Daniel Ritort

UK to end India financial aid

Slums in Mumbai, Indian financial capital

Slums in Mumbai, Indian financial capital

Justine Greening, international development secretary of the United Kingdom, said the United Kingdom is to end financial aid to India by 2015.

Support worth about 320 million Dollars will be phased out between now and 2015 and the United Kingdom’s focus will then shift to offering technical assistance.

Greening said the move reflects India’s economic progress and status. By his side, Salman Khurshid, foreign minister of India, said that aid is the past and trade is the future. However, charities described the move as premature and warned it would be the poorest who suffered.

According to analysts, the announcement that the United Kingdom is scrapping aid to India has been long expected and will not have come as a surprise to the Indian government. They stressed that 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.

Some analysts also pointed out that the decision is also a recognition of India’s economic transformation. It is now the third largest investor in the United Kingdom and the largest market for British goods outside the European Union.

However, much of the United Kingdom 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.

Until last year, when it was overtaken by Ethiopia, India was the biggest recipient of bilateral aid from the United Kingdom, receiving an average of 227 million Pounds a year in direct financial support over the past three years.

But the United Kingdom’s support for India, one of the world’s fastest-growing economies, has been a cause of concern because some believed that the United Kingdom should not be giving money to a country which has a multi-million Pound space program.

Some 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.

Greening has been conducting a review of all financial aid budgets since taking over the role in September and visited India earlier this week to discuss existing arrangements.

She said the visit confirmed the tremendous progress that India was making and reinforced her view that the basis of the United Kingdom’s support needed to shift from direct aid to technical assistance in future.

Greening said that after reviewing the program and holding discussions with the government of India, they agreed that now is the time to move to a relationship focusing on skillsharing rather than aid. She also added that India is successfully developing and their own bilateral relationship has to keep up with 21st century India.

In her opinion it’s time to recognize India’s changing place in the world. She stated that although all existing financial grants will be honored, the United Kingdom will not sign off any new programs from now on.

Last year the United Kingdom gave India about 250 million Pounds in bilateral aid as well as 29 million Pounds 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 United Kingdom estimates its overall contribution will be one-tenth of the current figure.

In making the decision, the United Kingdom is citing the progress India has made in tackling poverty in recent years. It said 60 million people have been lifted out of poverty as a result of the doubling of spending on health and education since 2006.

Actually, India spends 70,000 million Pounds on its social welfare budget, compared with 2,200 million Pounds on defense and 780 million Pounds on space exploration.

From 2015, development experts will continue to work alongside the Foreign Office and United Kingdom 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.

Save the Children said it believed the decision to end financial aid was premature. Kitty Arie, director of advocacy at Save the Children, said that despite India’s impressive economic progress, 1.6 million children died in India last year, a quarter of all global child deaths.

She argued they agree that in the longer term, aid to India should be phased out as the country continues to develop, but they believe that the poorest children will need their ongoing help.

She stressed that after 2015, the United Kingdom should also support Indian non-government organizations to tackle child mortality and improve health provision.

Keith Vaz, member of the British Parliament for Labor Party and a former chair of the Indian-British parliamentary group, said the government needed to reassure its Indian counterpart that their bilateral relationship was still priority.

He argued that 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 also pointed out that in withdrawing British aid to India, which will clearly only affect the most vulnerable, they need to see the minister’s plan for how she will work with other organizations to make sure the gaps they are creating will be filled.

War on Want, a charity which campaigns to end global poverty, said aid should not just stop because India had become a middle-income country. The group issued a statement arguing that financial support needed to be smarter and geared towards supporting progressive movements capable of bringing about political change and tackling growing inequality.

The United Kingdom is increasing the overall overseas development budget to meet a longstanding international commitment to spend 0.7 percent 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.

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