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
    +1

    Comment number 49.

    Please read the article properly - aid is to be 'cut by about £200milliion'!!! This is not the aid we give, which they are clearly afraid to vocalise, it is the level it will be cut to. This hangover of Empire needs to end full stop right now. Huge swathes of 'Great' Britain are now impoverished! The actual impact of domestic cuts on the BBC 4 documentary at 9pm last night made me want to weep.

  • rate this
    0

    Comment number 48.

    Why just India? Surely ALL foreign aid should be stopped!
    It isn't the responsibility of the UK to bail these countries out.
    Charity begins at home

  • rate this
    +77

    Comment number 47.

    As an Indian (and now British), I must say thank to the UK for the support all these years. I don't know how much it was well spend but the intention was noble. And I am sure whatever cause it was spend on, it must have made a difference.

    I am sure, in future both the countries will help each other to overcome their problems.

  • rate this
    +2

    Comment number 46.

    LONG overdue.

    End it now and use the money to help our young, our elderly, and to keep the domestic violence shelters open.

  • rate this
    +4

    Comment number 45.

    @23 davetee - the money is not going to come to the UK, it's simply going to be allocated to other countries who are more needy. India has a massive economy, they need to sort out the distribution of wealth and fix their caste system but don't need our aid. Think of aid as both assistance and an investment - the country can develop and may become a future trade partner so good for all involved.

  • rate this
    +4

    Comment number 44.

    A country that has a nuclear programme, a space programme and its own third world aid programme doesn't need aid from us. Why wait until 2015, though?

  • rate this
    +25

    Comment number 43.

    Sensible. There are vast differences in equality in India, but also the internal and self-generating wealth to remedy these. As others have pointed out, the country maintains a nuclear weapons program, and also gives out overseas aid of its own. Also - it will soon have a larger aircraft carrier fleet than the UK:

    http://en.wikipedia.org/wiki/List_of_aircraft_carriers_by_country#India

  • rate this
    +2

    Comment number 42.

    I hope there are a few more aid cuts. Charity starts at home, we should cease all foreign aid until our own debts are cleared. Who is going to give aid to Britain when we become insolvent? How many people are in poverty in the UK? The next stop should be cutting all monies/aid to Brussels, then Pakistan. Being a good country and helping others at the expense of our own people is not wise.

  • rate this
    +2

    Comment number 41.

    Disgusted that foreign aid continues at all.

  • rate this
    +5

    Comment number 40.

    There's a difference between having strong ties with a country and giving them aid. Whilst we should maintain a good relationship with India, we should not be giving them money. The aid should stop now.

    Poverty in India is more to do with the improper distribution of wealth, as opposed to a lack of resources overall. This is in common with all countries enslaved by capitalism.

  • rate this
    +3

    Comment number 39.

    I'll support "Foreign Aid" when said Countries Leaders stop
    syphoning off Millions straight into their bank accounts.

  • rate this
    +3

    Comment number 38.

    What about the hidden aid that allows companies with Indian subsidiaries to bring in IT personnel with little or no formality to displace and undercut UK base staff ?

  • rate this
    +3

    Comment number 37.

    @23 and others - The money won't be coming here, the Govt has committed to spending 0.7% of GDP on overseas aid. The money currently given to India will go to other countries, lets just hope that the Govt do it wisely (not something I'm convinced about)

  • rate this
    +14

    Comment number 36.

    Nuclear capabilities.... Space program...... Enormous private wealth...... Aid should have been stopped long ago to force Indias elite to take a look at what they are doing to their poor.

  • rate this
    +4

    Comment number 35.

    india has some of the richest people in the world (source: wiki) they have nuclear weapons yet more than half the country people are living in poverty, children are uneducated and under fed and working.

    it is disgusting that they are not doing anything to help their own people and stopping aid is long overdue as there is no evidence the people who need it are benefiting from it

  • rate this
    +5

    Comment number 34.

    UK Govt mishandled this very badly. UK knew it would have a bad press in India, whatever it did. It should have therefore taken one hit, when the FM (now President) derided the aid as 'peanuts', and moved on, in a mature fashion. This is what India is now pretending, after embarrassing UK, and says India wants 'trade not aid". Sure poor Indians will suffer, but they must fight their own Govt.

  • rate this
    +6

    Comment number 33.

    About time we suspend or stop ALL foreign aid. The quicker we rebuild our economy the sooner we'll be in a position to help those who genuinely need it.

    Have you seen the Indian Navy? We're scrapping ships at an alarming rate while they're building state of the art warships.

    Mad world...

  • rate this
    +15

    Comment number 32.

    Good grief some common sense from politicians at last.
    There are enough millionaires and billionaires in India to do something about the poverty in India (assuming they even want to). It is not the responsibility of the UK taxpayer.

  • rate this
    +3

    Comment number 31.

    Imagine the number of immigration officers you could hire with the kind of cash this would free up...

  • rate this
    +4

    Comment number 30.

    I suspect much general aid is the result of ongoing 'post-colonial' guilt-an African leader recently maintained that it was our obligation. This hypocrisy stinks when most aid is either diverted into corrupt leaders' pockets or takes the form of armaments. Those in real need seldom see much benefit-unless it is through church and similar charities.
    Time to stop this waste now.

 

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