By Tim Montgomerie
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In her first major announcement as International Development Secretary, Justine Greening has confirmed weekend speculation that all traditional UK aid to India will end by 2015. Up until now India has been the second biggest beneficiary of UK aid – receiving slightly less than Ethiopia (£324m pa) and slightly more than Bangladesh (£219m pa). Beyond then the UK/India development relationship will focus on technical assistance – especially cultivation of pro-private sector infrastructure, development of healthcare systems and support for civil society. This ongoing TA will cost about £30 million per year.
The Daily Mail gave a warm welcome to the news this morning. Critics of the UK aid budget have long complained that India is an emerging superpower which is investing heavily in its own space programme and military. Tory MP Mel Stride recently noted in parliament that there were twice as many billionaires in India than in Britain. In point seven of his recent ten point open letter to her, Lord Ashcroft urged Justine Greening to stop giving aid to richer nations. Why, ask the critics, is cash-strapped Britain borrowing from the likes of China and other international sovereign wealth funds in order to help countries that are enjoying much higher growth rates than us?
The counter-argument from ex-Development Secretary Andrew Mitchell was that much of India remains very poor. There are, for example, more people below the global poverty line in India than in the whole of sub-Saharan Africa. A third of people living on less than 80 per day live in this hugely populous nation. Aid organisations have said that these poor people shouldn't suffer because the Indian government has chosen the wrong spending priorities. Save the Children has called the cuts "premature". Our own Deep End Editor has wondered whether we should be a little less exercised about the aid budget and a little more exercised by much larger taxpayer subsidies of the banking sector.
Ms Greening has decided that continuing public confidence in the UK aid budget was her most important objective. All existing UK/ India aid projects – and those already in the pipeline – will continue until their completion but there won't be any new traditional aid contracts. Once the wind down has been completed more than £200 million will be saved. These savings won't be used to help George Osborne meet his deficit targets, however, but will be diverted to other even poorer nations – poorer nations without space programmes.
We seem to have a development minister who is determined to defend the 0.7% commitment but to accelerate the changes that Andrew Mitchell began. That means the re-orientation of the UK aid budget away from faster-growing developing nations and towards poorer nations – especially in conflict zones. There'll also be more emphasis on transparency of aid, private sector know how and medical vaccinations.