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UK to stop giving India financial aid by 2015

The UK will phase out payments to India over the next two years, the British government has announced.

India UK aid 9 11 2012Enlarge
An Indian boy feeds his sister at their home in a slum in Hyderabad, on January 10, 2012. Levels of under-nutrition in the country are 'unacceptably high' despite impressive GDP growth, which is just one reason why charities are concerned that the UK's decision to withdraw millions of pounds of funding by 2015 is premature. (Noah SEELAM/AFP/Getty Images)

The UK will stop sending India financial aid by 2015, the British government has announced, citing the rapidly growing Indian economy.

Both countries agree that "now is the time to move to a relationship focusing on skillsharing rather than aid," Britain's international development secretary, Justine Greening, said in a statement.

"It is time to recognise India's changing place in the world."

The UK has given its former colony an average of £227 million ($362 million) per year for the past three years, the BBC reported.

Britain will finish up paying any outstanding grants, but won't establish any new ones.

Then from 2015 onward, instead of direct financial aid, the UK will offer "technical expertise" on poverty reduction, healthcare, skills training, trade and private-sector partnerships, according to the Telegraph – all of which is estimated to cost the government one-tenth of what it currently contributes.

Conservative British lawmakers have long argued that the funding should be scrapped, and especially at a time of domestic spending cuts.

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India's economic boom has already brought millions of people out of poverty, critics say, and New Delhi now spends billions of dollars on defense, space exploration and aid to other countries.

Yet charities point out that some Indians remain among the poorest people on earth, and expressed concern that the UK's withdrawal of funding was premature.

"It's crucial that we don't cut off money which gives a lifeline to poor families," said Oxfam spokesman Phil Bloomer. "The scale of the challenge remains huge, as 250 million Indian citizens go to bed hungry tonight."

Indians, however, won't be shedding many tears over the aid cuts, according to economist Jayati Ghosh on the Guardian's Poverty Matters blog, who says that the UK contributes only a fraction of what India spends on development. And in return, Ghosh argues, Britain expected to continue wielding influence over India, rather than treating the country as an equal trading partner.

"Aid is past, trade is future," the Press Trust of India quoted Foreign Minister Salman Khursid as saying this week, noting that India is now the third biggest investor in the UK economy.

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http://www.globalpost.com/dispatch/news/regions/europe/united-kingdom/121109/uk-india-financial-aid-2015