Situation and cooperation

An Indian school girl in a slum in Delhi

India is a country of extreme contrasts. For all its booming metropolitan centres such as Mumbai, New Delhi and Bangalore, around 30 per cent of the country's population, i.e. around 400 million people, still live on the equivalent of less than 1.90 US dollars a day. Around 15 per cent of Indians are malnourished and 15 per cent of children under the age of five are underweight. Child mortality is higher in India than in the neighbouring countries of Nepal and Bangladesh, both of which belong to the least developed countries in the world. Although the 2016 Global Hunger Index no longer classifies the situation in India as "alarming" but, rather, as "serious", there are still more chronically undernourished children there than anywhere else in the world. More than a third of all children under five are affected by stunted growth.

Public spending on education and health is still insufficient to meet the needs of the entire population. The services offered are also often of poor quality. As a consequence of these poor educational services, about a quarter of the adult population is illiterate. There are also shortcomings in the country's infrastructure. For example, some 280 million people in India live in homes with no electricity, around 790 million have no access to sanitation.

Conflicts and protest movements

In multi-ethnic India, conflicts – some of them violent – are continually flaring up between various states, ethnic communities, religious faiths, political groupings and castes.

In the past few years, governing politicians have been repeatedly confronted with mass demonstrations launched by the relatively young urban middle classes.

Although gender equality is enshrined in the constitution, girls and women are still very vulnerable in Indian society. While their access to educational and health facilities has improved significantly, in many families there is still a bias towards the male members when it comes to the apportionment of food, medical care and education. Violence against women is a common occurrence.


Pharma manufacturing in Bangalore, India

Over the past twenty years, India has seen stable economic growth. In some fields – for example, information technology, pharmaceutics, space flight and biotechnology – the country is now a global leader.

However, the majority of the population has not shared in this positive development. Therefore India's government, adopting the slogan of "inclusive growth", wants to find ways of ensuring that a considerably larger proportion of the population benefits from the favourable macro-economic situation. To achieve this, it wants to get the country's gross domestic product to grow by more than eight per cent annually over the next few years. In recent years, India's economy failed to reach this target but in 2015 it recovered to reach 7.9 per cent.

To revitalise the economy, the government had introduced a number of legal reforms in 2012 and 2013. Among them were measures to open up the country to more investment from abroad and to simplify approval processes. After several years of caution and stagnation, foreign direct investments reached a new record high of 40 billion US dollars in the year between April 2015 and March 2016. The introduction of a new standardised value-added tax, decided as part of a wider tax reform in 2016, should also provide a new impetus to the Indian economy.

The Hindu-nationalist Bharatiya Janata Party (BJP), considered to be pro-business, won a clear victory in May 2014 and has governed since then with an absolute majority in parliament. The new government headed by Narenda Modi is continuing to pursue reforms and, moreover, is speeding up efforts to produce an investment-friendly climate. However, the stronger focus on improving the investment climate brings with it the danger that environmental and social standards will be undermined.

What is needed to reduce poverty in India are a great many new jobs – in particular for unskilled and low-skilled workers. From a government point of view, this would be easiest to achieve in the industrial sector, in particular in manufacturing.  According to government figures, only around five per cent of the working-age population have a professional qualification. For the up to 12 million young people joining the labour market each year, there are to few places in vocational training and most are of low quality.


Indian agriculture is mainly geared towards self-sufficiency. Due to population growth, cultivated areas are shrinking in many regions, and more and more people no longer have land of their own. Many smallholders are severely over-indebted.

Increasing soil degradation and the considerable impacts of climate change bring further potential for conflict. According to government figures, one third of India’s land surface is already affected by soil erosion and desertification. Existing models for global climate change suggest increasing fluctuations in temperature and precipitation on the Indian subcontinent. Droughts and floods could increase further in future and, as a result, so will conflicts over scarce resources, i.e. water and land.

The government has stated that it wants to reduce the income disparities that exist between people living in urban and in rural areas. Higher yields are to be produced in the agricultural sector by improving methods of cultivation and processing. In addition, in rural regions, new jobs are to be created in non-agricultural sectors.

Environmental degradation

People searching for recyclable goods at a rubbish dump in Puri, India

India's rapid economic development and its high consumption of raw materials are causing ever greater environmental problems. The air quality in India's conurbations is among the poorest worldwide; the country's waterways are very polluted; and, in many parts of the country, there are no proper systems of waste disposal or wastewater management.

