UK to end financial assistance to India

No new British financial aid grants will be made to India -- even though India has the world's highest number of poor people, many of whom suffer from chronic hunger. Does this make sense?

No new British financial aid grants will be made to India with immediate effect, UK Development Secretary Justine Greening announced today. Until last year, when it was overtaken by Ethiopia, India was the biggest recipient of bilateral aid from the UK, receiving an average of £227m a year in direct financial support over the past three years. Much of the UK aid money was used to fund projects in some of India's poorest areas.

Programs already underway will be completed by the end of 2015 as planned. But Secretary Greening will not sign off any new programmes, and financial aid programmes to the country will end completely in 2015.

From 2015, the UK's development cooperation with India will continue along three axes: (i) technical cooperation to share advice and skills with the Government of India on poverty reduction; (ii) investment in private sector projects bringing opportunities to poor people in the poorest parts of India; and (iii) global partnership -- the UK will work together with India to help other poor countries learn from India’s experience and on areas like trade, food security, climate change and health that can benefit everyone.

Secretary Greening said "These changes reflect India's rapid growth and development progress in the last decade. India's growing ability to finance its own development programs 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."

This decision by the UK government highlights the dilemmas of the new geography of poverty.

Today, some 72 per cent of the world’s poor people, 960 million (based on the $1.25 poverty line), live in middle income countries, not poor countries. And India has the world highest number of poor people, 456 million, followed by China (208 million); Nigeria (89 million), Indonesia (66 million), Pakistan (35 million) and the Philippines (20 million).

The two emerging giants of India and China account for half of the world’s poor! And based a poverty line of $2 a day, some two-thirds of Indians still live in poverty.

India also has an appalling record in tackling hunger, despite strong economic growth. In India, 43.5 percent of children under five are underweight. From 2005-2010, India ranked second to last in the world on children underweight — below Ethiopia, Niger, Nepal, and Bangladesh.

So the issue facing the British government, and all donors in the Asian Century, is whether they should give foreign aid to emerging economic giants who have nuclear and space programs, as well as foreign aid programs themselves, but do not take seriously enough the plight of their own poor people.

India has experienced a strongly growing economy for some two decades now, and has more billionaires than the UK. But the benefits of this growth have benefited the rich more than the poor. And corruption is rife, even in poverty reduction and food programs.

The British government, which faces its own financial problems, has taken the hard decision of implicitly telling the Indian government that it is its responsibility to look after its poor -- while recognizing that sharing knowledge with India is still a justifiable endeavor. This will enable the UK to allocate for assistance to countries that have greater development needs.

While the UK decision appears very sound, a global citizen might believe that we have a moral duty to help poor people, wherever they live, even when their own governments and elites do not seem to care. In other words, there are intractable moral dilemmas in these issues. No doubt reflecting this, British charities and non-government organizations will continue to provide assistance to India's poor and starving.