LONDON: UK aid to India was to be frozen in 2015 after India said it did not want it, but a review by the UK aid spending watchdog has found that nearly £2.3 billion (Rs 23,000 crore Rupees) went to India amid UK aid. 2016 and 2021.
In 2012, India’s then finance minister, Pranab Mukherjee, described Britain’s annual £280 million (Rs 2,798 crore) aid to India as “peanuts” and British critics at the time questioned whether the UK was paying much to India. Why was giving aid if India was funding itself. It had its own space program and its own foreign aid budget. In 2017, the Indian government said that it gave more foreign aid to countries than it received.
The phasing out of financial aid by 2015 was adopted as UK government policy in 2012.
but on tuesday independent commission Institute for Aid Impact (ICAI), which scrutinizes UK government aid and is independent of the government, said in a review of UK aid to India, “We calculate that the UK will give India around 2.3 billion pounds in aid.” This figure includes £441 million in bilateral aid, £129 million in development investment through the Foreign, Commonwealth and Development Office (FCDO), £749 million in aid through multilateral organizations and £1 billion through British International Investments (BII), the UK’s development finance institution. “The BII is the world’s oldest development finance institution, established in 1948 as the Colonial Development Corporation, with the aim of doing good without losing money,” the report said. It has a portfolio of 389 investments in India, valued at £2.3 billion in 2021 – its largest country portfolio ever at 28% of the total.
“Many stakeholders may be surprised to see UK aid continuing at this level a decade after the UK announced its break with its traditional development partnership. While the UK government said at the time that development investment and technical assurances would continue, the clear expectation was that overall aid volumes to India would decline sharply compared to theirs,” the report said.
“While there is still a substantial amount of UK aid to India, it is now very different in nature and purpose,” the report said. “It supports a range of 2030 UK-India Roadmap objectives under the Comprehensive Strategic Partnership, which serves as a tool for UK foreign policy, diplomatic and trade objectives,” the report said. “UK aid to India now focuses primarily on climate, infrastructure and economic development rather than the provision of basic services such as health and education to the poorest states in India.”
The report cited examples of how UK aid is poorly targeted in India. For example a large investment by BII in a medium sized Indian Bank Which was meant to support inclusive growth through the expansion of the bank’s micro-finance lending, was not ring-fenced and was instead used to expand the bank’s entire business, especially credit cards. ICAI gave the UK India Aid Program an amber-red score, which is the second worst score available.
“The UK’s overarching objective is a stronger bilateral relationship with India, and aid is being used in a variety of ways to support that partnership. This results in a fragmented portfolio without any binding growth logic. While the aid portfolio can help support the UK-India bilateral relationship, it lacks a strong link to poverty reduction, which remains the statutory objective of UK aid. We are also concerned that since 2017, the UK has largely chosen not to engage with the growing challenges in India in the areas of democracy, human rights and civil space, as identified in global indices. ,
A spokesperson for FCDO said: “Since 2015 the UK has not provided any financial support to the Government of India. The majority of our funding is now focused on business investments that help create new markets and jobs for the UK as well as India. UK investments are also helping to address shared challenges such as climate change.”
In 2012, India’s then finance minister, Pranab Mukherjee, described Britain’s annual £280 million (Rs 2,798 crore) aid to India as “peanuts” and British critics at the time questioned whether the UK was paying much to India. Why was giving aid if India was funding itself. It had its own space program and its own foreign aid budget. In 2017, the Indian government said that it gave more foreign aid to countries than it received.
The phasing out of financial aid by 2015 was adopted as UK government policy in 2012.
but on tuesday independent commission Institute for Aid Impact (ICAI), which scrutinizes UK government aid and is independent of the government, said in a review of UK aid to India, “We calculate that the UK will give India around 2.3 billion pounds in aid.” This figure includes £441 million in bilateral aid, £129 million in development investment through the Foreign, Commonwealth and Development Office (FCDO), £749 million in aid through multilateral organizations and £1 billion through British International Investments (BII), the UK’s development finance institution. “The BII is the world’s oldest development finance institution, established in 1948 as the Colonial Development Corporation, with the aim of doing good without losing money,” the report said. It has a portfolio of 389 investments in India, valued at £2.3 billion in 2021 – its largest country portfolio ever at 28% of the total.
“Many stakeholders may be surprised to see UK aid continuing at this level a decade after the UK announced its break with its traditional development partnership. While the UK government said at the time that development investment and technical assurances would continue, the clear expectation was that overall aid volumes to India would decline sharply compared to theirs,” the report said.
“While there is still a substantial amount of UK aid to India, it is now very different in nature and purpose,” the report said. “It supports a range of 2030 UK-India Roadmap objectives under the Comprehensive Strategic Partnership, which serves as a tool for UK foreign policy, diplomatic and trade objectives,” the report said. “UK aid to India now focuses primarily on climate, infrastructure and economic development rather than the provision of basic services such as health and education to the poorest states in India.”
The report cited examples of how UK aid is poorly targeted in India. For example a large investment by BII in a medium sized Indian Bank Which was meant to support inclusive growth through the expansion of the bank’s micro-finance lending, was not ring-fenced and was instead used to expand the bank’s entire business, especially credit cards. ICAI gave the UK India Aid Program an amber-red score, which is the second worst score available.
“The UK’s overarching objective is a stronger bilateral relationship with India, and aid is being used in a variety of ways to support that partnership. This results in a fragmented portfolio without any binding growth logic. While the aid portfolio can help support the UK-India bilateral relationship, it lacks a strong link to poverty reduction, which remains the statutory objective of UK aid. We are also concerned that since 2017, the UK has largely chosen not to engage with the growing challenges in India in the areas of democracy, human rights and civil space, as identified in global indices. ,
A spokesperson for FCDO said: “Since 2015 the UK has not provided any financial support to the Government of India. The majority of our funding is now focused on business investments that help create new markets and jobs for the UK as well as India. UK investments are also helping to address shared challenges such as climate change.”
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