09/11/2012 13:53 GMT | Updated 09/01/2013 05:12 GMT

So, the UK Is No Longer Going to Be Giving Aid to India

It seems, as far as the UK government is concerned, that aid no longer forms part of a moral commitment to global equity but is merely a business opportunity.

Today, to the glee of some of the UK's media, the secretary of state for international development, Justine Greening, announced that all UK financial aid to India will cease in 2015.

The reaction has been mixed, and largely predictable, with the development community arguing that the UK's aid programme is leaving India too soon while victorious neo-liberal commentators suggesting that we should be cutting the rest of the aid budget too.

Whatever your opinion, the fact is that, despite all the talk of space programmes and Indian millionaires, almost a third of India's population live below the international poverty line on less than $1.25 a day. India is also home to half of all malnourished children and a third of the world's poorest people. And while the numbers of people moving into the middle classes has increased in recent years, the overall population increases mean that the absolute numbers of poor has also increased, especially in rural regions of the developing world.

The truth is that we cannot simply see aid in terms of the old post-colonial model of rich countries giving to poor countries. In a world in which some of the world's poorest people live in middle income or rich countries, we have to move to a vision of development that recognises increasing inequality within counties as well as between them.

Inequality within India is indeed great, a result of a global economy that favours the rich over the poor. And one in which corporations rule. And so when, as part of its announcement on cutting aid to India, the UK government says its future aid programme will, among other things, focus on "private sector projects designed to help the poor while generating a return", then alarms bells start to ring. The first question has to be: a return for whom? And the answer to this is: company balance sheets and their shareholders.

The former UK government international development secretary, Andrew Mitchell, wrote to WDM earlier this year saying: "This government believes in free trade, fair competition and the strength of British businesses. Helping developing countries prosper and grow is important for our own economic opportunities as a global trading nation." Further evidence, were it needed, that the UK government clearly has an eye to the returns for British business through its aid programme. This was painfully in evidence when Andrew Mitchell showed his disappointment that contracts for supplying Typhoon fighter jets to India were awarded to a French company rather than a British one, implying that those contracts had been expected in return for the UK's ongoing commitment to provide aid to India.

But experience shows that wealthy private sector interests can often win out over those of the poorest where aid and development are concerned.

There are instances where technical assistance - the use of aid money to pay for specialist advice given to governments in developing countries - can be seen to be promoting a neo-liberal economic agenda that favours business interests over those of the poor. While there is nothing wrong with sharing UK expertise, the reality of technical assistance is often that it is ideologically pro-market private consultants such as the Adam Smith Institute, Atos and PriceWaterhouseCoopers, rather than the poor, who benefit the most in the form of lavish payouts. Justine Greening has taken the welcome step of calling an internal probe into the value of these consultants. But the bigger question of who benefits from the actual advice given through UK technical assistance, both through consultants and using the UK government's own expertise, remains unanswered.

In Bangladesh, UK funded technical assistance is contributing to the establishment of 'special economic zones'. These favour foreign business investment over the needs of the unskilled, low paid workers who are employed in the factories operating there. Meanwhile, multinational, high street names like Nike, Walmart, Adidas, H&M and Gap have factories in these zones which grant them ten year tax holidays. But the unskilled workers (mainly women in this case) earn on average less than £1 a day, have few employment rights and are banned from joining a trade union. Recent protests by workers have been met with tear gas and rubber bullets from the police. And of course the profits from the sales of the goods produced there benefit the company much more than the workers or the host country.

Aid is vital for short term poverty relief, and we would never argue otherwise. But we need to be focussed on how to achieve long term reductions in poverty and improvements in global equity. The UK government has an obligation to keep to its commitment of spending 0.7% gross national income on aid and development to achieve these aims. But it must also answer the question about how its faith in the private sector involvement in aid and development can really be in any way considered to contribute to social and economic justice.

It seems, as far as the UK government is concerned, that aid no longer forms part of a moral commitment to global equity but is merely a business opportunity.