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
    +17

    Comment number 29.

    Aid can be given in many ways, so we should always be there to help India. India is an important friend, and the bonds between our two countries should not be broken. So aid is given because there are many very poor people and it is them we seek to help. But our support should not in anyway be a substitute for the internal funding from their own economic resources. Aid is about sharing.

  • rate this
    +78

    Comment number 28.

    Ok. We have a long and complex history with regard to India. I can just about get my head around why we still supply some aid to India,
    So can anybody explain why we are (from the list of 16 countries that the UK gives aid to in an appreciable way issued by the FO) giving aid to CHINA??!

  • rate this
    +4

    Comment number 27.

    Whilst I can understand this action on the basis of the Indian economic explosion, having witnessed at first hand the terifying, deeply pervasive poverty of many rural areas, I fear for many Indians. The Indian government really has to get a grip and work on social justice and against corruption in order to bridge a rich-poor divide, that we in the west just do not appreciate the magnitude of.

  • rate this
    +4

    Comment number 26.

    Aid is a good thing for countries that really need it and can't generate enough revenue. As one of the BRIC countries India are now generating enough wealth to support their own programmes and like Brazil no doubt their economy will overtake ours soon so it would be unjust for the Indian government to take our tax money to help their poor when they're busy sending rockets to the moon, etc.

  • rate this
    +7

    Comment number 25.

    It is about time. If the Indian government can afford a space program, they clearly don't need aid from us.

  • rate this
    +8

    Comment number 24.

    There is plenty of poverty for vast majority of Indians. The problem is Indian government chooses to spend the country's money on space program and nuclear weapons instead of its people so why should they recieve any aid.

  • rate this
    +3

    Comment number 23.

    Why wait till 2015...we need the money NOW!

  • rate this
    -190

    Comment number 22.

    I think we should give aid because the plight poor people gets ignored and people still live in unsanitary conditions, even though there is a lot of wealth in India and, yes, they have a space programme and have nuclear weapons.

    The aid should be aimed promoting health, well being and the helping the poor.

  • rate this
    -1

    Comment number 21.

    I think this is the right decision but let's avoid the knee-jerk reaction of "end all foreign aid and spend the money here" - I think it is to this government's credit that foreign aid to those who are far more in need than we are in the UK has continued through the troubled economic times

  • rate this
    +74

    Comment number 20.

    I think any country that is wealthy enough to fund fantastic stuff like a space programme doesn't need aid. This is good news indeed.

  • rate this
    +1

    Comment number 19.

    My word was not even aware we are supporting a BIG country like India, I am sure the money will be distributed to other more needy countries or you might find an increase so some countries we already support. Being from Africa it will not surprise me if more in pumped into this continent

  • rate this
    +4

    Comment number 18.

    Not a moment too soon. India does still have its issues, including depressing poverty but it is perfectly capable of solving them on its own. The people who have the power and money just don't want to share it - that's not something we are going to solve by throwing more money we don't have at the problem. India doesn't need our help and hasn't done for quite some time.

  • rate this
    +7

    Comment number 17.

    How will they fund their Space Program and Nuclear arsenal?

    It is about time though, British people have lost their jobs after they have been out-sourced to this country and we are still giving them hand-outs.

    The government seem to be doing everything but sorting out the Corporation tax issue.

  • rate this
    +3

    Comment number 16.

    Bill Gate spent billions for good causes, Indian Trillionier billionaires millionaires now should spend some of their cash for good causes in their own country.In a visit in India in 2008 three malnourished people approached for few coins, the guide said these are nuisance just ignore.This is perhaps the general notion of the better off to other lesser off human beings, all created by God.

  • rate this
    +3

    Comment number 15.

    Do we now start asking for aid from India seeing as a lot of our workers are losing jobs to them?

  • rate this
    +110

    Comment number 14.

    Why wait until 2015?

  • rate this
    +241

    Comment number 13.

    Why wait? India is a wonderful country with a strong economy and even stronger culture that already can stand on its own two feet. Stop this now and put the £200 million into the NHS.

  • rate this
    +1

    Comment number 12.

    This does make perfect sense in terms of the growing economy but the Indian govt does need to address the issues around poverty and living conditions for a large number of it's population. I hope this doesn't impact on the most vulnerable as we so oftern see.

  • rate this
    +41

    Comment number 11.

    Maybe it's time they give us some aid

  • rate this
    +171

    Comment number 10.

    A good move by the Government. If we must send aid overseas, lets target the nations that have a dire need for aid and not those who believe space and nuclear weapons programmes are more important than dealing with abject poverty on their own doorstep.

 

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