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UK to end financial aid to India by 2015 UK to end financial aid to India by 2015
(35 minutes later)
  
The UK is to end financial aid to India by 2015, international development secretary Justine Greening has said.The UK is to end financial aid to India by 2015, international development secretary Justine Greening has said.
Support will gradually be phased out between now and 2015, saving £200m ($319m), and the UK's focus will then shift to offering technical assistance.Support will gradually be phased out between now and 2015, saving £200m ($319m), and the UK's focus will then shift to offering technical assistance.
Ms Greening said the move, which will be popular with Tory MPs, reflected India's economic progress and status.Ms Greening said the move, which will be popular with Tory MPs, reflected India's economic progress and status.
Giving his reaction, India's foreign minister Salman Khurshid said: "Aid is the past and trade is the future."Giving his reaction, India's foreign minister Salman Khurshid said: "Aid is the past and trade is the future."
The UK's financial support to India, one of the world's fastest-growing economies, has been a cause of concern among Conservative MPs amid suggestions that funding had ended up supporting prestige projects such as India's space programme. The UK's financial support to India, one of the world's fastest-growing economies, has been a cause of concern among Conservative MPs, many of whom believed that the UK should not be giving money to a country which has a multi-million pound space programme.
Ministers have defended the level of financial help in the past on the basis of the extreme poverty persisting in rural areas and historic colonial ties between the two countries. Ministers have defended the level of financial help in the past on the basis of the extreme poverty that remains in rural areas and historic colonial ties between the two countries.
Ms Greening has been conducting a review of all financial aid budgets since taking over the role in September and visited India earlier in the week to discuss existing arrangements.Ms Greening has been conducting a review of all financial aid budgets since taking over the role in September and visited India earlier in the week to discuss existing arrangements.
'Changing place''Changing place'
She said the visit confirmed the "tremendous progress" that India was making and reinforced her view that the basis of the UK's support needed to shift from direct aid to technical assistance in future.She said the visit confirmed the "tremendous progress" that India was making and reinforced her view that the basis of the UK's support needed to shift from direct aid to technical assistance in future.
The announcement that the UK is scrapping aid to India has been long expected and will not have come as a surprise to the Indian government.The announcement that the UK is scrapping aid to India has been long expected and will not have come as a surprise to the Indian government.
UK International Development Secretary Justine Greening was in India early this week to meet senior Indian government officials who were briefed on the move.UK International Development Secretary Justine Greening was in India early this week to meet senior Indian government officials who were briefed on the move.
India has long held the position that while it welcomes financial aid from overseas from those who choose to give it, it will never actively seek it.India has long held the position that while it welcomes financial aid from overseas from those who choose to give it, it will never actively seek it.
The move is also a recognition of India's economic transformation.The move is also a recognition of India's economic transformation.
It's now the third largest investor in the UK and the largest market for British goods outside the EU.It's now the third largest investor in the UK and the largest market for British goods outside the EU.
But much of the UK aid money was used to fund projects in some of India's poorest areas and some will worry that those at the receiving end could suffer.But much of the UK aid money was used to fund projects in some of India's poorest areas and some will worry that those at the receiving end could suffer.
"After reviewing the programme and holding discussions with the government of India, we agreed that now is the time to move to a relationship focusing on skillsharing rather than aid," she said."After reviewing the programme and holding discussions with the government of India, we agreed that now is the time to move to a relationship focusing on skillsharing rather than aid," she said.
"India is successfully developing and our own bilateral relationship has to keep up with 21st Century India...It is time to recognise India's changing place in the world.""India is successfully developing and our own bilateral relationship has to keep up with 21st Century India...It is time to recognise India's changing place in the world."
Although all existing financial grants awarded will be honoured, the UK will not sign off any new programmes from now on.Although all existing financial grants awarded will be honoured, the UK will not sign off any new programmes from now on.
By focusing post-2015 support on trade, skills, health and private sector anti-poverty projects which can generate a return on investment, the UK estimates its overall contribution will be one-tenth of the current £280m budget.By focusing post-2015 support on trade, skills, health and private sector anti-poverty projects which can generate a return on investment, the UK estimates its overall contribution will be one-tenth of the current £280m budget.
In making the decision, the UK is citing the progress India has made in tackling poverty in recent years. It says 60 million people have been lifted out of poverty as a result of the doubling of spending on health and education since 2006.In making the decision, the UK is citing the progress India has made in tackling poverty in recent years. It says 60 million people have been lifted out of poverty as a result of the doubling of spending on health and education since 2006.
The UK also says bilateral trade between the two countries is flourishing, growing 20% in 2010. India spends £70bn on its social welfare budget, compared with £2.2bn on defence and £780m on space exploration.
'Premature'
From 2015, development experts will continue to work alongside the Foreign Office and UK Trade and Investment but focused on sharing advice on poverty reduction, facilitating private sector projects and global partnerships in food security, climate change and health prevention.From 2015, development experts will continue to work alongside the Foreign Office and UK Trade and Investment but focused on sharing advice on poverty reduction, facilitating private sector projects and global partnerships in food security, climate change and health prevention.
The BBC's political correspondent Carol Walker said this was an important step that was seen by the government as part of efforts to focus its aid budget on countries most in need. Save the Children said it believed the decision was "premature".
The government is increasing the overall overseas development budget to help meet a longstanding international commitment to spend 0.7% of national income on aid. "Despite India's impressive economic progress, 1.6 million children died in India last year - a quarter of all global child deaths," Kitty Arie, the charity's director of advocacy, said.
"We agree that in the longer term, aid to India should be phased out as the country continues to develop, but we believe that the poorest children will need our ongoing help."
It urged the UK, after 2015, to also support Indian NGOs to tackle child mortality and improve health and education provision.
War on Want, which campaigns to end global poverty, said aid should not just stop because India had become a middle income country.
Financial support needed to be "smarter" and geared towards supporting "progressive movements" capable of bringing about political change and tackling growing inequality, the charity said.
The UK government is increasing the overall overseas development budget to help meet a longstanding international commitment to spend 0.7% of national income on aid.