t aware of how much people really are spending trying to get those services when programmes that politicians are trying to sponsor don’t get realized. People are going to get those services. They are paying for them now. The question is, how do you get them in the most effective way? The economies of scale of doing formal infrastructure programmes are so much greater than each individual family trying to solve its own service needs.

Usaid supported what was considered a fairly successful programme in Tamil Nadu that helped small and medium-sized bodies improve their bookkeeping and financial governance. A recent survey found the state of finances in many smaller towns to be lacking, in some cases severely lacking. How much does this weigh on the ability to attract financing?

If a state doesn’t keep track of its own finances through a modern system, it’s going to be hard to gain the confidence of an investor that a project they are paying for through a stake or a bond or some other format is going to get serviced well or managed well. So, it is an issue. That’s really one of the value-adds of the Triple I initiative. It’s not depending wholly on the state to try to put a project together but producing a fiscally disciplined programme for the state, hopefully factoring in some of the limitations that the state has in its own management capacity in terms of how it deals with that project. We were just talking before the launch and we were hoping that some states will come forward and recognize that they need even private sector on the management side. Some states are looking at private contractors very seriously because they recognize their own limitations. Those kinds of activities could really be carved out of financial planning and management undertaking and isolated from some of the problems.