U.K. restructures aid programme to India with eye on market

Discussion in 'Foreign Relations' started by LETHALFORCE, Dec 24, 2011.


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    Feb 16, 2009
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    The Hindu : News / National : U.K. restructures aid programme to India with eye on market

    After criticism that being a fast-growing economy, India does not deserve foreign aid

    Britain's £280 million annual aid to India has been radically re-engineered in response to criticism that as one of the world's fastest growing economies New Delhi does not “deserve” foreign aid, the International Development Secretary Andrew Mitchell said on Friday. He also said that British aid to India was “not for ever” and there were no commitments beyond 2015.


    The restructured programme, which has resemblance to a sovereign wealth fund, is designed to bring returns to the recession-hit British taxpayers. It will see half the aid budget for India invested in private sector enterprises that are already working with poor people such as Milk Mantra, a dairy in Orissa which buys milk from small farmers.

    Mr. Mitchell told The Financial Times that the four-year “pro-poor private sector investment” programme rolled out across India's eight poorest States broke new ground in development assistance and could be extended to other countries.

    “At the heart of the programme is pro-poor private sector investment work. It will increasingly be about returnable capital and has some of the characteristics of a sovereign wealth fund,” he said.

    “This is Britain's big contribution and as far as the British taxpayer is concerned this is returnable capital.”

    India has hitherto insisted that any foreign aid must be channelled through government agencies but Mr. Mitchell said that Britain's private sector approach had the backing of the Indian government.


    Seeking to play down criticism — much of it within his own Conservative Party — that at a time of a deep economic crisis at home the government should not be “splurging” scarce resources in foreign aid, he said : “The Tory party is not the same as it was in 1979 on development. There is a big, strong, passionate drive throughout Britain to make a huge contribution which our generation can make which previous generations have not.”

    Mr. Mitchell said Britain's aid programme for India was “hugely” in its own national interest given the importance of India's growing market potential. It was also part of broader cooperation on major bilateral and international issues such as trade and climate change.

    “It's hugely in our own national interest,” he said pointing out that India was “going to be one of the biggest markets in the world in the next few years.”

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