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
    +7

    Comment number 129.

    Im normally all for aid in oher countries, but It seems a bit unreasonable that India uses foreign aid to solve the widespread poverty in the country while using its own wealth to fund a space programme.

    I think as a country they need to get their priorities in order and feed their people before they build a rocket.

  • rate this
    +10

    Comment number 128.

    This is the best news I've heard for weeks and should have happened years ago.

  • rate this
    +5

    Comment number 127.

    The UK government has long forgot the oldest family value and that is that "Charity Begins At Home" They should have stopped all aid to everywhere when times got tough at home. Look after your own first and if there is anything left by all means help others. For years they have cut spending for the benefit of our own people whilst giving billions away. National economics should be = to family eco.

  • rate this
    +14

    Comment number 126.

    India choose to fund its own space program rather than address extreme poverty.

    It is not the responsibility of the British to pay for the bad decision made by another country.

  • rate this
    +17

    Comment number 125.

    It needs to stop now, not in two years time

  • rate this
    +3

    Comment number 124.

    "Aid" is newspeak for money. If asked should we give money to country X most people rightly say no. Everybody wants to aid the poor, but giving money, often to governments, is no aid at all.

  • rate this
    -65

    Comment number 123.

    Indians paid taxes for nearly 300 years towards the British Empire and ended up losing parts of its territory during partition. India was treated like a protitute without pay. The British Govt needs to push the Indian govt transparency and corruption. Also can India have the Kohinoor, jewels and tons of gold back. Also compensation for wiping out so much of our wildlife by big-game hunters.

  • rate this
    +18

    Comment number 122.

    Any country which maintains a nuclear arsenal and has a space program whilst the majority of its population don't have access to the most basic of life's necessities does not deserve any aid from us...or anyone else for that matter! Charity begins at home.

  • rate this
    +5

    Comment number 121.

    Giving aid to countries allows us to have a bigger say in the running of other countries, 'back us or we will withdraw our aid payments.' Also, it probably helps to win contracts for British companies,a bit like a bribe. Probably has very little to do with aiding the poor, just good for diplomatic relations and trade.

  • rate this
    +5

    Comment number 120.

    The UK must stop giving aid to ALL other countries that we currently give aid to, immediately! The people of the UK must come first from now on.Giving aid to countries like India is ridiculous.They have enough money to look after their own disadvantaged people.

  • rate this
    +1

    Comment number 119.

    I see a very simplistic view here. Most people assume that if we stop aid then the 'rich' Indian government will pickup the pieces whereas in reality they won't and the people who received any aid will go without.

    I would prefer an approach where UK Govt did not trade with India until they looked after people and stopped discrimination but we continued with aid - hurt the rich not the poor

  • rate this
    +15

    Comment number 118.

    Why stop it by 2015? Why not stop it now? No more aid to India from tomorrow Sat 10th Nov 2012.

  • rate this
    -24

    Comment number 117.

    Many of the celeb obsessed UK public deplore giving aid but seem to have no prob with war mongering? UK spent approx £1billion (£1000,000,000) bombing Libya for 6 months.
    This adventure turned one of the most developed country`s in Africa into a nation in ruins & run by wild gangs. The assassination of the US ambassador can be laid at Liam Fox, David Cameron, & Hilary Clinton`s door.

  • rate this
    +3

    Comment number 116.

    Well it's a start but when are we getting the money back from the banks since that has affected every man woman and child in this nation?

  • rate this
    +8

    Comment number 115.

    Another sensible decision by the government. I'm tired of this country giving aid to another country that has a space program, nuclear weapons and its own aircraft carrier.

  • 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.

  • rate this
    +16

    Comment number 113.

    There is still extreme poverty in India due to corruption, until that has been rectified, no amount of aid will help their poor.
    We do not have a space program and still cant help our own poverty stricken population.
    If a country has money to support any sort of space program then they certainly don't need hand outs from us.

  • rate this
    -108

    Comment number 112.

    Give more Aid to AFRICA... More AID to AFRICA.

  • rate this
    +17

    Comment number 111.

    @81. Chris_S

    Care to state exactly how after all these years and with India having a space program, how it is our fault that there is still poverty in India? I am also pretty sure there was poverty in India before the British found it. So I am unsure how you can say that the British caused it. Still even if we did, India has had plenty of time and money in order to sort it out.

  • rate this
    +7

    Comment number 110.

    I agree with the other comments.

    CUT IT NOW!!!!

    Why wait another two years?

    Total Aid to India should have been cut ten years ago. It's the bleeding heart liberal, save-the-whales, Greenpeace, flower-power types in the Government that sit down to their middle class dinners in their middle class houses, with their middle class children and middle class dogs that are on a guilt trip.

 

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