India tells Britain: We don't want your aid

INDIA DOES not require British aid, which is “peanuts”, the country’s Finance Minister has said.

Pranab Mukherjee and other Indian ministers tried to stop Britain’s aid to their booming country last year — but relented after the British begged them to keep taking the money, The Sunday Telegraph can reveal.

The disclosure will fuel the rising controversy over Britain’s aid to India.

The country is the world’s leading recipient of British bilateral aid, even though its economy has been growing at up to 10 per cent a year and is projected to become bigger than Britain’s within a decade.

Last week India rejected the British-built Typhoon jet as preferred candidate for a £6.3billion warplane deal, despite Andrew Mitchell, the Development Secretary, saying Britain’s aid to Delhi was partly “about seeking to sell Typhoon”.

Mr Mukherjee’s remarks, previously unreported outside India, were made during question time in the Rajya Sabha, the upper house of parliament.

“We do not require the aid,” he said, according to the official transcript of the session. “It is a peanut in our total development exercises [expenditure].”

He said the Indian government wanted to “voluntarily” give it up.

According to a leaked memo, the then foreign minister, Nirupama Rao, proposed “not to avail [of] any further DFID [British] assistance with effect from April 1, 2011”, because of the “negative publicity of Indian poverty promoted by DFID”.

Sources in Delhi said officials at the Department for International Development told the Indians that cancelling the programme would cause “grave political embarrassment” to Britain.

DFID has sent more than £1billion of British taxpayers’ money to India in the past five years and is planning to spend a further £600million on Indian aid by 2015.

“They said British ministers had spent political capital justifying the aid to their electorate,” one source told The Sunday Telegraph.

“They said it would be highly embarrassing if the Centre [the government of India] then pulled the plug.”

Amid steep reductions in most British government spending, the NHS and aid have been the only two budgets protected from cuts.

Britain pays India about £280million a year, six times the amount given by the second-largest bilateral donor, the United States. Almost three quarters of all foreign bilateral aid going to India comes from Britain.

France, chosen as favourite for the warplane deal, gives about £19million a year.

Controversial British projects have included giving the city of Bhopal £118,000 to help fit its municipal buses and dustcarts with GPS satellite tracking systems. Bhopal’s

buses got satellite tracking before most of Britain’s. In India, government audit reports found £70million had disappeared from one DFID-funded project alone.

Most aid donors to India have wound down their programmes as it has become officially a “middle-income country”.

However, Britain has reallocated its aid spending to focus on India at the expense of some far poorer countries, including the African state of Burundi, which is having its British bilateral aid stopped from next year.

Supporters of British aid say that India still contains about a third of the world’s poor, with 450million people living on less than 80p a day.

DFID says its programmes are focused on the country’s three poorest states, saving at least 17,000 lives a year.

The junior development minister, Alan Duncan, said last week that cutting off British aid to India “would mean that hundreds of thousands, if not millions, of people will die who otherwise could live.”

Emma Boon, the campaign director of the Taxpayers’ Alliance, said: “It is incredible that ministers have defended the aid we send to India, insisting it is vital, when now we learn that even the Indian government doesn’t want it.”

Malini Mehra, director of an Indian anti-poverty pressure group, the Centre for Social Markets, said aid was “entirely irrelevant” to the country’s real problems.

Andrew Mitchell, the Secretary for International Development, said now was not the time to stop aid to India.

A DFID spokesman said that the Indian prime minister indicated last year that his government still welcomed aid from “friendly” countries.