Britain to cut financial aid to India by 2015

Friday, 9 November 2012 - 5:29pm India News Bulletin

Justine Greening announces end to India financial aid

Image: Wikimedia Commons (Annie Mole)

Britain’s financial aid to India will be slashed starting now and will be completely cut by 2015, UK’s international development secretary, Justine Greening has said. While no new financial aid grants will be made to India, the UK will offer technical assistance to the country.

"After reviewing the programme and holding discussions with the government of India this week, we agreed that now is the time to move to a relationship focussing on skills-sharing rather than aid,” Greening said.

"Having visited India I have seen first-hand the tremendous progress being made. 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,” she said.

But committed programmes and grants currently underway will be completed by the end of 2015 as planned.

"It is of course critical that we fulfil all the commitments we have already made and that we continue with those short-term projects already underway which are an important part of the UK and Government of India’s development programme," she said.

The shift reflects India's successful transition to become a key part of the global economy. The Indian economy’s growth rate is at 8% per year and UK exports to India rose 37% in 2010.

In 2011 alone, Britain’s bilateral aid to India was about £250m. The UK also provided £29m in technical co-operation to India. British aid to India was at its peak of £421m under the Labour government.

According to a BBC report, India’s spent on social welfare is £70bn as against £2.2bn on defence and £780m on space exploration.

However, the country was recently criticised by UK authorities to direct aid money in nuclear programmes rather than social welfare. Many critics have also questioned why India which has enough funds to have its space programme needs cash aids from Britain.

New programmes between the two countries will take the form of technical assistance, sharing UK expertise in trade, investment, skills and health.

The UK’s investments in private sector projects will generate a return for Britain which is struggling to keep its borrowings under control.

UK-Indian entities including the Foreign Office, UK Trade and Investment and other government departments will work together to share advice and skills with the Government of India, according to Greening.

The cut to India’s financial assistance come as the two countries take a raft of measures to boost bilateral trade and investment opportunities.

Most recently, UK’s Foreign Secretary William Hague was in India meeting his counterpart Salman Khurshid to discuss trade ties between the two countries.