Finance Minister Pranab Mukherjee said 'India doesn’t need peanuts aid offered by UK'

The UK government is facing ‘grave political embarrassment’ after it emerged that India rejected around GBP 280 million in aid from Britain, calling it ‘peanuts’ and wanted to “voluntarily” give it up.

According to The Telegraph, Finance Minister Pranab Mukherjee once said that India “does not require” British aid, during question time in the Rajya Sabha.

“We do not require the aid,” Mukherjee said, according to the official transcript of the session.

“It is a peanut in our total development exercises (expenditure).” Mukherjee said, adding that the Indian government wanted to “voluntarily” give it up.

According to a leaked memo, Foreign Minister Nirumpama Rao proposed “not to avail of any further British assistance with effect from 1st April 2011,” because of the “negative publicity of Indian poverty promoted by UK’s Department For International Development (DFID)”.

DFID officials, however, claimed that the department told the Indians that cancelling the programme would cause “grave political embarrassment” to the UK, according to sources in Delhi.

“They said that British ministers had spent political capital justifying the aid to their electorate. They said it would be highly embarrassing if the Centre [the government of India] then pulled the plug,” the paper quoted the source, as saying.

Britain currently pays India around GBP 280 million a year, six times the amount given by the second-largest bilateral donor, the United States.

Almost three-quarters of all foreign bilateral aid going to India come from Britain. France gives India around GBP 19 million a year in aid.