UK to end aid spending in India by 2015

[November 09, 2012]  LONDON (AP) -- Britain will halt all aid spending in India in 2015 in a significant shift in relations between the emerging economic giant and its former colonial ruler, Prime Minister David Cameron's government announced Friday.

Acknowledging the country's rising wealth and status, International Development Secretary Justine Greening said Britain would change its entire relationship with India -- seeking to boost trade as it ends its aid program.

Britain offered India about 280 million pounds (US$447 million) in assistance in 2011, focused heavily on education and health programs for impoverished children.

However, many legislators in the U.K. had targeted the development spending for scorn, arguing that Britain, struggling to cut its own national debt, could no longer afford to help a booming nation that has its own space program.

"Now is the time to move to a relationship focusing on skills-sharing rather than aid," Greening said in a statement. "Our own bilateral relationship has to keep up with 21st-century India. It's time to recognize India's changing place in the world."

India, which won independence from Britain in 1947, currently has its lowest economic growth in almost a decade. Last month, the World Bank and the International Monetary Fund cut their predictions for Asia's third-largest economy.

The World Bank expects India's economy to grow 6 percent for the year, and the International Monetary Fund forecasts growth of just 4.9 percent, down from its earlier projection of 6.1 percent.

Britain is struggling with spending cuts worth about 103 billion pounds ($162 billion) through 2017 aimed at slashing the budget deficit. The cuts will mean the loss of tens of thousands of public sector jobs and harsh welfare cuts.

Greening's department said the change in aid policy would save Britain about 200 million pounds (US$319 million) by 2015.

Some aid and advocacy groups warned that millions of Indians still require aid. "India still has major challenges. Millions of Indian people live in extreme poverty and a shocking number of children under 5 die each year," said Adrian Lovett, executive director of the poverty campaign group ONE.

British Foreign Secretary William Hague discussed the plan Thursday on a visit to New Delhi ahead of the public announcement. "Aid is the past and trade is the future," Indian Foreign Minister Salman Khurshid said following the talks with Hague.

India's President Pranab Mukherjee, in a previous role as finance minister, had described the British aid program as "a peanut" in India's overall spending on programs for the country's poor.

Britain's development ministry said that, despite the cuts in India, it would meet its pledge to spend 0.7 percent of gross domestic product on overseas aid by 2013 -- an international aid target set for the G-8 nations at a meeting in Scotland in 2005.

[Associated Press; By DAVID STRINGER]

Associated Press writer Muneeza Naqvi in New Delhi contributed to this report

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