UK still giving aid to India disguised as ‘business investment’ rather than direct donations: British watchdog

LONDON: UK aid to India was set to stop in 2015 after India said it did not want it, but a watchdog review of UK aid spending found that around £2.3 billion (Rs 23,000 crore) of British aid went to India between 2016 and 2021.
In 2012, India’s then finance minister, Pranab Mukherjee, described Britain’s £280 million (Rs 2,798 crore) annual aid to India as “peanuts” and Britain’s criticisms of wondered why Britain was giving aid to India if India was funding its own space program and had its own foreign aid budget. In 2017, the Indian government said it gave more foreign aid to countries than it received.
A phasing out of financial aid by 2015 was duly adopted as UK government policy in 2012.
But on Tuesday the Independent commission for Aid Impact (ICAI), which reviews UK government aid and is independent of the government, in its review of UK aid to India, said: “We calculate that the UK has provided around 2 £.3 billion in aid to India between 2016 and 2021”. This figure includes £441m in bilateral aid, £129m in development investment through the Foreign, Commonwealth and Development Office (FCDO), £749 million in aid through multilateral organizations and £1 billion in investment through British International Investment (BII), the UK development finance institution. “The BII is the world’s oldest development finance institution, established in 1948 as the Colonial Development Corporation with a mission to do good without losing money,” the report said. It has a portfolio of 389 investments in India valued at £2.3bn in 2021 – by far its largest country portfolio at 28% of the total.
“Many stakeholders might be surprised to see UK aid to India continuing at this level a decade after the UK announced its transition from its traditional development partnership. While the UK government said at the time that investment in development and technical assurance would continue, it was clearly expected that overall aid volumes to India would decline faster than they have. done,” the report said.
“While there are still substantial volumes of British aid to India, its nature and purpose are now very different,” the report notes. “It supports a range of objectives of the UK-India 2030 Roadmap within the framework of the overall strategic partnership, serving as a tool for UK foreign policy, diplomatic and trade objectives,” the report said. . “British aid to India is now largely focused on climate, infrastructure and economic development, rather than providing basic services such as health and education to India’s poorer states. .”
The report cites examples of how UK aid is being poorly targeted in India. For example, a large BII investment in a medium-sized company Indian bank which was meant to support inclusive growth through the expansion of the bank’s micro-finance lending was not ring-fenced and instead used to expand the bank’s entire business, including credit cards. The ICAI gave Britain’s aid program to India an amber-red score, the second worst score available.
“The UK’s overarching goal is a stronger bilateral relationship with India, and aid is being used in a variety of ways to support this partnership. The result is a fragmented portfolio without a compelling development rationale. While the aid portfolio can help support bilateral relations between the UK and India, it lacks a strong link to poverty reduction, which remains the statutory objective of UK aid. We are also concerned that the UK has since 2017 largely chosen not to engage with the growing challenges to democracy, human rights and civic space in India. , as identified in the global indices. “
A FCDO spokesperson said: “Since 2015, the UK has not provided any financial assistance to the Indian government. Most of our funding is now focused on commercial investments that help create new markets and new jobs for the UK, as well as India. UK investments are also helping to tackle common challenges such as climate change.


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