Finance Minister Pranab Mukherjee said that India "does not require" British aid, describing it as "peanuts"
Finance Minister Pranab Mukherjee and other ministers tried to terminate Britain's aid to India -- but relented after the British begged them to keep taking the money, according to Britain's The Sunday Telegraph.
Tall claims? Pranab Mukherjee's remarks, previously unreported outside India, were made during question time in the Rajya Sabha. File pic
The disclosure will fuel the rising controversy over Britain's aid to India. The country is the world's top recipient of British bilateral aid, even though its economy has been growing at up to 10 per cent a year and is projected to become bigger than Britain's within a decade.
Last week India rejected the British-built Typhoon jet as preferred candidate for a �6.3 billion warplane deal, despite the Development Secretary, Andrew Mitchell, saying that Britain's aid to Delhi was partly "about seeking to sell Typhoon."
Mukherjee's remarks, previously unreported outside India, were made during question time in the Rajya Sabha. "We do not require the aid. It is a peanut in our total development exercises," he said, according to the official transcript of the session.
According to a leaked memo, foreign minister Nirumpama Rao, proposed not to avail (of) any further DFID (British) assistance with effect from April 1, 2011, because of the "negative publicity of Indian poverty promoted by DFID".
But officials at DFID, Britain's Department for International Development, told the Indians that cancelling the programme would cause "grave political embarrassment" to Britain, according to sources.
DFID has sent more than �1 billion of UK taxpayers' money to India in the last five years and is planning to spend a further �600 million on Indian aid by 2015. "They said that British ministers had spent political capital justifying the aid to their electorate," one source said. "They said it would be highly embarrassing if the Indian government then pulled the plug."
Amid steep reductions in most British government spending, the NHS and aid have been the only two budgets protected from cuts.
Britain currently pays India around �280 million a year, six times the amount given by the second-largest bilateral donor, the United States. Almost three-quarters of all foreign bilateral aid going to India comes from Britain. France, chosen as favourite to land the warplane deal, gives around �19 million a year.
Controversial British projects have included giving the city of Bhopal �118,000 to help fit its municipal buses and dustcarts with GPS satellite tracking systems. Bhopal's buses got satellite tracking before most of Britain's did. In India, meanwhile, government audit reports found �70 million had disappeared from one DFID-funded project alone.
Most aid donors to India have wound down their programmes as it has become officially a "middle-income country," according to the World Bank.
However, Britain has reallocated its aid spending to focus on India at the expense of some far poorer countries, including the African state of Burundi, which is having its British bilateral aid stopped altogether from next year. Supporters of British aid say that India still contains about a third of the world's poor, with 450 million people living on less than Rs 60 a day. DFID says its programmes -- which are now focused on the country's three poorest states -- save at least 17,000 lives a year and have lifted 2.3 million people out of poverty since 2005. The junior development minister, Alan Duncan, said last week that cutting off British aid to India "would mean that hundreds of thousands, if not millions, of people, will die who otherwise could live." However, Mukherjee told the parliament last August that foreign aid from all sources amounted to only 0.4 per cent of India's gross domestic product. From its own resources, the Indian government has more than doubled spending on health and education since 2003.