A prominent Indian-born peer attacked the “obscene” way rich people in the Asian state spend money when so many of their countrymen live in extreme poverty.

Baroness Flather, a crossbench peer and former Tory, questioned why the UK government continued to give aid to India in the face of its booming economy.

During a debate on poverty in the developing world, Lady Flather said: “Three quarters of Indians live on 30p a day. All statistics have shown us that Indians are the most malnourished people in the world, even more so than the Africans.

“Look at the other side of coin. There is so much money in India now it makes you feel ill, because it is in your face all the time in every city.

“They say Indians have three trillion dollars in Swiss banks. Well, none of it is going anywhere other than sitting in Swiss banks or building the most grotesque things. It is obscene the way the money is being spent in India, but nothing is being spent on the poor.

“Bill Gates and Warren Buffett wrote to the Indian billionaires to try and arrange a meeting. They did not get a reply.

“This is the position we are in in India, when India is booming. It is right to some extent to say, ‘why should a lot of aid go to India when the Indians don’t want to help themselves?’.”

She also questioned how much foreign aid reached its intended targets.

But Government international development spokesman Baroness Verma, replying to the debate, said: “India may be a growing economy but there are more poor people in India than there are in the whole of sub-Saharan Africa. This is therefore not the time to end our aid.