Indian minister said country neither wants or needs 'peanut' money

Money doled out for education and health while UK funding is cut

The UK is to give India another quarter of a billion pounds in aid by 2019 - the same amount New Delhi spent to launch its first mission to put a man on the moon.

The massive donation comes despite a British government promise to end financial aid to India by this year.

Instead, while Britain reels from cuts to essential services, the Department for International Development has has quietly gone ahead with a massive programme to subsidise India's health and education budgets, leaving India with enough money to spare for a moonshot.

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Lift off: The successful launch of India's first rocket equipped with an astronaut module in December. The launch cost same as £250 million UK aid

On the up: Prime minister Narendra Modi (left) is overseeing a defence budget of £24.8 billion. Minister Justine Greening (right) is being asked to justify £250 million aid to India in light of its £600 million space exploration programme and cuts to UK services

In December Indian scientists successfully launched a rocket capable of manned space flight at an estimated cost of £250 million - the same amount Britain is donating.

The decision to continue to use British taxpayers' money to fund aid projects in India places International Development Secretary Justine Greening in a difficult position.

She has on at least two occasions promised the House of Commons that financial aid would end this year. But as a MailOnline investigation reveals today, her department remains committed to £254 million of spending running through until 2019.

She will face calls to explain how it is that her department has sanctioned continued use of British taxes when the public had been assured the tap had been switched off.

Today the Department for International Development claimed all the money budgeted for existing projects will have been handed over by the end of the year, even though several are scheduled to run on beyond that point. It is understood that 'aid' is being renamed 'technical assistance'.

Superpowers: India is being courted by world leaders like Barack Obama (left). Officials say it neither wants or needs UK aid but a MailOnline investigation has revealed it will still be given £250 million by 2019

Rising influence: Indian prime minister Narendra Modi inspects a guard of honor at 68th Independence Day Rally in Delhi. A MailOnline investigation has revealed the country is set to be given £250 million by UK

A MailOnline investigation found the figures included:

• £26.1 million to boost the affordable housing market in India

• £35 million on education, including teacher training, schoolbooks and skills for job seekers

• £390,000 to provide street lights in the city of Jaipur

• £4 million for a wind farm in Rajasthan

• £39 million on health, including a survey to count abortions and unwanted pregnancies

• £31 million to a state regarded as India's 'corruption capital', where hundreds of government officials face graft charges

• £18 million on improving local government, including providing helpful tips on how to raise VAT on alcohol and petrol

The investigation also found millions of pounds had been earmarked for loans to encourage investment in infrastructure in states regarded as too risky by other lenders.

Millions more have been set aside to help India gain access to private sector expertise - even though Indian companies dominate the market to such an extent that Tata Consulting Services, the biggest Indian player, currently employs 10,000 people in the UK and holds dozens of government and private sector contracts.

To make matters worse for the minister the booming South Asian economic superpower is being courted by world leaders and has made clear that it neither wants nor needs the UK's money.

Its own foreign aid budget dwarfs the funds it receives from the UK. India now spends more than three times as much - £860 million this year alone - as it is due to receive in total from the UK.

In recent years the UK government's determination to continue its aid programme to India has baffled and infuriated critics who demand to know why the aid budget should be protected at a time when public spending at home is being slashed.

Millions of pounds is earmarked for loans to encourage investment in infrastructure in states regarded as too risky by other lenders

No need: India's finance minister said country neither wants or needs UK's continued aid. While millions remain in poverty, the state of the economy is widely regarded as on the up

One of the reasons for that bemusement is the sheer scale of India's own economic progress. While many hundreds of millions of its people remain in abject poverty, India is still regarded as a country on the economic up and the election of a pro-business BJP government last year has seen foreign leaders, including David Cameron and Barack Obama, eagerly courting prime minister Narendra Modi.

In December India successfully launched a rocket fitted with a crew module as the latest step in a space programme that has already seen it send an orbiter to Mars. The cost of the rocket development programme was estimated to be around £260 million, just four million short of the total outstanding British aid package for India.

