UK will continue to provide India 1 bln pounds aid

Prasun Sonwalkar

London, Feb 14 (PTI) The UK will continue to provideIndia over 1 billion pounds until 2015 despite politicalpressure to reduce aid to the booming Asian giant, amid deepcuts in public spending at home.

British aid to India would remain at 280 millionpounds a year until 2015, but will shift to more investment inprivate enterprise, UK''s international development secretaryAndrew Mitchell was quoted as saying by the Financial Times.

Mitchell''s comment, which came a day before formalannouncement, is likely to infuriate some MPs who see nojustification for the aid, while slashing defence oranti-poverty spending at home.

There were demands to cut aid to India due to thecountry''s booming economic growth and reports of corruption inthe use of British funds. A review of UK''s overseas aid policywas launched after the David Cameron government took office.

The report questioned financial assistance to India,saying it is growing at 8.5 per cent a year, gives aid toAfrica, boasts more than 126,000 US dollar millionaires and isone of only six nations with satellite launch capability.

However, Mitchell describes a "development paradox",in which poverty remains rife and India has a third of theworld''s malnourished children.

He said: "Some people in both the UK and India havebeen asking whether the time has come to end British aid toIndia. In my view we are not there yet. India has more poorpeople in it than the whole of sub-Saharan Africa. If you�regoing to achieve the (UN) millennium development goals, youhave to make big progress in India."

Mitchell will withdraw development assistance fromsome "emerging economies", including Serbia, Moldova, Cambodiaand Vietnam.

As aid to India falls in real terms while assistanceto other nations rises sharply, it will be overtaken byEthiopia as Britain''s biggest bilateral aid programme, thereport said.

By 2015 about half of direct grant aid to India willbe replaced by "pro-poor" private investment including throughCDC, the state-owned development finance group.

The bulk of the programme will be targeted on threepoor states: Bihar, Madhya Pradesh and Orissa, it added. PTIPS