Although India does have environmental legislation, these laws are often not enforced because there is a lack of clearly defined responsibilities and financial resources as well as of competence at the local level. Whether and to what extent India manages to turn its economic growth into 'green growth' will have a considerable impact on the country's sustainable development and on the global climate.

Priority areas of German cooperation with India

Indo-German development cooperation is based on mutual trust and has been highly successful. It has now developed into a purposeful dialogue between equal partners.

German cooperation with global development partners such as India focuses less on local projects and more on structural programmes. These programmes build on India's own efforts and reform programmes. They demonstrate model solutions and qualify the participating partners to continue and expand the projects independently.

For 2016, Germany provided new funds of around 1.1 billion euros to India, as part of the two countries' development cooperation. Of this, over one billion euros was allocated to Financial cooperation and 29 million euros to Technical Cooperation. The lion's share of the financial cooperation funds are being provided as a loan at near-market conditions, to be paid back with interest by India.

The following priority areas were agreed:

  • Renewable energy and energy efficiency
  • Sustainable urban development
  • Environmental and resource protection

In addition, India is part of the BMZ special initiative ONE WORLD – No Hunger. Germany is supporting a Green innovation centre and measures to prevent soil degradation and increase food security.

Renewable energy and energy efficiency

Power lines in New Delhi, India

In India, there is a large gap between supply and demand in the energy sector. Energy consumption is increasing inexorably, yet most of the existing power generating plants are obsolete and inefficient. Power supply in India – in particular in rural areas – falls well short of demand. This shortage is also severely hampering economic development. And yet, India is already the world's third-largest producer of carbon dioxide emissions, after the U.S.A. and China. The country's economic and environmental policies therefore have a direct impact on the world's climate.

That is why the promotion of renewable energies is central to development cooperation. For example, Germany made available a low-interest development loan, thereby making a major contribution to the financing of a photovoltaic power plant, currently the largest in the world, in the Indian state of Maharashtra. The plant went into operation in late 2013. In October 2015, the German Minister for development, Gerd Müller, signed the German-Indian Solar Partnership with a cooperation volume of one billion euros over five years. The partnership supports the installation of solar panels on roofs and decentralised electricity provision for rural areas through solar power plants.

Other projects involving solar power are to be extended, or new ones launched, in the next few years. Germany is also supporting a hydropower project in the Himalayas. Over the last years, India has significantly stepped up the generation of electricity from renewable energy sources. However, feeding in this 'renewable' electricity into India's overstretched national grid has now hit a choke point. Another sizeable loan provided by Germany is helping India to upgrade its network of transmission lines and construct 'green energy corridors'. These corridors will improve the feed-in of power generated from renewable energy sources into the national grid.

A further important goal is to improve the efficiency of power generation and transmission, as well as generating savings in electricity consumption. That is why Germany is also supporting projects to improve energy efficiency in residential buildings.

Sustainable urban development

A worker on the construction site of the new metro in New Delhi, India

In 2016, sustainable urban development was agreed as a new priority area between India and Germany. At present, about 30 percent of the population live in cities, one quarter of them under bad conditions in slums. In the next 15 years the urban population is to rise to 40 percent. The Indian government has launched numerous initiatives in the area, including the 'Smart Cities Mission' and the Gain Cleaning Initiative.

Germany is involved in the sanitation and management of sewage and waste in households and industry, in urban planning, urban governance and climate-friendly urban mobility. An example of the latter is the project for integrated water transport in the city of Kochi: the revitalisation of traditional water transport means and routes and the integration of the routes into an overall timetable can reduce the amount of other private transport. This reduces traffic congestion, accidents and air pollution.

Environmental and resource protection

India is facing massive challenges with regard to environmental protection in urban and industrial areas. The country also finds itself faced with the need to develop strategies for climate change adaptation and adopt measures for resource protection. It is a matter of national and global importance that India protect the quality of its soil, water and air, and that it conserve biodiversity on the Indian sub-continent. That is why international initiatives such as Economics of Land Degradation (ELD) and The Economics of Ecosystems and Biodiversity (TEEB) are receiving greater attention in the cooperation between India and Germany.

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