Report: UK aid fund for India lacks transparency

A UK government aid fund set up to reduce poverty and create overseas business opportunities in middle-income developing countries like India lacks transparency, an independent watchdog warned on Tuesday (7).

The UK’s Independent Commission for Aid Impact (ICAI) warned of “serious risks” about the effectiveness of the £1.3 billion Prosperity Fund for India, China, Mexico, Indonesia and Brazil.

“The review calls on the government to look again at the planned rate of expenditure, including considering extending the time period over which the £1.3 billion is due to be spent. It also calls on the fund to improve its transparency, saying there was too little public information available about its work,” the ICAI report said.

The fund runs from 2016 to 2021 with a remit to promote the economic reform and development needed for growth in developing countries.

It marks a new direction for the UK aid programme by increasing the funding available to different government departments and by focusing on middle-income countries.

“Since the referendum on leaving the European Union, the promotion of trade has been given a higher priority by the Prosperity Fund,” the ICAI notes.

The hope is that countries supported by the fund will be in a better position to trade with the world, resulting in increased economic growth, employment and prosperity.

However, ICAI told ministers to ensure that the fund continued to work towards reducing poverty, which is both a legal requirement for the use of the aid budget and necessary to meet Britain’s commitment to devote 0.7 per cent of national income on overseas development.

A UK government spokesperson said: “In a post-Brexit world a more outward looking, global Britain investing and trading with the fastest growing markets is good for the UK and good for the world.

“Helping to build well-regulated, competitive markets is the right thing to do to deliver global prosperity, stability and security and help the poorest, 60 per cent of whom live in middle-income countries, to stand on their own two feet and become our trading partners of the future.”

The UK had concluded its conventional aid programme for India at the end of 2015, instead focusing on a project-led approach aimed at strengthening India-UK ties.