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 149.

    74.Paul
    Unfortunately this is the case the developing world over - the rich get richer and the poor get poorer. There is also a keeping up with the Jones' element with the need to gain nuclear weapons and space exploration - all the while ignoring the asic needs of the people they are meant to serve.

  • rate this
    +1

    Comment number 148.

    so can we expect david to move all this money to his mates in other countries as long as they will promise him higher personal returns for aid given?

  • rate this
    0

    Comment number 147.

    @114 Biggles, I agreed the target of 0.7% of GDP going in aid is a good thing in theory, I just wish it was spent wisely. I was in Malawi a few years ago staying with a friend who worked for the UN, some of the aid sponsored projects there were laughable eg a large project to provide freshwater to villages by Lake Malawi (a huge freshwater lake) that the locals couldn't afford to maintain anyway

  • rate this
    +3

    Comment number 146.

    India is a wealthy country with a strong economy and I agree that we should stop giving aid as she is now able to stand on her own feet.

    I understand the feelings of those who have highlighted the poverty in India but it is for the Indian economy to solve the problems and is no longer the responsiblity of other countries to provide aid.

    The British Empire no longer exists.

  • rate this
    +4

    Comment number 145.

    Why not 2012.

    We're talking about a fast growing economy that's nicking our jobs. It's their culture that creates such a huge divide in wealth.

  • rate this
    +4

    Comment number 144.

    Well what good news for the British taxpayer that all that aid has paid off and that India is now a booming economy. But the downside is that Britain is not.

  • rate this
    +2

    Comment number 143.

    Tory Govt again playing to the howls of the the hypocritical section of the Electorate.. Yes aid should be stopped.. because it is common sense. But this has been announced now by the Tories to buy back votes from Pensions they just robbed.

  • rate this
    +2

    Comment number 142.

    More AID to AFRICA, .... send AFRICA AID. .... only joking :)

    It's all bribery AID for India to open its economy more, anyway.

    India is the 3rd biggest investor in Britain, we should make friends and stop patronising them with bribery.... for our own future.

  • rate this
    +6

    Comment number 141.

    Indian officials have told Britain that they don't need the cash, so why can't it be stopped immediately?

  • rate this
    +1

    Comment number 140.

    Good. We should only give foreign aid in the event of natural disasters. The £12bn + of our foreign aid should be spent on looking after dementia and alzeimers patients in the UK and not sent out of the country.

  • rate this
    0

    Comment number 139.

    Another wasted opportunity: Don't just tell us when the aid is going to be stopped but where it will be re-directed to. We really do need politicians and civil servants in the UK who can think about the long game so that in this case aid agencies can prepare themselves to effectively using the money elsewhere when it becomes available.

  • rate this
    +2

    Comment number 138.

    Any aid should be in terms of "supplies" created by businesses in the UK, thus the Governmnet making revenue and also supporting uk business which also means that money sent is not sqandered or stolen by corrupt Governments

    As for this Aid, India's Growth figures prove they should not be receiving any money now so why are we waiting till 2015 whilst families in this country face rising prices.

  • rate this
    +4

    Comment number 137.

    Lets spend the money we save investing in regenerative medicine and renewables now for our own population's wellbeing, and when the Indians and Chinese have 500m over 65s eacyh we can sell them something they actually will want/need rather than having to beg for 'consultancy' contracts and banking jobs with their corporations.

  • rate this
    +9

    Comment number 136.

    It's about time. While there is extreme poverty in India there is also extreme wealth. Some of the richest people in the world are bosses of Indian based companies. Their issues are social not economic so economic aid is unnecessary.

  • rate this
    +10

    Comment number 135.

    About time. India has an advance space program, has nuclear weapons & a vibrant, growing economy (albeit based on exploitation & cheap labour). So the fact India does wish send money on social care should not mean other nations have to provide aid to compensate for it.

  • rate this
    +7

    Comment number 134.

    India should be looking at social reform. The wealth is there, but it does not trickle down !
    Re organised India could be an enviable country, but 19th century employment standards prevail.

  • rate this
    +3

    Comment number 133.

    The major determinant of poverty and inequality in India is still the caste system, I believe. I may be wrong. By that logic, giving money to aid poverty was attempting to fix a systemic irrational cultural practice which impact great numbers economically to their detrement.

  • rate this
    +10

    Comment number 132.

    As an Indian honestly this is a non news in India. The aid is less than 0.01% of our development expenditure. We are too occupied in economic growth to bother about this. The Indian FM said other day - stop talking aid talk trade.

    Yes there is poverty & its a shame for us, but things are rapidly changing. You have to be here to believe it. It is just a matter of time.

  • rate this
    +6

    Comment number 131.

    India does not need aid from us. They have a space program, nuclear power and growing economy. Their problem is corruption causing the wealth divide. We would actually be helping them by stopping the aid thus putting added pressure on Indian government to sort it's own mess out.

  • rate this
    -1

    Comment number 130.

    Its disgusting how the UK is making such a noise out of the peanut aid it gives to India.
    -These aid programs are directed towards NGOs which are take part in social welfare schemes.
    -India is giving aid in millions to countries like Afghanistan.
    -About India's rocket missions; they spend the money on earth and are creating jobs in India for highly skilled labours.

 

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