UK gives $1.6 billion of aid to India over 4 years

Britain said on Monday it would give a billion pounds ($1.6 billion) of aid to rapidly growing India over the next four years while ending aid to other poor countries such as Cambodia and Moldova.

Prime Minister David Cameron's government has launched a big push to increase British trade with India and other emerging giants to try to bolster Britain's recovery from recession.

His nine-month-old coalition government had earlier suggested it could scale back development aid to India because of its growing prosperity, but decided against it after a review of its overseas aid programmes.

The Department for International Development (DFID) said aid to India would be frozen at the current level of around 280 million pounds a year over the next four financial years.

At the same time Britain will end bilateral aid to emerging economies seen as no longer needing it, including Serbia, Cambodia and Moldova, DFID said.

Overseas aid is one of a handful of areas of public spending that have been protected from sharp cuts ordered by the government to rein in a record peacetime budget deficit.

Ring-fencing aid, particularly to India, with its rapid economic growth, is controversial in Britain at a time when many domestic programmes are being cut.

India enjoys economic growth of around 8 percent a year, has its own space programme and plans to spend $50 billion to modernise its military over the next five years. But millions of Indians remain desperately poor.

Britain's aid will in future be targeted at India's three poorest states -- Orissa, Madhya Pradesh and Bihar -- and much more will be spent in the private sector.

"They do have a space programme, but on the other hand there are more poor people in India than in the whole of sub-Saharan Africa and the average income of an Indian citizen is only one third of that of a Chinese person," International Development Secretary Andrew Mitchell told the BBC.

Britain is one of the world's biggest aid donors and the Conservative-Liberal Democrat coalition has stuck to the previous Labour government's goal of raising foreign aid to the U.N. target of 0.7 percent of gross national income by 2013.

In 2009-2010, DFID spent 4 billion pounds on bilateral aid and 2.5 billion through international organisations.

The coalition has previously announced it will stop giving aid to China and Russia. DFID said it expected to announce the closure of more programmes as it finishes its review by March 1. Aid to Vietnam will gradually wind down over the next few years.

The coalition is focusing more of its aid budget on "fragile" or conflict-ridden states such as Afghanistan and Pakistan. DFID will continue to work in countries where many live in extreme poverty, including Ethiopia and Bangladesh.

Cameron has pushed for more business with India. Defence contractor BAE Systems and engine maker Rolls-Royce signed a $1.1 billion aircraft deal with India when Cameron led a weighty delegation there last July.

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