Leading article: UK support has a role, but must be targeted at the poorest

India's private sector miracle has not yet reached some of its most deprived areas

It is madness, on the face of it, for Britain to send large amounts of aid to India, a country which has a space programme, a sizeable defence budget and an economy growing at 8 per cent each year. And the observation is underscored by the recent decision by the Indian government to lower the poverty line so that fewer people in the country are officially classed as poor – and thereby qualify for state-subsidised food and fuel. But although Indian government statistics put a third of the population below the poverty line, reports from elsewhere, including the World Bank, suggest the figure is far higher.

There also are other factors to consider. In the past it was easy to split the world into rich and poor countries. Today, the dividing line is less clear. Most poor people do not, paradoxically, live in poor countries; they live in middle-income economies. India is a prime example. Its private sector miracle has not yet reached some of its most deprived areas, leaving more abjectly poor people there than in the whole of sub-Saharan Africa put together. Notwithstanding the surge in India's headline economic growth, its poorest states – each one with a larger population than most African countries – still face huge development challenges.

Measured by indicators such as malnutrition and maternal mortality, the bulk of people in India still live in extreme poverty. More than half of girls in Madhya Pradesh do not go to secondary school; more than half of the young children in Bihar are undernourished. Such are the places where British aid is targeted, helping vulnerable groups such as Dalit women standing up to caste discrimination.

The question marks over aid to India go to the heart of a larger debate. In part, the purpose of aid is strategic, to maintain good relations with a nation which could become a major trading partner as its economy grows. In part, it can be a lever to persuade recipient nations to improve their human rights record. But in the main – thanks to a welcome revolution in development policy in recent decades – aid is focused on the genuine alleviation of poverty. That means helping poor people, not poor nations. In India, for example, British aid supporting childhood health and vaccine programmes has brought about the virtual eradication of polio.

The aim of recent reforms to Britain's aid programme has been to pick the places where our money can have maximum impact. It is a largely successful strategy, albeit one that throws up the conundrum that best value for money is often achieved in states which are more developed rather than less.

But even within the modern, less dictatorial approach, there is room to hold governments of recipient countries to account. In India's case, for example, Britain's aid to the poorest people should not allow the Delhi government to withdraw its own support for social programmes in order to fund its defence or space ambitions. Only close monitoring can ensure our actions do not leave recipient countries' poor less well off than before.

Ultimately, aid policymakers are trying to put themselves out of a job. In due course, recipient countries will pay for the programmes to help their poor. British aid can prepare the ground, helping poorer states to unlock funds from the private sector, for example, and reinforcing the impact of India's own programmes. The second stage is to focus on projects that empower civil society groups to act as monitors and watchdogs on the performance of their own government. But that is still some way off. And until baseline development indicators on health and education have been met there is a clear role for a British aid programmes to help the world's poorest people wherever they live.