By Nick Mann | 10 February 2013
The UK should abandon its decision to end development aid for India in 2015 and instead refocus its spending on the areas that need it most, a think-tank said today.
The Institute for Public Policy Research claimed that, in light of the development challenges facing India, the decision to end spending was ‘premature and politically motivated’ and could jeopardise much of the hard work already undertaken in the country.
UK International Development Secretary Justine Greening announced in November that India’s ‘rapid growth and development progress’ over the past decade meant the UK’s financial grant support would be ended in 2015. UK involvement in India after that would restricted to technical assistance.
But, in a report entitled In aid of India, the IPPR said support should continue until further progress had been made in reducing poverty in the country. The World Bank predicts that India’s poverty rate will be 23.6% in 2015 – ‘far higher’ than China’s, which was 13% by the time the UK stopped its aid spending, the report noted.
The UK Department for International Development should also move the focus of its aid spending from wealth creation towards the Millennium Development Goals, particularly those concerning health and governance, the IPPR said. It highlighted the need to combat the spread of HIV/AIDS and ‘extremely high’ rates of malnutrition. The department should also continue to support good governance in the poorest states.
Before the UK does end its aid spending, it should set out a clear ‘exit strategy’. This should detail the goals that should be met before funding ceases, and when they should be achieved, the report explained.
The DFID was also urged to make it easier for non-resident Indians based in the UK to send remittances back to India, and to explore why British investors were not investing enough in the country. If just 10% of the $4.1bn sent from the UK in remittances to India in 2010 were channelled through mutual funds for development purposes, it could offset the termination of the DFID programme, according to the IPPR.
Will Straw, associate director for globalisation and climate change at the think-tank, said: ‘The UK should not give aid to India forever. But withdrawing now is premature given India’s significant development challenges; a tactic for winning votes at home rather than tackling poverty abroad.’
He added: ‘Justine Greening’s announcement missed an opportunity to reshape the debate on aid and engage the public in how the UK can help countries “graduate” from aid over time.
‘Given the volume of remittances and foreign direct investment from the UK to India, the decision to withdraw aid should have considered the totality of British financial flows. There is much more that Britain can do to guide non-resident Indians and investors who are sending funds back to India or looking to invest.’
A DFID spokesman said the report failed to recognise that the decision to change the UK’s development relationship with India was an agreement between the UK and the Indian government.
‘The Indian government has made clear that what it values most about the relationship is technical assistance to make its own welfare spending more effective,’ he said.
‘To recommend that the DFID should not focus on economic growth is simply wrong-headed and seems to be based on an outdated idea of “aid” that does not reflect twenty-first century India,’ he added.
