Background
India, the largest democracy in the world, is home to nearly one-third of the world's population living below $1.25 a day. Poverty is an endemic in India where a whopping 650 million (53.7% of country’s population, as per Oxford Poverty and Human Development Initiative) poor people struggle every day to earn the basic necessities of life. Eight states of India constitute 65% of India’s poor, and poverty alleviation in these states is very critical to meet the United Nations’ Millennium Development Goals. The department for international development (DFID), which is leading British government’s fight against world poverty, was giving India 280 million pounds in aid every year with primary focus on three states, Bihar, Madhya Pradesh and Orissa, that constitute a quarter of the above mentioned 65% of India’s poor. But last year on November 9, British international development secretary Justine Greening announced that no new British financial aid grants would be made to India, although the existing commitments until 2015 would be honoured. According to the British taxpayers, this had been a long-awaited policy change; nevertheless, the decision has sparked debates in many spheres.

Importance
One might argue: What is the importance and relevance of this issue that could potentially affect both the countries and the world community at large? If we look at the trending events that are often discussed in the world’s major political and economic forums, the ‘Rise of the East’ and the ‘Economic crisis in Euro-zone’ are among the most prominent ones. The mere simultaneous occurrence of these two events has made us alter many of our old beliefs and forced the policymakers to bring policy changes in a range of controversial areas. Some historians and statisticians even want to compare the coming days with the days before the industrial revolution of Europe and pre-colonisation period of China and India, when the ‘East’ supposedly controlled the world’s trade and economy.

Under these circumstances, the UK government’s decision to stop aid to India is very significant. This involves two prominent countries of the West and the East breaking a trend that had long seen so obvious. Here the actual issue is not whether India can afford to let go 280 million pounds each year, but whether the British government is viewing India as the rising powerhouse in global affairs or the Indian government is communicating the message of self-sufficiency without doing a reality check on the ground.

Author’s position
In my opinion, the decision of the UK government is absolutely correct and perfectly timed. The aid to India should be stopped mainly because it has not been serving the intended purpose for both the countries. The rationales behind the stated position are analysed in the following six paragraphs.

(1) The UK AID logo of DFID has the tagline ‘from the British people’. The British taxpayers have every right to object to the distribution of the fund particularly when there is an economic hardship domestically. DFID accounted for $12.1 billion of the over $1 trillion 2010-11 budget of the UK government. After David Cameron’s Conservative-led coalition government came into power in the May 2010 election, there was a huge pressure on the legislators to cut down the expenses in several areas. In a coalition government, axing the funds for international development would have been a safe decision and the same has been reflected in the UK aid to India. So, from the political point of view of the UK, this new policy that would save Britain over 200 million pound over the next three years is actually airing the voice of majority of the British people. The same sentiment has been reflected in the poll conducted by The Guardian, where 47% of the people voted for the decision to stop further aid.

(2) When we talk about aid for a particular purpose, we must take into account the amount of the money involved. India is still grappling with a range of health, education and social issues, not taking into account the issues related to poor infrastructure and other developmental works. But let’s consider the role of UK aid here. The amount, around 280 million pound per year, really is "peanuts", as the former finance minister and current president, Pranab Mukherjee, described it. This is less than 0.03% of India's national income and less than 2% of what the central government spends only on the food subsidy and rural employment programmes in the country. Hence, the annual grant amount by the UK government was merely symbolic and the grant’s efficacy was highly debatable.

(3) Now, if we do not consider the amount of the grant and focus on the effective utilisation of the money, the question arises whether the grant has brought in the desired expertise and knowledge that would otherwise be missing in India. Is it able to fulfil the gaps found in the spending pattern of the government of India or other local agencies? The answers will be mostly negative. If we do a comparative analysis of the key poverty indicators of the three focussed Indian states of DFID, the result will not show a drastic change that would have otherwise proved the necessity of the continuation of the UK aid. This calls into question the whole system that manages the government’s aid. Experts have established that private philanthropy (for example, Bill and Melinda Gates Foundation) has a much better track record of delivering results than government funding does. In fact, the often heard allegation that the UK aid is making some officials richer and giving a few employments in the British Council must certainly be true in India. Considering the fact that there are still millions of people who need the aid all over the world, this international budget which never reaches the intended Indian recipients should be stopped.