Under fire: Critics are asking ministers to justify £250 million aid to India in light of its £600 million space exploration programme and cuts to UK services

In the race: The country has a space programme estimated to be £600 million while UK taxpayers continue to send millions in aid

The total value of India's space programme is estimated to be £600 million. It's defence spending is also rising rapidly, with the latest defence budget coming in at £24.8 billion.

Jonathan Isaby, Chief Executive of the TaxPayers' Alliance, said: 'Taxpayers will not see a jot of difference between so-called 'technical' or 'aid' spending - ultimately, British taxpayers' money is still being used to support projects in a country that can afford an expansive space program.

'It is time for the government to crack down on wasteful aid spending and ensure that every penny spent abroad goes to the people who most need it. Indian wind farms look like a vanity project to make politicians feel better rather than an attempt to help the world's neediest. We need a serious rethink of our aid policy.'

Last month the National Audit Office took DfID to task for splurging more than £1 billion in two months to hit its £11.46 billion spending target.

It is time to recognise India's changing place in the world Justine Greening, International Development Secretary

The UK government has repeatedly defended the decision to ring-fence aid spending to meet the UN target of 0.7 per cent of its gross national income.

But it also faced criticism last month from the Commons Public Accounts Committee, which accused it of handing over hundreds of millions of pounds to an aid agency without proper scrutiny. The agency - the Private Infrastructure Development Group - had been accused of funding criminals, the committee added. PIDG is also involved in spending DfID cash in India, including a £390,000 project to replace street lighting in the city of Jaipur in Rajasthan.

A series of embarrassing revelations about waste has fuelled public dissatisfaction with Britain's India aid programme. In February 2012 India's finance minister Pranab Mukherjee told the Indian parliament: 'We do not require the aid. It is a peanut in our total development spending.'

In November the same year Justine Greening, the International Development Secretary, announced an end to financial aid to India by 2015.

'It is time to recognise India's changing place in the world,' she said at the time. She went on: 'After reviewing the programme and holding discussions with the government of India, we agreed that now is the time to move to a relationship focusing on skill sharing rather than aid.

In reply, India's foreign minister, Salman Khurshid, said: 'Aid is the past and trade is the future.'

At a time when the government is facing criticism over its handling of the NHS, continued British support for the Indian health system is being called into question

Squalor: The scene outside this health centre (left) is typical of many parts of India where sewage runs down the muddy streets. Inside beds lie empty due to lack of trained staff

DfID's own website sets out the position quite clearly:

'DFID's partnership with India is in transition. As part of the new development relationship DFID stopped approving new financial grant aid in 2012. However, DFID will honour commitments to existing projects, all of which will finish in 2015.

'We do not require the aid. It is a peanut in our total development spending.' India's finance minister, Pranab Mukherjee

'After 2015 DFID's partnership will focus on sharing skills and expertise and making private sector investments which will help the poorest people and generate returns; and strengthening partnership on global development issues such as food security and climate change.'

Greening repeated her assurance in the House of Commons a year later, telling MPs on 4 December 2013 that: '…I announced last year that we will move to a new type of development relationship with India, running down financial grants that are under way so that they finish by 2015 and, following on from that, having a relationship based on trade and technical assistance.'

At the time most assumed that this meant that Britain would no longer be contributing financially to India.

But an examination of outstanding aid projects reveals that the money will continue to flow from London to New Delhi, both in continuation of existing aid and to finance new projects.

Hard lesson: A government primary school in Rahul Nagar slum in Bhopal, funded by British aid money. A special investigation for the Mail has revealed how the nation will continue to get aid until 2019

Philip Davies, the Conservative MP for Shipley and parliamentary spokesman for Blue Collar Conservatism, said: 'To continue to provide aid to India when we are in so much debt and they can afford a space programme and $35bn spending a year on defence is completely unjustifiable and shows a total disregard for hardworking taxpayers in this country. All aid to India must end immediately as the Government clearly said it would'

Among the projects that UK taxpayers will continue to support beyond the promised deadline is the Indian National Secondary Education Programme (Rashtriya Uchcha Siksha Abhiyan), which is due to receive another £14.1 million by July 2016, bringing the total spent on that one programme to £81.5 million.

