Britain should ‘urgently' prepare an exit strategy from its £280-million-a-year aid programme to India, a House of Lords committee said in a report published on Thursday.
“British development aid to the poorest Indian States may provide a perverse incentive to the Indian Government to use less of its own revenue to alleviate poverty,” the Economic Affairs Committee concluded in its report on the Economic Impact and Effectiveness of Development Aid.
It added that India's impressive economic growth and technological attainments and aid programme coexisted with widespread, extreme poverty.
The report, a wider examination of the state of Britain's international aid programme, criticised ‘large and prolonged' aid programmes, which it said could make the acquisition of aid, rather than the solving of issues the top priority. It also questioned Britain's commitment to meeting the UN target of spending 0.7 per cent of Gross National Income on aid by 2013, arguing that it should instead be based on what achieved international development and stability.
The issue of aid to India to which the government has committed up until 2015 has long been a controversial issue in Britain, particularly following the government's decision to drop aid programmes to 16 other countries, including Russia and China.
There was further embarrassment last month after newspaper reports revealed that India had been keen to drop the aid programme, but that British officials had insisted it be maintained.
Most recently, the decision to pick France's Dassault Aviation as the preferred bidder for the MMRCA fighter contract over the Eurofighter consortium led some Members of Parliament to raise the matter again.
In an interview with The Times of London earlier this month, the International Development Secretary, Mr Andrew Mitchell, indicated the programme would not be renewed beyond 2015. “We are walking the last mile with them,” he told the paper.
Responding to the report, Mr Mitchell said that going back on its 0.7 per cent pledge would cost lives while philanthropist Mr Bill Gates warned that abandoning the target risked undermining the huge progress made over the past few years.