Focus on: aid to India | Commercial awareness on The Gateway

Focus on: aid to India

Should the UK still send aid money to this Asian nation?

International development secretary Justine Greening has announced that the UK will completely stop financial aid to India by 2015. Support worth around £200 million will be phased out over the next two years, and the UK's focus will shift to trade rather than aid.

The move is popular among Conservative MPs, many of whom have argued that we should no longer be giving aid to India, one of the world's fastest growing economies, especially when the UK government is making austerity cuts at home.

After visiting India this month, Greening said: "I have seen first-hand the tremendous progress being made. India is successfully developing and our own bilateral relationship has to keep up with 21st-century India. It's time to recognise India's changing place in the world."

Logically, the decision makes sense. In 2009 India was upgraded from a "poor" to a middle-income country (MIC) by the World Bank and its economy is growing at a rate of nearly 10 per cent a year. India itself is a foreign aid donor, giving more than £300 million to poorer countries than itself in 2008, and it spends around £780 million a year on its space exploration programme. What's more, India is the third-largest investor in the UK and, according to Forbes magazine, there are more billionaires in India than here.

It seems, therefore, that the Indian government has the capacity to look after its own. Last year, Indian finance minister Pranab Mukherjee said the country no longer wanted or needed British aid.

By focusing much smaller British contributions on trade, skills development and assisting private sector anti-poverty projects in India post-2015, the relationship between the UK and its former colony could become profitable for both partners. For the UK in particular, strengthening trading links with one of the world's fastest-growing economies would be advantageous. It will also enable the UK to focus on giving aid to the poorest countries and those scarred by recent conflict as it aims to increase aid spending to 0.7 per cent of national income.

But charities have warned that the change in policy is premature, and that it will be India's poorest who suffer from the decision to cut aid. Despite the country's recent economic progress, more than 360 million people - a third of the population - live in severe poverty. And, although the Indian economy is growing quickly, the World Bank says India doesn't have a system in place to redistribute wealth and challenge poverty.

Save the Children's director of advocacy Kitty Arie told the BBC: "1.6 million children died in India last year - a quarter of all global child deaths." The charity agrees in principle that long-term aid to India should be phased out, but argues that the poorest children will continue to need the UK's help. The Department for International Development has conceded that some promised projects will now not go ahead, including one to help slum-dwellers, plans to provide remote villages with solar energy and an initiative to help poor girls go to secondary school.

Economic development in India has created a wealthy upper class and a government with the theoretical means to tackle poverty, but there's no guarantee that financial gains by the few will filter down to the many any time soon.

We asked students whether they think India still deserves our aid?

*"Not in terms of pure financial aid, but in terms of [supporting the development of] specialised skills - Yes." *Matt Akula Riley - University of Exeter

*"India doesn't deserve UK's financial help directly. However, foreign investments in high-tech areas as well as the financial services industry would help India further its economy... It is time to move away from direct financial support to a more subtle, yet long-lasting, means of support." *Lun Nie - University of Manchester

*"No. Time for everyone to help themselves. Just like we did [in South Africa]." *Mike Musgrave - University of St Andrews

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