Britain’s aid programme to India is fragmented, lacks a clear rationale and does little to counter the negative trends in human rights and democracy in the country, the government’s aid watchdog has found.
The findings are likely to be used by those who claim the UK government risks using its aid programme to deepen its relationship with India, including seeking free trade deals, rather than attempting to reduce poverty, which is the statutory purpose of UK aid.
The review by the Independent Commission for Aid Impact said the government spent £2.3bn on aid to India between 2016 and 2021, including the provision of loans by the government-run British International Investment to mainly smaller companies. In total, loans to India represent 28% of the BII global loan portfolio.
The review finds “the overall programme is fragmented across activities and spending channels and lacks a compelling development rationale”, particularly since India already has relatively developed financial markets.
The UK does not use its aid programme, enshrined in a joint roadmap signed by India and the UK in 2021, to support Indian democracy and human rights, despite backsliding in this area under the premiership of Narendra Modi, the review says.
The ICAI review group reported: “To explain the limited activity on democracy and human rights, Foreign Office officials noted India’s acute sensitivity to any external influence in its political affairs, particularly from the UK. They acknowledged that the UK and India have different perspectives in this area and described the roadmap as being based on shared interests, rather than shared values. They informed us that the UK engages in ‘quiet diplomacy’ on issues such as freedom of speech.”
On human rights the report finds the 2021 roadmap setting out India and the UK’s joint cooperation goals “does not include any objectives related to the promotion of democracy or human rights in India” and adds that “the UK has not been particularly active in India in this area in recent years, either in its aid programme or in its public diplomacy”.
The report says: “There is little or no programming related to democratic space, free media or human rights. UK funding for Indian NGOs working on civil society issues has been largely discontinued. In fact, internal UK documents reviewed by ICAI suggest that behind-the-scenes diplomacy in this area is also quite limited. A number of Indian NGOs we consulted for this review expressed concerns that the UK was prioritising good relations with the Indian government over human rights.”
The report says it is not convinced that BII’s large India portfolio is making a strong contribution to inclusive growth and poverty reduction, with many of its investments providing benefits to middle-class consumers rather than the poor. One BII study found only 30% of those benefiting belonged to the bottom 60% of India’s population by income. One major investment in an Indian bank, intended to expand financial services for the poor, in fact led mainly to expansion of the bank’s credit card business and corporate lending.
The assessment found the programmes were well managed and the emphasis on climate breakdown, especially in the Indian power sector, made sense given the scale of India’s carbon emissions.
The UK overhauled its aid programme to India in 2011 in response to the expansion of India’s economy and falling rates of extreme poverty. A decade ago, India was the largest recipient of UK bilateral grant aid, with annual funding peaking at £421m in 2010, but that figure fell to £95m in 2020.
A Foreign Office spokesperson said: “Since 2015 the UK has given no financial aid to the government of India. Most of our funding now is focused 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.”
• This article was amended on 15 March 2023 because an earlier version cited the Independent Commission for Aid Impact’s figure for aid to India between 2016 and 2021 as £2.7bn. The correct citation is £2.3bn.
