Aid to India focuses on reducing carbon emissions, says UK

According to the latest policy paper, the FCDO bilateral development aid budget for India in 2024-25 is expected to rise to GBP 57 million

London: The “Climate and Nature” theme dominates the UK’s bilateral aid focus for India, with 75 per cent of around GBP 38 million allocated for 2023-24 targeted at climate action projects, according to latest statistics.

A ‘UK-India development partnership summary’ released by the UK Foreign, Commonwealth and Development Office (FCDO) last week reveals that the remaining 24 per cent of the funds fall under the theme of “Bilateral Investment Partnerships (BIP)” and one per cent under “Global Health”.

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Amid some criticism of a continued high aid allocation for a fast-growing economy such as India, the FCDO pointed out that it is on schedule to make back all the money under the development partnership model that is distinct from the traditional aid funding basis.

“UK aid helps India reduce its carbon emissions through commercial investments, this is not traditional development aid,” an FCDO spokesperson said.

“We have already had GBP 100 million of our GBP 330 million spend to date returned, and expect all our money to be made back in the future,” the spokesperson said.

According to the latest policy paper, the FCDO bilateral development aid budget for India in 2024-25 is expected to rise to GBP 57 million. It notes that most of the UK’s development assistance is invested through British International Investment (BII), with major sectors covered including infrastructure, financial services, and healthcare.

“India is unique in also having a UK equity investment portfolio. To date GBP 330 million of development capital has been committed to invest in smaller, newer Indian enterprises, alongside investment from government of India or other Indian institutions. The aim is to help enterprises to grow and create jobs in ways that are sustainable and inclusive and get to the point where we can sell our stake and reinvest our finance,” notes the policy paper.

It adds that BII’s investments in India directly support over 500,000 jobs and the businesses they invested in paid over USD 500 million in taxes to the government of India in 2021. Some examples of such investments are highlighted as Ayana Renewable Power, which was funded in 2018 by BII to invest in clean energy, and Roserve Enviro, which provides end-to-end wastewater treatment and recycling solutions to industrial clients.

Among its regional programmes, the FCDO highlights the Climate Action for a Resilient Asia (CARA), which works across the Indo-Pacific region to build the resilience of economies and vulnerable communities to climate change, improve the natural environment, and promote low carbon growth.

“CARA’s work in partnership with India includes tackling regional air pollution, developing urban infrastructure such as public transport that is resilient to future climate shocks, delivering weather information and forecasting that is useful to farmers, and helping to protect the unique Sundarbans, the largest intact mangrove forest in the world,” the policy paper notes.

The latest update comes in the wake of strong criticism by the UK government’s independent aid watchdog of a “fragmented” approach to the development assistance for India over recent years.

The Independent Commission on Aid Impact (ICAI), which is tasked with the scrutiny of the UK government’s official aid to countries, noted in its India Country Portfolio Review in March 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.

“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. India is nonetheless still a substantial recipient of UK bilateral aid, ranking 11th in 2021,” the review noted.