India’s Finance Minister has said that his country “does not require” British aid, describing it as “peanuts”.
Pranab Mukherjee and other Indian ministers tried to terminate Britain’s aid to their booming country last year - but relented after the British begged them to keep taking the money, The Sunday Telegraph has revealed.
The disclosure will fuel the rising controversy over Britain’s aid to India.
The country is the world’s top recipient of British bilateral aid, even though its economy has been growing at up to 10 per cent a year and is projected to become bigger than Britain’s within a decade.
Last week India rejected the British-built Typhoon jet as preferred candidate for a £6.3 billion warplane deal, despite the Development Secretary, Andrew Mitchell, saying that Britain’s aid to Delhi was partly “about seeking to sell Typhoon.”
Mr Mukherjee’s remarks, previously unreported outside India, were made during question time in the Rajya Sabha, the upper house of parliament.
“We do not require the aid,” he said, according to the official transcript of the session.
“It is a peanut in our total development exercises [expenditure].” He said the Indian government wanted to “voluntarily” give it up.
According to a leaked memo, the foreign minister, Nirumpama Rao, proposed “not to avail [of] any further DFID [British] assistance with effect from 1st April 2011,” because of the “negative publicity of Indian poverty promoted by DFID”.
But officials at DFID, Britain’s Department for International Development, told the Indians that cancelling the programme would cause “grave political embarrassment” to Britain, according to sources in Delhi.
DFID has sent more than £1 billion of UK taxpayers’ money to India in the last five years and is planning to spend a further £600 million on Indian aid by 2015.
“They said that British ministers had spent political capital justifying the aid to their electorate,” one source told The Sunday Telegraph.
“They said it would be highly embarrassing if the Centre [the government of India] then pulled the plug.”
Amid steep reductions in most British government spending, the NHS and aid have been the only two budgets protected from cuts.
Britain currently pays India around £280 million a year, six times the amount given by the second-largest bilateral donor, the United States. Almost three-quarters of all foreign bilateral aid going to India comes from Britain. France, chosen as favourite to land the warplane deal, gives around £19 million a year.
Controversial British projects have included giving the city of Bhopal £118,000 to help fit its municipal buses and dustcarts with GPS satellite tracking systems. Bhopal’s buses got satellite tracking before most of Britain’s did.
In India, meanwhile, government audit reports found £70 million had disappeared from one DFID-funded project alone.
Around £44,000 of British aid was allegedly siphoned off by one project official to finance a movie directed by her son.
Most aid donors to India have wound down their programmes as it has become officially a “middle-income country,” according to the World Bank.
However, Britain has reallocated its aid spending to focus on India at the expense of some far poorer countries, including the African state of Burundi, which is having its British bilateral aid stopped altogether from next year.
The decision comes even though India has a £6 billion space programme, nuclear weapons and has started a substantial foreign aid programme of its own. It now gives out only slightly less in bilateral aid to other countries than it receives from Western donors.
Supporters of British aid say that India still contains about a third of the world’s poor, with 450 million people living on less than 80p a day. DFID says its programmes — which are now focused on the country’s three poorest states - save at least 17,000 lives a year and have lifted 2.3 million people out of poverty since 2005.
The junior development minister, Alan Duncan, said last week that cutting off British aid to India “would mean that hundreds of thousands, if not millions, of people, will die who otherwise could live.”
However, Mr Mukherjee told the parliament last August that foreign aid from all sources amounted to only 0.4 per cent of India’s gross domestic product. From its own resources, the Indian government has more than doubled spending on health and education since 2003.
Last year, it announced a 17 per cent rise in spending on anti-poverty programmes. Though massive inequalities remain, India has achieved substantial reductions in poverty, from 60 per cent to 42 per cent of the population in the last thirty years.
Emma Boon, campaign director of the TaxPayers’ Alliance, said: “It is incredible that ministers have defended the aid we send to India, insisting it is vital, when now we learn that even the Indian government doesn’t want it.”
As long ago as 2005, MPs on the international development select committee found that India “seems to have become increasingly tired of being cast in the role of aid recipient.” In their most recent report on the programme, last year, they said that British aid to the country should “change fundamentally,” with different sources of funding. The report praised a number of DFID projects, but questioned others.
As well as the Indian government, many other Indians are sceptical about British aid. Malini Mehra, director of an Indian anti-poverty pressure group, the Centre for Social Markets, said aid was “entirely irrelevant” to the country’s real problems, which she said were the selfishness of India’s rich and the unresponsiveness of its institutions.
“DFID are not able to translate the investments they make on the ground into actual changes in the kind of structures that hold back progress,” Ms Mehra said.
“Unless we arouse that level of indignation and intolerance of the situation, aid will make no difference whatsoever.”
Mr Mitchell last night defended British aid, saying: “Our completely revamped programme is in India’s and Britain’s national interest and is a small part of a much wider relationship between our two countries.
“We are changing our approach in India. We will target aid at three of India’s poorest states, rather than central Government.
“We will invest more in the private sector, with our programme having some of the characteristics of a sovereign wealth fund. We will not be in India forever, but now is not the time to quit.”
DFID declined to comment on why it had asked the Indian government to continue with a programme it wanted to end. Source