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| UK to halt India aid and focus on trade | UK to halt India aid and focus on trade |
| (about 3 hours later) | |
| The government will stop all financial aid to India by 2015 in a move that signals a new relationship between the countries, the international development secretary, Justine Greening, announced. | |
| In a statement released to MPs on Friday, Greening said Britain would make no new financial aid commitments to India in the light of "India's rapid growth and development progress in the last decade". In future the relationship would focus on trade rather than aid, she said. Existing grants projects will be completed but the immediate change of focus will save about £200m between now and 2015. | |
| Greening, who took responsibility for Britain's aid budget in September's cabinet reshuffle, said British support for India would be limited to skills sharing in areas such as trade and investment and health. She said the change had been agreed with the Indian government. | |
| "We have agreed that the UK's programme of financial grant aid to India will end. From now, all new development co-operation programmes will be either technical assistance programmes focused on sharing skills and expertise, or investments in private sector projects focused on helping the poor. We will finish existing financial grant projects responsibly, so that they all complete as planned by 2015," she said. | "We have agreed that the UK's programme of financial grant aid to India will end. From now, all new development co-operation programmes will be either technical assistance programmes focused on sharing skills and expertise, or investments in private sector projects focused on helping the poor. We will finish existing financial grant projects responsibly, so that they all complete as planned by 2015," she said. |
| "The two governments have agreed to enhance collaboration on global development issues for which specific areas of interest will be identified. The governments of India and the UK are proud of our development achievements over the last 50 years. This new partnership will be an important part of the India-UK wider relationship, which we deeply value." | "The two governments have agreed to enhance collaboration on global development issues for which specific areas of interest will be identified. The governments of India and the UK are proud of our development achievements over the last 50 years. This new partnership will be an important part of the India-UK wider relationship, which we deeply value." |
| Critics have questioned the UK's £280m-a-year aid to a country with its own space programme. But the Labour MP Keith Vaz said the move would affect India's most vulnerable, and the charity ActionAid expressed concern. | Critics have questioned the UK's £280m-a-year aid to a country with its own space programme. But the Labour MP Keith Vaz said the move would affect India's most vulnerable, and the charity ActionAid expressed concern. |
| Growth in India has slowed recently and is forecast to be less than 6% this financial year. Hundreds of millions of people have been lifted out of poverty in recent decades, but many indicators show inequalities have grown. Vast fortunes have been made by a new class of businessmen while malnutrition and child mortality remain particular problems, with rates in some states worse than those in parts of sub-Saharan Africa. | Growth in India has slowed recently and is forecast to be less than 6% this financial year. Hundreds of millions of people have been lifted out of poverty in recent decades, but many indicators show inequalities have grown. Vast fortunes have been made by a new class of businessmen while malnutrition and child mortality remain particular problems, with rates in some states worse than those in parts of sub-Saharan Africa. |
| Vaz said: "Although undoubtedly India has progressed in the past 20 years, there are still an estimated 360 million people surviving on less than 35p per day. 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 that the gaps we are creating will be filled. | Vaz said: "Although undoubtedly India has progressed in the past 20 years, there are still an estimated 360 million people surviving on less than 35p per day. 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 that the gaps we are creating will be filled. |
| "Our relationship with Delhi is vital. The prime minister has said so himself on many occasions. We need to reassure the Indian government and its people that this relationship is a priority." | "Our relationship with Delhi is vital. The prime minister has said so himself on many occasions. We need to reassure the Indian government and its people that this relationship is a priority." |
| Melanie Ward, head of advocacy at ActionAid, said: "India is an example of the changing face of global poverty and a fast-moving economic landscape, but the reality is that it is a country with more poor people than in the whole of sub-Saharan Africa. It is precisely because of the success of aid and development that some countries are no longer low-income. Aid which is carefully targeted at the poorest and most vulnerable people in India still has the potential to make an enormous difference to millions of lives." | Melanie Ward, head of advocacy at ActionAid, said: "India is an example of the changing face of global poverty and a fast-moving economic landscape, but the reality is that it is a country with more poor people than in the whole of sub-Saharan Africa. It is precisely because of the success of aid and development that some countries are no longer low-income. Aid which is carefully targeted at the poorest and most vulnerable people in India still has the potential to make an enormous difference to millions of lives." |
