UK To End Financial Aid To India By 2015

The UK is to stop giving financial aid to India by 2015, the international development secretary has announced.

Davis Cameron

The UK is to stop giving financial aid to India by 2015, the international development secretary has announced.

Support will be gradually cut by about £200m ($319m) between 2013 and 2015 before being wound up completely.

Minister Justine Greening said the move reflected India's economic progress and status as a global force.

The UK's financial support to India, one of the world's fastest-growing economies, has been controversial for some time - particularly among Tories.

Ministers have defended it in the past on the basis of the extreme poverty persisting in rural areas and historic 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 aid arrangements.

'Changing place'

She said the visit confirmed the "tremendous progress" that India was making and the basis of the UK's support needed to shift from direct aid to technical assistance in future.

"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 awarded will be honoured, the UK will not sign off any new programmes from now on.

By focusing post-2015 support on trade, skills, health and private sector anti-poverty projects which can generate a return on investment, the UK estimates that its overall contribution will be one-tenth of the current £280m budget.

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.

The UK also says bilateral trade between the two countries is flourishing, growing 20% in 2010.

From 2015, development experts will continue to work alongside the Foreign Office and UK Trade and Investment but focused on sharing advice on poverty reduction, facilitating private sector projects and global partnerships in food security, climate change and health prevention.

The BBC's political correspondent Carol Walker said this was an important step that was seen by the government as part of efforts to focus its aid budget on countries most in need.

The government is increasing the overall overseas development budget to help meet a longstanding international commitment to spend 0.7% of national income on aid.