UK to axe financial aid to India, saving £200m

British aid to India is to be brought to an end in 2015 in recognition of the booming sub-continent's “changing place in the world”.

The UK's controversial programme of direct financial assistance to India will be wound down over the next three years after International Development Secretary Justine Secretary announced an immediate halt to any new commitments.

The move prompted criticism from some humanitarian organisations, who warned that British aid still made a difference to the poor of India despite the country's increasing wealth.

But it will delight many Tories who have taken issue with David Cameron's continued commitment to overseas aid despite large spending cuts at home.

After 2015, UK support for India will consist of technical assistance, with the provision of development expertise which officials said would still cost about one tenth of the current programme.

But there will be no more direct aid, which has been running at £280 million a year since Ms Greening's predecessor Andrew Mitchell reduced it last year.

While aid programmes in India that are already under way will be completed as planned, no new ones will be signed off, reducing intended spending between now and 2015 by about £200 million.

Ms Greening, who took responsibility for Britain's aid budget in September, announced the change after discussions with the Indian government this week.

"Having visited India I have seen first hand the tremendous progress being made. India is successfully developing and our own bilateral relationship has to keep up with 21st century India. It's time to recognise India's changing place in the world," she said.

"It is of course critical that we fulfil all the commitments we have already made, and that we continue with those short-term projects already under way, which are an important part of the UK and government of India's development programme."

Critics of Britain's continued spending on Indian development point to the country's massive budget, which funds a space programme. Indian finance minister Pranab Mukherjee last year said the country no longer wanted or needed British aid, describing the money as "a peanut in our total development expenditure".

But Oxfam raised concern that the ending of financial aid to India may be "too hasty", warning that the scale of the poverty challenge there remained "huge".

The charity's director of campaigns and policy, Phil Bloomer, said: "We're concerned that completely withdrawing British aid to India by 2015 is too hasty. It's crucial that we don't cut off money which gives a lifeline to poor families, and a third of the world's poorest people live in India.

"Today's announcement puts the onus on both the UK and Indian governments to demonstrate how any changes to aid, and future development co-operation, puts the poorest people first.

"Despite the fact India is a country of growing wealth it is also a hugely divided country with extreme levels of poverty and inequality. The scale of the challenge remains huge, as 250 million Indian citizens go to bed hungry tonight."

Poverty campaign group One also warned against worsening "the plight of children" in India as funding is stopped.

Its Europe director, Adrian Lovett, said India still faced "major challenges". He said: "Millions of Indian people live in extreme poverty and a shocking number of children under five die each year.

"As Britain reduces aid, it must be very careful to ensure the plight of those children is not made worse. India's future is in Indian hands - and Britain must be a partner on that journey."

Melanie Ward, head of advocacy at ActionAid, said: "We are concerned about the UK Government's plans to cancel planned aid programmes in India.

"India is an example of the changing face of global poverty and a fast-moving economic landscape, but the reality is that it is a country with more poor people than in the whole of sub-Saharan Africa.

"It is precisely because of the success of aid and development that some countries are no longer low-income. Aid which is carefully targeted at the poorest and most vulnerable people in India still has the potential to make an enormous difference to millions of lives."