UK to halt financial aid to India from January 2016

India will stop receiving financial aid from the UK from 1 January, 2016, as a decision regarding this was taken by the British government in 2012 following a domestic uproar over extending aid to India.

Many people in the UK had urged the government to end financial assistance to India citing the Asian country's growing economic strength.

Calling British aid "a peanut" in India's total spending on development, the then finance minister Pranab Mukherjee had said in 2012 that the country could "very well do" without that assistance. Following the comments, many legislators in the UK had vehemently opposed the continuation of British aid to India.

While those protesting against the aid had said that India possessed a "robust space and defence programme", aid activists asked for continuation of the programme, given millions of poor people in India, The Economic Times reported.

The Indian government said UK had offered financial assistance for its developmental programmes during 2013-2015. It provided Rs 855.01 cr, Rs 601.77 cr in and 190.06 cr for the fiscal years 2013-14, 2014-15 and 2015-16 respectively.

Currently, the Department for International Development (DFID) is giving financial assistance to 26 government sector projects which are being run at the Centre and in MP, Odisha, West Bengal and Bihar. The projects are spread across health, education, governance and urban reforms sectors. DFID is a UK government department responsible for administering overseas aid.

In December, British media reported that UK development spending went up to £279 million in 2014 from £268 million in the previous year, despite its decision to stop aid to India.

The Indian government said that five new agreements have been signed in 2014-15 and 2015-16 for technical assistance projects in the areas of agricultural reforms, urban infrastructure, energy access, etc.

"The new component Private Sector Development Initiative (PSDI), introduced in 2011 to promote private sector investment in eight low income states of Madhya Pradesh, Odisha, Bihar, West Bengal, Chhattisgarh, Jharkhand, UP and Rajasthan, will continue," said the Ministry of External Affairs.