UK’s aid watchdog critical of ‘fragmented’ approach to India funds

The UK government’s independent aid watchdog on Tuesday delivered a strong critique of the country’s “fragmented” approach to the development assistance for India over recent years, which amounts to GBP 2.3 billion between 2016 and 2021 and makes India a “substantial recipient” of bilateral aid.

The Independent Commission on Aid Impact (ICAI), which is tasked with the scrutiny of the UK government’s official aid to countries, notes in its India Country Portfolio Review that it would be a surprise to many to see UK aid to India continuing at a high level despite a shift in the relationship in 2015 – in keeping with the Indian government’s preference for a partnership of equals, rather than a traditional donor-recipient relationship.

According to the ICAI assessment, India remains the largest recipient of UK development investment in the form of loans and equity investments into the private sector that aim to achieve development impact alongside a modest financial return.

“The UK’s aid to India is now very different to that provided a decade ago. The UK no longer offers financial support to the government, nor does it fund direct poverty reduction interventions in the poorest states,” notes the ICAI review.

“India is nonetheless still a substantial recipient of UK bilateral aid, ranking 11th in 2021. When BII [British Investment International] investments are taken into account, we estimate that India received approximately GBP 2.3 billion in UK aid between 2016 and 2021 although it should be noted that the GBP 129 million of Foreign, Commonwealth and Development Office (FCDO) investments within this figure have generated some returns to the UK taxpayer,” it reads.

“Many stakeholders may be surprised to see UK aid to India continuing at this level, a decade after the UK announced its transition away from its traditional development partnership. While the UK government stated at the time that development investment and technical assistance (which, in the aid statistics, includes research funding) would continue, the clear expectation was that overall aid volumes to India would decrease faster than they have,” it notes.

ICAI goes on to say that it is not clear from the pattern of UK aid to India that has emerged since the transition in 2015 represents the “best use of the UK aid budget”.

“Rather than a coherent portfolio focused on India’s most pressing development challenges, it consists of a set of activities that is fragmented across objectives and spending channels, and lacks a clear development rationale,” it concludes.

ICAI chief commissioner Dr Tamsyn Barton, who led the review, said: “India was the 11th largest recipient of UK aid in 2021, receiving more aid than countries like Bangladesh and Kenya, so it is all the more important that every penny is well spent or invested.

“However, we found that the portfolio wasn’t coherent and that the development rationale for it wasn’t clear. And while we appreciate that democracy and human rights in India is a sensitive area for the UK, we were surprised to find out that the UK had largely ceased supporting work at the local level.” Despite concerns about the model that has emerged in India, Barton did stress on areas of strength, including “innovative support on climate change and clean energy, showing the value of combining support for policy reforms with well-targeted development investments”.

The review has made a set of recommendations for the UK government to build on the strengths it has identified within the India Country Portfolio, including a focus on a limited number of areas where UK aid can help make India’s economic growth more inclusive and pro-poor and a greater focus on mobilising private finance at scale to address climate change.

Pointing to “negative trends” in the areas of Indian democracy and human rights, it also recommends the UK look for opportunities to support coalitions of Indian research institutions and non-governmental organisations working on social issues in support of the goal of championing open societies and democratic standards.

The British government said it will respond to the ICAI report in due course, as is the usual process for such reviews.

Meanwhile, an FCDO spokesperson said: “Since 2015 the UK has given no financial aid to the government of India. Most of our funding now is focussed on business investments which help create new markets and jobs for the UK, as well as India.

“UK investments are also helping tackle shared challenges such as climate change.” 

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