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Britain to review aid to 'rich' India

Under pressure to reduce foreign assistance, Britain may scale down aid given to India annually, saying wealthy Indians could do more to help their poor countrymen. India is one of the leading beneficiary countries under scrutiny, especially after an investigative report by a British newspaper highlighted the extent of corruption in the Sarva Shiksha Abhiyan

Britain is to review its £ 250 million annual development assistance to India amid a growing sense in Whitehall and among independent experts that a country that spends millions on its nuclear programme and is seen as an emerging economic giant does not need foreign aid any more. 

India is the single largest recipient of British overseas aid, mostly tied to specific projects. With Britain itself facing sweeping cuts in public spending following its worst post-war economic crisis in recent months, the aid package to India could be reduced as part of an overall review of British assistance to fast-developing major economies.  

Funding to China and Russia is reported to have been already withdrawn. Secretary of State for International Development Andrew Mitchell, on July 11, 2010, said: “India is more complex and more difficult than China. But this is a programme (scaling down aid) I am looking at in detail,” adding that “the rich NRI population of Britain could do more to help their countrymen.” 

Officially, the line until now has been that despite progress India still needed assistance to deal with the “scale of its needs”. Recently, in an article in The Hindu, Mitchell wrote that Britain would continue to support “the millions of Indians who are battling against poverty and disease”. 

“Our message is this: the people and government of Britain are on your side, and we will use every tool in our policy armoury -- aid, trade, climate policy, diplomacy, business investment, and more -- to champion fairness and prosperity for you,” he wrote, pointing out that a “fifth of global child and maternal deaths, and cases of TB, occur in India” while over 40% of children in India are underweight and a child dies every 15 minutes from easily preventable diseases. 

Last month, however, Britain, shocked by reports of massive embezzlement in India in the use of millions of pounds granted as aid for the Sarva Shiksha Abhiyan, promised “zero tolerance to corruption”. Mitchell described them as “shocking allegations” and promised to launch an “immediate inquiry”. 

Cutting foreign aid to countries like India was the most important suggestion by voters to Chancellor George Osborne, who launched a Treasury’s Spending Challenge website to ask people for ideas on where the funding cuts axe should fall. As hundreds of suggestions poured in, the most popular was for international development funding to bear some of the brunt of the pain.  

Mitchell’s Conservative Party colleague and The Financial Times’ former South Asia Bureau Chief Jo Johnson called for Britain to stop funding India saying that it was no longer a natural aid recipient. “India can now fund its own development needs… It has a defence budget of $ 31.5 billion, plans for a prestige-boosting moon-shot and a substantial foreign aid programme of its own,” he wrote, adding that “a bit of tough love in the new special relationship should end this anachronism”. 

Johnson may have been hinting at eight Indian companies, including Indian Oil Corporation (IOC) and the Mukesh Ambani-led Reliance Industries Limited (RIL), having made it to the list of the world’s 500 largest companies compiled by Fortune magazine. 

Other Indian companies on the list are Tata Steel, Tata Motors, Bharat Petroleum Corporation Limited, Hindustan Petroleum Corporation Limited (HPCL), ONGC and State Bank of India (SBI). The list also features Citigroup, Arcelor Mittal, Pepsico and Motorola, led by people with Indian roots.  

There has been a gradual influx of Indian names in the global big league over the past few years. In 2003, just one Indian firm -- Indian Oil Corporation -- figured amongst the world’s largest companies. This year, there is one additional name from India -- Tata Motors -- compared to the 2009 listing. Tata Motors has seen its turnover shoot up after acquisition of Jaguar Land Rover in early 2008. There is one other name from the Tata Group -- Tata Steel -- which also owes its presence on the list to its takeover of UK-based Corus.  

The US dominates the listing with 139 names -- the largest number of companies from any single country. However, the number of American firms on the list has gradually been coming down as developing countries such as China and India grow. A total of 46 firms from China have also made it to the listing -- again, most of them are from the public sector. 

However, the ground reality in the case of India can be gauged from its entry on the Department for International Development’s website that features a photo of a “family group in a slum” in Patna and notes: “The country has accomplished a great deal since Independence in 1947, making slow but steady progress. However, despite its strong economic growth, the scale of its need is huge. Today 456 million Indians -- 42% of the population -- live in poverty, comprising one-third of the world’s poor.” 

Source: Economic Times, July 12, 2010
            Press Trust of India, July 12, 2010
             Deccan Chronicle, July 12, 2010