According to DfID's own documents, the money pays for school buildings; salaries for additional teachers; training for teachers and school heads; books and science equipment; and small grants for community-run school management committees.

Missing: This school has no desks or chairs because they had never been delivered and are presumed stolen from the factory where they were made. UK aid money is being given to Indian state school schemes, often targets of fraud

Classroom: These children are receiving lessons on how to read and write, yet the standards in some schools mean half of ten-year-olds cannot read a sentence or do simple maths sums

But India's state school schemes have been targets for fraud. Last year three education officials in the north eastern state of Tripura were suspended in connection with the disappearance of £500,000 in RMSA funds. In 2010 it was revealed that £70 million had gone missing from another state government scheme part funded with £294 million of British aid. DfID launched an investigation and later claimed that all but a small portion of the aid money had been accounted for.

Other education projects include £12.4 million to encourage girls to go to school in Orissa, due to run until July 2016; £4.3 million to pay for skills training for job-seekers, due to end in March 2018 , and £4.3 million to improve the quality of teachers, to run to March 2016.

Where are the millions going? £7.6 million towards health reforms by December this year £13.3 million has been allocated to improve access to basic services in the state £10.9 million set aside to improve the quality of government in Madhya Pradesh £2.2 million set aside for a family health survey £1.8 million is due to be spent gathering details about unwanted pregnancies and abortions £26.2 million to pay for improving health care in Bihar £26.1 million to boost the affordable housing market £22.8 million to find loans in states traditionally regarded by private sector investors as too risky £9.7 million to pay for studies into how India can gain access to 'global expertise' Advertisement

The continuing British support for the Indian state school system comes against a backdrop of cuts to education budgets both in the UK and in India, where £409 million has been lopped off the education budget. In the UK, the Department of Employment and learning is being asked to make cuts of £82 million from its budget, putting 1,500 jobs at risk and threatening 17,000 education and training places. And last week the prime minister revealed that the education budget for England would no longer keep pace with inflation, meaning a cut of 10 per cent in real terms during the next parliament, estimated at £3.1 billion a year.

One of the issues that has most concerned critics of Britain's aid programme is the danger of handing money to states which struggle to cope with corruption.

Yet one of the Indian states which has been targeted by DfID to receive large volumes of aid cash is Madhya Pradesh, which is at the centre of a raging corruption scandal.

Investigations by a retired Supreme Court judge have uncovered a hotbed of graft. He found that as many as 102 government officials convicted of corruption had returned to work after challenging their convictions and securing bail or are continuing to draw pensions. Another 134 individuals had been charged but had not been suspended. Police seized property, cars and jewellery. Health staff were among those arrested.

Anti-corruption officers have recovered £25 million in unaccounted wealth from officials since 2009. During one raid on the Bhopal home of a minister, the official's wife complained: 'Why don't you raid the ministers to whom we have to pay a bribe of Rs 1 crore [£106,000] every month?'

UK aid spending includes a £390,000 project to replace street lighting in the city of Jaipur in Rajasthan, India

Critics are asking why the booming South Asian economic superpower needs handouts, including £390,000 for street lights, when country's own officials say they don't need it

While the Amber fort basks in light at Jaipur, Rajasthan, £390,000 in aid is needed for street-lighting across the region

Still, Britain continues to plough money into the state, which will receive another £7.6 million towards health reforms by December this year, bringing the total spent on that project alone to £120 million.

The programme is implemented by the state's Department of Public Health and Family welfare and by Department of Women and Child Development.

Another £13.3 million has been allocated to improve access to basic services in the state, a £20 million project that is also due to run until December. Explaining the decision to press on with the project, DfID's documents state that, following an earlier successful £40 million scheme, it wanted 'to make a deeper and sustainable impact with a new approach, which encourages fresh inflows of private and public investment for city infrastructure and contributes to an overall strategic effort in urban development.'

It is time for the government to crack down on wasteful aid spending and ensure that every penny spent abroad goes to the people who most need it. Jonathan Isaby, chief executive, TaxPayers' Alliance

There is another £10.9 million set aside to improve the quality of government in Madhya Pradesh, with the project due to run until March 2016.

