UK aid to India

Review

This review finds that the UK’s new model of development cooperation with India has resulted in a fragmented portfolio without a strong development rationale. We awarded an amber-red score overall and made five recommendations.

Findings

• While the UK’s India portfolio reflects the shared interests of both the UK and Indian governments, it is fragmented across activities and spending channels, and lacks a compelling development rationale.
• Investments made through FCDO DevCap and British International Investment (BII), the UK’s two development investment portfolios in India, have supported economic growth and job creation.
• BII has invested approximately £1 billion in India during our review period, but much of its portfolio lacks strong ‘financial additionality’ – that is, ensuring it does not duplicate what is already available from financial markets – and investments have not demonstrated a clear contribution to poverty reduction and inclusive growth.
• The UK is delivering finance and innovative approaches to tackle climate change, but more needs to be done to mobilise private finance and take successes to scale.
• UK aid has built research partnerships between UK and Indian institutions on global development challenges, but the research is weakly integrated with the rest of the portfolio.
• The UK has built effective partnerships with the Indian government, and it maintains positive working relationships with multilateral institutions and other bilateral donors.
• Like many other donors, the UK no longer works closely with Indian civil society.
• There is little UK support for Indian democracy and human rights, despite negative trends in these areas.
• The UK’s support to India’s emerging role as an aid donor lacks a strong focus on results.
• The UK has put in place processes for monitoring its India country portfolio, but it is too early to measure progress against the objectives set out in the 2030 roadmap for India-UK future relations.
• The coherence of the UK’s portfolio in India has been undermined by successive budget reductions.

Recommendations

1. The UK should focus its aid portfolio to India on a limited number of areas where UK aid can help make India’s economic growth more inclusive and pro-poor, with clear theories of change to guide the design of aid programming and development diplomacy.
2. The UK should build on its emerging success story in climate finance and green infrastructure, looking for opportunities to combine technical assistance, research partnerships, development investments and multilateral partnerships for greater impact and value for money.
3. UK development investments should have a greater focus on mobilising private finance at scale to address climate change, particularly from large institutional investors based in the City of London.
4. British International Investment should reassess its approach to ensuring additionality in its India portfolio.
5. The UK should look for opportunities to support coalitions of Indian research institutions and non-governmental organisations working on social issues, in support of the UK India Country Plan goal of championing open societies and democratic standards.