(4) If we consider India’s point of view, a very pertinent questions arises: Is emerging India ready to handle its own problems? People have pointed out India’s spending choices that include own space programme and building a nuclear-capable army, in order to show India’s readiness to finance its own development and poverty reduction programmes. I do not buy this argument, as the geo-political obligations of the country were never put into context properly. India has the world’s biggest terrorist zone in its vicinity and a hostile communist neighbour who is three times powerful both economically and militarily. Even though India has a large poor population, should a country with the second largest mobile/net density keep relying on the European Space Agency (ESA) or National Aeronautics and Space Administration (NASA) for satellite communications? Of course not! Nevertheless, when we talk about the efforts of the Indian government towards meeting the Millennium Development Goals, the ‘common man’ agenda of ruling UPA-II does make perfect sense. The flagship social programmes of the government such as MNREGA, National Rural Health Mission (NRHM), Indira Awaas Yojana (IAY), Rashtriya Krishi Vikas Yojana (RKVY), Sarva Shiksha Abhiyan (SSA) are targeting the welfare of the common people in every aspects of life such as employment, health care, shelter, agriculture, education and so on. The total spending on these programmes is about 6.74% of the annual GDP (in 2011-12) that have pulled 60 million people out of extreme poverty in the last five years. So the question whether India has a vision and system in place to tackle its poverty issues is almost irrelevant now. Certainly, the internal political economy of India remains the biggest obstacle towards achieving the Millennium Development Goals, a problem where International bodies and developed countries can put their thoughts into (that is highly unlikely anyway).

(5) India is (I should write ‘was’, considering the current state of economy) growing at more than 7% in the last five years and considered the world’s second largest growing economy. The government of India spends $200 billion a year, its investment into the development of war-torn Afghanistan is more than $1 billion a year, the credit to Africa alone was $5 billion in 2011. If we look at India’s possessiveness in increasing the foreign currency reserve and the new policies of ministry of external affairs, the government’s ambition to play a bigger role in world affairs is evident. The demand for inclusion in the UN Security Council as a permanent member is long pending. In the 2011 winter session of parliament, the government openly expressed the intention of cutting down the foreign aids from different countries and continuing the relationship in terms of technical cooperation and bilateral trade. Hence, India’s message to Justine Greening on her visit to India just before the November 9 announcement could easily be understood. 

(6) One of the important reasons why I am supporting this decision of the UK Government is rightly pointed out by one Indian politician who has said, “Aid is past, trade is future.” In 2010, bilateral trade between the UK and India grew by 20%, bringing the total to 13 billion pounds. UK goods export to India grew by 37% and goods imports from India rose by 27%. The Indo-UK trade is expected to reach 25 billion pounds by 2015. So, the need of the hour is to focus on increasing bilateral trade that would grow both the economies and help both the citizenry. The UK government and the British companies should start seeing India as a huge market with 1.25 billion consumers. The press release by DFID post November 9 announcement specifically mentioned about the growing investment in the private sector projects, returnable capital investment and the collaboration on global forums on international issues. I believe this is the exact path for both the countries to embark on from this point onward.

Here is another important point to which I want to draw readers’ attention. From the above arguments with respect to the author’s position it seems the UK aid could have stopped a long time ago. Then why did it continue for so long?

The first responsible factor is the age-old relationship between India and the UK. The history between the two countries over sentimentalised the aid issue, putting both the governments in uncomfortable positions to take any tough decision. As India inherited most of her administrative bureaucracies from the British only, we can well imagine the red tape involved in taking a judgment against something long seen so obvious for both the countries.

The second reason came into focus when the former international development secretary Andrew Mitchell said in 2011 that the 280 million pound annual assistance was partly about "seeking to sell the Typhoon". Just for example, let’s take India’s recent decision to seal the estimated $15 billion fighter jet purchase deal with France's Rafale, rejecting the British-backed company. The decision was decried in the British media as "ingratitude" given the UK's aid to India. The grant to developing countries such as China, Brazil and India continues as long as the PR magic (as many people allege the grants to be) is working for the donor countries and beneficiary partners on both the sides are happy. But thanks to whatever reasons you may think, a right policy change has finally happened and in the perfectly right direction.

Conclusion
Nobel laureate Rabindranath Tagore said “You can't cross the sea merely by standing and staring at the water.” The same applies when we think about the future of both India and the UK. India will always remember the help that the UK gave her at the time of need. However, the UK does not need to continue this in future and India would barely notice this change. Now the time has arrived to take concrete steps to increase the bilateral trade and investment that will benefit both the economies.

References
1. The press release by Department for International Development (DFID), http://www.dfid.gov.uk/Where-we-work/Asia-South/India/
2. Five-year plans of Government India, http://www.planningcommission.nic.in/
3. The Millennium Development Goals of the United Nations, www.un.org/millenniumgoals/
4. Press reports/articles on the newspapers, www.guardian.co.uk, www.telegraph.co.uk.
5. Ministry of External Affairs, www.mea.gov.in
6. UK in India, http://ukinindia.fco.gov.uk/en/