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
    +4

    Comment number 709.

    In the context of a nation India is not materially rich. If its wealth was spread equally across all its people it would still be a poor country.

    It could still remove its appalling extreme poverty. A country with a few million filty rich, relatively small middle class, but hundreds of millions of poor.

    India has the means to change extreme poverty by itself.

  • rate this
    -1

    Comment number 708.

    691.Doctor Bob
    =>And we should cut aid to Africa. We've been giving it SO long; they haven't learned to stand on their own feet so the money's been wasted. Aid kills democracy
    ==
    I'm sure the form of political representation you desire is top of your list of priorities when you are trying to feed your starving children in a drought zone...

  • rate this
    +4

    Comment number 707.

    About bloody time.

    Lets hope the money goes to good use in the UK.

    Hopefully this should aid the financial recovery of our country.

  • rate this
    -3

    Comment number 706.

    Some here are afloat on the Boat of empires past, our paltry monies to curry political favour for private business don't do dot for poverty.
    And please before you make comment on India spend some time there at least, many comments her are sadly based on ignorance and media generated Orientalist view of India and what ails her. She struggles still with the negative impact of imperiailism...

  • rate this
    +4

    Comment number 705.

    the problem is population, if you see most of the poor people in india are muslims, because too many People(breeding) and no resources( No Land for them), what happens if too many people in system you cant give all resources to every one , those ones who dont get resources end up in poverty, it will happen one day who got more population than resources it dosent matter is it indian or china or uk.

  • rate this
    +5

    Comment number 704.

    Excellent, now the India can look after its own poor rather than thinking of a space programme. The idea of a country that bought out Jaguar/Rover is given handouts is daft - but then a lot of liberal ideas are daft.

  • rate this
    +7

    Comment number 703.

    @682 YET HERE YOU ARE COMMENTING ON THE BBC WEBSITE........GIVE UP YOUR RIGHT TO USE A BRITISH SITE IF THATS YOUR FEELING ABOUT THE UK

  • rate this
    +2

    Comment number 702.

    Lets accept the truth, we are a small island with not much influence left over rest of the world. This is the time to decide who is going to be powerful in next 20 years and join them instead of singing about our lovely past.

  • rate this
    +4

    Comment number 701.

    As India has been saying for some years that it does not need our aid, is there any chance of asking for those years back as a repayment? We could certainly use it.

  • rate this
    +4

    Comment number 700.

    Why are any of these countries receving money? Ethiopia for example has received tens of millions from the UK (on top of all charity money) and many other countries for 40+ years now - has it made any difference to the nation? It may have helped some individuals but it has not changed the mindset to continue having children for example when they clearly cannot afford or look after them.

  • rate this
    0

    Comment number 699.

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

    Trust the above is annually? I'm pretty sure Indian spends a lot more than £2.2bn on defense. Accoridng to SIPRI it's more like £29.4bn.

  • rate this
    +4

    Comment number 698.

    686.
    Tonester_7


    "I am a left wing socialist environmentalist"


    Never mind dear, you`ll feel better after a nice cup of tea

  • rate this
    +5

    Comment number 697.

    682.Indian from Mumbai
    You speak English, though (quite a useful language). And you choose to access the BBC website. Interesting, that.

  • rate this
    +7

    Comment number 696.

    And not before bloomin time!
    But lets also include Pakistan, Bangladesh and Nigeria and WHY wait until 2015.
    If Individuals wish to donate to these countries then thats their choice but the Government should not useour taxes to make the corrupt even richer.

  • rate this
    +7

    Comment number 695.

    652.Indian from Mumbai
    "Why don't you tackle Racism at home first"

    We have done - with quite a lot of success. Why do you think we have so many Indians working here ? There is racial diversity and religious tolerance here in the UK. Not many countries can say that. Sure we're not perfect but we're improving rapidly and are far more progressive than most other countries.

  • rate this
    +1

    Comment number 694.

    670 Indeed you make a very good point. Vast amts of food is wasted in India bec of appalling infrastructure, corrupt govt & simply absurd regulation. Tolls levied on the movement of goods between Indian states leads to massive waste. On Indian roads you will often see lines of trucks queuing to pay the tolls. Barriers to trade/movement of goods exist at every turn!

  • rate this
    0

    Comment number 693.

    682.Indian from Mumbai
    Ok if that is how you want it, cancel my paper in the morning!

  • rate this
    -4

    Comment number 692.

    With all these hardworking, work motivated poor Indian's living in tents, it shouldn't be too difficult for them to relocate themselves in order to find some well paid employment.

    Why should we subsidise their children?

    Meanwhile back in the UK....

    Our own population is told to get on it's bike to find work.

  • rate this
    +5

    Comment number 691.

    656.Polly
    About time - I do not think we should give any aid to countries that can afford to spend money on nuclear bombs

    =>And we should cut aid to Africa. We've been giving it SO long; they haven't learned to stand on their own feet so the money's been wasted. Aid kills democracy, that's why you haven't got it there. It means govs don't have to rely on taxes from their locals

  • rate this
    +2

    Comment number 690.

    This seems like a sensible measure. Govenment to government Aid is often spent on projects that do not benifit the needy, which has been the case more recently in India. Sections of the Indian population do undoubtedly need aid from the UK, however this can come through the form of personal donations to specific charities who are often far more effective at getting Aid to those who need it.

 

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