UK to end financial aid to India by 2015

 

International Development Secretary, Justine Greening: "India is very successfully developing as an economy"

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The UK is to end financial aid to India by 2015, international development secretary Justine Greening has said.

Support worth about £200m ($319m) will be phased out between now and 2015 and the UK's focus will then shift to offering technical assistance.

Ms Greening said the move, which will be popular with Tory MPs, reflected India's economic progress and status.

Giving his reaction, India's foreign minister Salman Khurshid said: "Aid is the past and trade is the future."

But charities described the move as "premature" and warned it would be the poorest who suffered.

Until last year, when it was overtaken by Ethiopia, India was the biggest recipient of bilateral aid from the UK, receiving an average of £227m a year in direct financial support over the past three years.

But the UK's support for India, one of the world's fastest-growing economies, has been a cause of concern among Conservative MPs, many of whom believed that the UK should not be giving money to a country which has a multi-million pound space programme.

Ministers have defended the level of financial help in the past on the basis of the extreme poverty that remains in rural areas and historical colonial ties between the two countries.

Ms Greening has been conducting a review of all financial aid budgets since taking over the role in September and visited India earlier in the week to discuss existing arrangements.

'Changing place'

She said the visit confirmed the "tremendous progress" that India was making and reinforced her view that the basis of the UK's support needed to shift from direct aid to technical assistance in future.

Analysis

The announcement that the UK is scrapping aid to India has been long expected and will not have come as a surprise to the Indian government.

UK International Development Secretary Justine Greening was in India early this week to meet senior Indian government officials who were briefed on the move.

India has long held the position that while it welcomes financial aid from overseas from those who choose to give it, it will never actively seek it.

The move is also a recognition of India's economic transformation.

It's now the third largest investor in the UK and the largest market for British goods outside the EU.

But much of the UK aid money was used to fund projects in some of India's poorest areas and some will worry that those at the receiving end could suffer.

"After reviewing the programme and holding discussions with the government of India, we agreed that now is the time to move to a relationship focusing on skillsharing rather than aid," she said.

"India is successfully developing and our own bilateral relationship has to keep up with 21st Century India.

"It is time to recognise India's changing place in the world."

Although all existing financial grants will be honoured, the UK will not sign off any new programmes from now on.

Last year the UK gave India about £250m in bilateral aid as well as £29m in technical co-operation.

By focusing post-2015 support on trade, skills and assisting private sector anti-poverty projects which can generate a return on investment, the UK estimates its overall contribution will be one-tenth of the current figure.

In making the decision, the UK is citing the progress India has made in tackling poverty in recent years. It says 60 million people have been lifted out of poverty as a result of the doubling of spending on health and education since 2006.

India spends £70bn on its social welfare budget, compared with £2.2bn on defence and £780m on space exploration.

'Premature'

From 2015, development experts will continue to work alongside the Foreign Office and UK Trade and Investment but focus on sharing advice on poverty reduction, private sector projects and global partnerships in food security, climate change and disease prevention.

Emma Seery, Oxfam: "A third of the world's poorest people live there [in India]"

Save the Children said it believed the decision to end financial aid was "premature".

"Despite India's impressive economic progress, 1.6 million children died in India last year - a quarter of all global child deaths," Kitty Arie, its director of advocacy, said.

"We agree that in the longer term, aid to India should be phased out as the country continues to develop, but we believe that the poorest children will need our ongoing help."

After 2015, the UK should also support Indian non-government organisations to tackle child mortality and improve health provision, it urged.

'Hitting the vulnerable'

Labour MP Keith Vaz, a former chair of the Indian-British parliamentary group, said the government needed to reassure its Indian counterpart that their bilateral relationship was still a priority.

"Although undoubtedly India has progressed in the past 20 years, there are still an estimated 360 million people surviving on less than 35 pence per day," he said.

"In withdrawing our aid to India, which will clearly only affect the most vulnerable, we need to see the minister's plan for how she will work with other organisations to make sure the gaps we are creating will be filled."

War on Want, which campaigns to end global poverty, said aid should not just stop because India had become a middle-income country.

Financial support needed to be "smarter" and geared towards supporting "progressive movements" capable of bringing about political change and tackling growing inequality, the pressure group said.

The UK government is increasing the overall overseas development budget to meet a longstanding international commitment to spend 0.7% of national income on aid.

At the same time, it wants to re-align its expenditure to focus on the poorest countries and those scarred by recent conflict.

Bar chart showing top five recipients of UK bilateral aid for the past three years
 

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  • rate this
    +131

    Comment number 948.

    Can't believe the people on here saying that we should still give aid to India. Maybe they do have povety - well let them sort that out. Like many people, I work in a company that is laying off hundreds of staff and outsourcing to India. Their economy is growing. We need to look after our own people first, i.e. the ones out of work due to India offshoring!

  • rate this
    -60

    Comment number 908.

    India is home to a third of the world's extreme poor. Shifting the focus away from poor people is not the answer in the short-term.

    To cut aid as a short-term political decision aimed at earning popular support rather than being based in the realities of the development needs of people living in abject poverty.

  • rate this
    -76

    Comment number 837.

    This is a giant step backwards.
    Having spent time in Southern India it is obvious that the wealth of the country does NOT sufficiently trickle down to those who need it most. Until there is universal primary education, safe water for everyone, sanitation and health care this decision will remain morally abhorrent.

  • rate this
    +92

    Comment number 786.

    As an Indian I would like to thank the UK for the aid they have provided so far. But it is a good decision to stop the aid. Not because India today has no poor people or UK cannot afford it; Not because India is the 3rd largest investor in UK or it has space program or nuclear weapons... but because India of today is confident enough to help herself. UK's best wishes are enough. No aid required!

  • rate this
    -212

    Comment number 114.

    I am dismayed by some of the comments on here.
    Poverty in the UK is no where near what poverty is like in countries such as India.
    Just because there is a economic down turn we shouldn't forget our responsibilities in giving aid.
    I suggest people who think they are in poverty in uk move to one of the 3rd world countries the UK give aid to and feel what real poverty is like.

 

Comments 5 of 13

 

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