The Institute for Public Policy Research (IPPR), a major centre-left think-tank here, claims the announcement last year to end British aid to the country was "a tactic for winning votes at home rather than tackling poverty abroad".
"The UK should not give aid to India for ever, but withdrawing now is premature given India's development challenges. DfID (Department for International Development) should instead focus on areas that are not benefiting from India's growth, and key issues like health, HIV and good governance in the poorest states," said Will Straw, the associate director of the IPPR and co-author of In aid of India? Defining a positive role for the UK released today.
International development secretary Justine Greening had announced in November 2012 that the UK was to halt new commitments to India ? historically the biggest recipient of British aid.
Existing programmes will be wound down over the next three years, and after 2015 British support will be limited to "technical assistance".
However, IPPR stresses that India has achieved impressive economic growth in the past 10 years, as the shift in power to emerging economies has accelerated, but the country remains home to one-third of the world's poorest people - measured as those who live on less than 79 pence a day.
It calls on the UK government to take a "more holistic" approach to development by working with non-resident Indians (NRIs) living in the UK, who between them send remittances worth more than 2.5 billion pounds back to the country each year, and with UK-based investment funds.
The UK spent just over 300 million pounds on development in the country last year, with the majority channelled through DfID.
Prime Minister David Cameron had committed the Conservatives to fulfil Labour's pledge to lift overseas aid spending to 0.7 per cent of GDP by this year.
But the ring-fenced aid budget has become increasingly controversial with right-wing Tory backbenchers, at a time when many other government departments are facing deep cuts.
Greening had come under intense pressure to scale back giving to India, amid calls pointing to the country's remarkable economic boom, which has created thousands of millionaires and enough funds for the Indian government to operate its own space programme.
Her decision to change Britain's relationship with India was her first key policy announcement after taking over the department last year.
Max Lawson, the head of policy at aid and development
charity Oxfam, said there was, "no development case to be made for stopping aid to India".
"Three hundred thousand women a year die in childbirth. It's completely inexcusable that the rich in India allow that to happen - but that's just as true in Nigeria or in Angola, and no one says we shouldn't help poor people in those places," he added.
Ivan Lewis, Labour's shadow development minister, told the Guardian that politics, not economics, had guided the announcement.
"The timing of this decision was not about consistent UK development policy, or our relationship with India, it was a beleaguered secretary of state trying to get a few brownie points from the 'no-aid' brigade," he said.
The IPPR calls for the UK to draw up an "exit strategy", setting development targets that must be achieved before assistance is stopped.
"This report fails to recognise that the decision to change the UK's development relationship with India was an agreement between the UK and the Indian government. The Indian government has made clear that what it values most about the relationship is Technical Assistance to make its own welfare spending more effective," a DfID spokesperson said.
London: The decision by the UK government to stop aid to India from 2015 is an "arbitrary termination" that needs a rethink as the country still faces key development challenges, says a new report.
First Published: Sunday, February 10, 2013, 16:18