UK to halt state financial assistance to India in 2015 and will make no new cash commitments before then, says minister
The Indian finance minister last year said British aid money was 'a peanut in our total development expenditure'. Photograph: Kevin Frayer/AP
All financial assistance from the UK to India will end from 2015, the international development secretary, Justine Greening, has announced.
Britain is to make no new financial aid commitments to India, and will save about £200m by 2015.
Greening, who took responsibility for Britain's aid budget in September, said programmes already under way would be completed as planned but no new initiatives would be signed off.
British support for India will in future be limited to skills sharing in area areas such as trade and investment and health.
"After reviewing the programme and holding discussions with the government of India this week, we agree that now is the time to move to a relationship focusing on skills sharing rather than aid," Greening said.
"Having visited India, 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.
"It is of course critical that we fulfil all the commitments we have already made and that we continue with those short-term projects already under way which are an important part of the UK and government of India's development programme."
The move follows criticism of the government for maintaining aid to India, which has a booming economy and its own space programme. It will delight Conservative MPs critical of David Cameron's commitment to spending 0.7% of national income on overseas aid.
The changes will mean Britain spending about £200m less from 2013 to 2015 than had been planned by the former international development secretary Andrew Mitchell.
After 2015, the UK's relationship with India is to focus on "technical co-operation", with a hub of British development experts working with the Delhi government, and a programme of private sector investment to assist some of the poorest parts of India.
Officials said the UK's technical assistance was expected to be about a 10th of the current programme of support.
British funding to India was cut last year but still committed the UK to spending £280m a year until 2015.
The Indian finance minister, Pranab Mukherjee, last year said the country no longer wanted or needed the British aid, describing the money as "a peanut in our total development expenditure".
In a statement to MPs, Greening said: "We have agreed that the UK's programme of financial grant aid to India will end. From now, all new development co-operation programmes will be either technical assistance programmes focused on sharing skills and expertise, or investments in private sector projects focused on helping the poor," she said.
"We will finish existing financial grant projects responsibly, so that they all complete as planned by 2015."
She said the changes reflected India's "rapid growth and development progress" over the past decade.
"India's growing ability to finance its own development programmes means that the time has now come to end the UK's financial grant support. The growing two-way trade and investment between our two countries means that our development partnership should increasingly be about trade not aid.
"As part of the new focus on sharing skills and expertise, we have agreed to develop a cross-government technical assistance programme focused on priority issues, such as growth, trade, investment, education, skills and health."
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