At a time when the government is facing criticism over its handling of the NHS and the issue is set to be a key factor at the general election, continued British support for the Indian health system is another potential banana skin for the government.

One of the smaller schemes involves £2.2 million set aside for a family health survey, which is due to end in March 2017. According to government papers, there is a £14 million shortfall in the budget for the survey and the Indian government has explained that the quality and credibility of the survey will be higher if financed by donors.

Another £1.8 million is due to be spent gathering details about unwanted pregnancies and abortions by 2017.

Other health funding includes £26.2 million in the next year to pay for improving health care in Bihar, part of a £146 million project launched in 2008 which is due to end in March 2016; and £1.4 million to improve health, nutrition and sanitation services in Orissa by March this year.

Some of the projects are a far cry from traditional aid. DfID plans to provide £26.1 million to boost the affordable housing market in India by March 2018. The money - part of a total of £40.2 million - is a loan to finance loans for low cost housing and to finance loans for first time buyers.

Natural energy: This wind farm in Rajasthan has been built as part of project to improve transport, energy and urban services for the poor. The loan scheme is due to run until May 2018

'The central problem we are trying to address is inadequate supply of affordable homes and home loans for low income households,' the department explains. 'The intervention represents an effective use of DFID resources as it relies on delivering high impact affordable housing services in under invested regions of India. It also leverages additional private sector resources for the same purpose. DFID funds will be provided to NHB on a returnable basis, allowing for their re-use for other pressing developmental needs in future. The benefit cost ratios from the preferred option is higher than the alternative doing nothing option.'

Another loan scheme targets £22.8 million to find loans in states traditionally regarded by private sector investors as too risky. The aim of the project is to improve transport, energy and urban services for the poor, and it is due to run until May 2018. So far the project has invested £4 million in a wind farm in Rajasthan.

Bada Bagh monumenta next to wind farm in Rajasthan, India, where £4 million has been invested as part of loan scheme designed to find money for projects deemed 'too risky' by private investors

And there is £9.7 million to pay for studies into how India can gain access to 'global expertise' to improve its infrastructure, a project due to run until March 2019. This one may raise eyebrows given that India does already already has considerable access to leading global expertise in the private sector: Tata Consultancy Services, (an arm of the giant Indian company that also owns Jaguar Land Rover and Tata Steel) employs 10,000 people in the UK and has more than 150 UK customers, including 31 FTSE 100 companies. It also holds a number of key government and local government contracts.

Among the remaining stand-out projects, there is £7.6 million to help the government of Orissa modernise its government and attract private investment, to run to March 2017. Among its contributions has been the increasing of VAT on alcohol and petrol. There is also £153,000 to tackle climate change.

'Vanity project': TaxPayers' Alliance say aid could be better distributed elsewhere rather than on country that can afford an expansive space programme

Growing wealth: India's space programme is estimated to be worth £600 million while UK continues to send aid to cities including Jaipur (above)

DfID claims that all the money budgeted for existing projects will have been handed over by the end of the year, even though several are scheduled to run on beyond that point. In a statement it said:

'We announced in 2012 that all financial aid grants from the UK to India will cease in 2015, after which we would only provide support in the form of private sector expertise and technical assistance. That is exactly what we are doing.'

Its own documents show that millions of pounds of spending has been budgeted for subsequent years, but the department is understood to no longer describe this as aid grants, instead referring to it as 'technical assistance'.

One example involves a project to improve infrastructure in the state of Orissa (also know as Odisha), which was launched in April last year, 17 months after Greening announced the end of aid to India.

In its own summary of the business case for the project, the department says: 'DFID will provide up to £5 million Technical Assistance (TA) grant over four years to the Housing and Urban Development Department (HUDD) of the Government of Odisha (GoO) to catalyse urban infrastructure investments from the private and public sector.'

A spokeswoman added: 'Support via financial grant aid goes directly to the government. Support via technical assistance provides expertise and skills to the government, rather than direct financial grants.'