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Coffee House

Storm in an Indian teacup

5 February 2012

2:19 PM

5 February 2012

2:19 PM

So, does India want the UK’s aid or not? If you believe the Indian finance
minister, Pranab Mukherjee, the funds are unnecessary, ‘peanuts’ even. The Daily Telegraph reports that British ministers ‘begged’ the Indian
government to take the money. The story is likely to garner attention, especially as aid to a growing power like India is a contentious proposition.

But before taking the Indian Finance Minister’s word — and the Telegraph’s reporting — as truth, it is worth looking at a few facts. First, Mukherjee made the statement in 2010, as
reported in the Financial Times at the time. Since then the Finance Minister has publicly described
himself ‘very pleased’ with UK aid, including as late as December 2011 when he met with Andrew Mitchell. More importantly, as I reported on Coffee House in late June last year, the Indian Prime Minister told David Cameron to ‘think hard’
about cutting UK aid to India, which the Indian government ‘welcomed’.

[Alt-Text]


The reason is simple: India still struggles to develop at the pace it needs to and welcomes UK expertise (not just funds) to help address the country’s poverty. If the UK is to run an aid
programme, not working in a place that has the world’s largest number of poor people seems a bit odd.

So if this is 2010 news, why is the story making the headlines now? Because of the Indian decision to declare the French-built Rafale, and not the UK-manufactured Typhoon, their preference for
future purchases. The thinking seems to be, ‘If they won’t buy our planes then why should we give them aid?’

But here, too, there is more than appears at first glance. The Rafale bid is just the ‘lowest bid’, not necessarily the best one. As a Cabinet minister told me, ‘there have been
many occasions at the Grand National when the horse leading the early part of the race finishes second’. So BAE are still in with a chance and will need to push through in the next stages of
bidding, including by showing greater life-time cost savings for the Typhoon over the Rafale.

There may be good arguments for reducing UK aid to India — many of which were aired in a recent debate in the House of Commons — but outdated comments from an Indian minister and a
premature assessment of the viability of the Typhoon bid aren’t among them.

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