Wrong destination? UK debates aid to India

A nuclear power with its own space program receiving humanitarian aid from London. But as the Indian economy gears up to overtake Britain, many in the UK say they should no longer pour money into one of world’s fastest growing countries.

­Clamor in Britain is growing to slash the $440 million Britain gives to India after New Delhi said it would voluntarily give up the money. The British media revealed recently that India's finance minister Pranab Mukherjee told the Indian parliament: “We do not require the aid. It is a peanut in our total development spending".

Within a decade, economists predict India will have overtaken the UK to become the world’s 5th largest economy, which makes some experts suggest that the aid might even start flowing in the other direction.

As the former colony’s prosperity is increasing, London is definitely aware New Delhi is spending tens of billions on defense, nuclear tests and its space program. India is expected to be among six emerging economies that will dominate global economic growth in the coming decades – that’s according to a World Bank forecast. Its economy is growing at nearly 10% a year and the country is a foreign donor itself.

Thousands in Britain are angry with the government that says it can’t afford pensions, education and services but has already promised more than $440 million a year to India. Dr. Richard Wellings from the UK Institute of Economic Affairs strongly opposes aid to India.

“It’s crazy really – foreign aid is one of the few areas of the UK budget that’s actually increasing substantially over the next few years. But that money could make a huge difference over the next couple of years if it was spent on tax cuts for low paid workers, or  it could make a huge economic difference if it was spent at home,” Wellings suggests.

British public opinion and media alike fumed when India recently “snubbed” British industry, awarding a $20 billion deal to supply fighter jets to France. The contract was lost despite the UK government’s claims that the country’s almost $1.61 billion aid package would help secure the order.

­Help Indians to help themselves

For many Brits, India remains a byword for extreme poverty: hunger, disease and child mortality are still dangerously high. India’s per capita national income in 2010 was $1,340, compared with $38,540 in the UK. Therefore, there is an argument for aid being given to India, home to a third of the world’s population who live below the World Bank’s extreme poverty line. India has 600 million poor people, living on less than 2 dollars a day.

The House of Commons’ International Development Committee believes poverty in India is on such an extreme scale that it will take many years for the country to achieve internationally agreed Millennium development goals. And despite the pressure from both donator and benefactors, the UK cabinet has agreed an aid program until 2015.

The British government says the aid is carefully targeted: it’s meant to be invested in education for women and children, as well as helping the private sector create jobs and growth. Stephen Hammond, MP is among those who advocate the government help. “It’s a very concentrated targeted aid program, and I think on that basis, given that it’s being targeted at some of the poorest people in the world, I’m happy to defend it,” Hammond says.

The aid is concentrated in the three poorest states in India, but critics the British help promotes corruption.

“The problem is those particular states also have some of the worst problems with poor governance and corruption in the country. Those two things are related – one of the reasons they’re struggling states is because they have very poor governance. I’d be skeptical towards the idea that somehow this is going to be different this time.”

Many people in both countries believe it is wealthy Indians who should help their poor fellow citizens. India has more billionaires than the UK, according to Forbes magazine. Indian journalist Mihir Bose says it’s up to the 400 million wealthier Indians to help their impoverished countrymen – not a patronizing, post-imperial Britain.