| There was no immediate reaction from Indian officials to the announcement. On Thursday the external affairs minister, Salman Khurshid, said in response to questions about the possibility of UK aid ceasing that "aid is past, trade is future". | There was no immediate reaction from Indian officials to the announcement. On Thursday the external affairs minister, Salman Khurshid, said in response to questions about the possibility of UK aid ceasing that "aid is past, trade is future". |
| At a joint press conference with William Hague, the UK foreign secretary, Khurshid said aid was an issue that "did not merit a discussion". President Pranab Mukherjee had previously dismissed British aid as "peanuts" when finance minister. | |
| British diplomats in India say the move is one of several in recent months that have marked a profound shift in the relationship between the two countries. Others include the controversial lifting of a 10-year boycott of the chief minister of Gujerat, imposed after sectarian riots in 2002, as well as the revision of travel advice to Kashmir and an agreement to pursue joint efforts in cybersecurity. | British diplomats in India say the move is one of several in recent months that have marked a profound shift in the relationship between the two countries. Others include the controversial lifting of a 10-year boycott of the chief minister of Gujerat, imposed after sectarian riots in 2002, as well as the revision of travel advice to Kashmir and an agreement to pursue joint efforts in cybersecurity. |
| Indian experts from across the political spectrum welcomed the aid move. Surjit S Bhalla, a Delhi-based consultant and former World Bank economist, said the British decision was "enlightened". "I don't think it makes a huge amount of difference. The whole concept of aid is very old and not necessarily relevant for modern times. These programmes were constructed when India and emerging nations were very poor," he said. | Indian experts from across the political spectrum welcomed the aid move. Surjit S Bhalla, a Delhi-based consultant and former World Bank economist, said the British decision was "enlightened". "I don't think it makes a huge amount of difference. The whole concept of aid is very old and not necessarily relevant for modern times. These programmes were constructed when India and emerging nations were very poor," he said. |
| Instead, Bhalla said, investment should be largely focused on technical assistance in key areas such as sanitation or solar power in villages currently without electricity. The Indian government already ran a range of vast and often very wasteful welfare programmes. Compared with government expenditure on subsidised gas, for example, the British contribution of £280m annually was minimal, Bhalla said. | Instead, Bhalla said, investment should be largely focused on technical assistance in key areas such as sanitation or solar power in villages currently without electricity. The Indian government already ran a range of vast and often very wasteful welfare programmes. Compared with government expenditure on subsidised gas, for example, the British contribution of £280m annually was minimal, Bhalla said. |
| Dunu Roy, of the respected Hazards Centre, which supplies research to Indian NGOs, said his reaction to the news was "good riddance". "All aid was tied up with conditionalities so hopefully now Indians will have a better chance of doing what they want," he told the Guardian. | Dunu Roy, of the respected Hazards Centre, which supplies research to Indian NGOs, said his reaction to the news was "good riddance". "All aid was tied up with conditionalities so hopefully now Indians will have a better chance of doing what they want," he told the Guardian. |
| Jayati Ghosh, a professor of economics at Jawaharlal Nehru university, New Delhi, said she did not think too many people would notice the end of British aid. "It is not that there are no minor successes, but in general the nature of the spending has not been such that it will really be missed. It had a tendency to follow the latest development fashion. So it was privatisation, then microcredit and now conditional cash transfers. It made little positive difference," she said. | Jayati Ghosh, a professor of economics at Jawaharlal Nehru university, New Delhi, said she did not think too many people would notice the end of British aid. "It is not that there are no minor successes, but in general the nature of the spending has not been such that it will really be missed. It had a tendency to follow the latest development fashion. So it was privatisation, then microcredit and now conditional cash transfers. It made little positive difference," she said. |
| The decision to cut aid has long been expected. The outcry in the UK when India selected Dassault, the French aerospace firm, over BAE Systems as the preferred bidder for a £6bn contract for new fighter jets was widely covered in the Indian press. Many Indians were irritated by the suggestion that, as a recipient of financial assistance from Britain, they should have made a different choice. | The decision to cut aid has long been expected. The outcry in the UK when India selected Dassault, the French aerospace firm, over BAE Systems as the preferred bidder for a £6bn contract for new fighter jets was widely covered in the Indian press. Many Indians were irritated by the suggestion that, as a recipient of financial assistance from Britain, they should have made a different choice. |
| According to British diplomats, bilateral trade between the countries in 2010 was worth £10bn. The countries have set a target of £20bn by 2015. |