Wednesday 6 July saw the release of the Australian government’s final report from its Independent Review of Aid Effectiveness. The Aid Effectiveness Report recommends that current Australian aid to China and India be phased out, acknowledging that both countries have become aid donors themselves.
The report did note that should Australia participate in development assistance activities in either India or China, it would do so through multilateral programs.
So does India or China have a need for aid? Is there still poverty in India?
Poverty in India is rife. The Oxford Poverty and Human Development Initiative found in 2010 that just eight states of India are home to more poor people than Sub-Saharan Africa combined. Yet Australian aid to Sub-Saharan Africa is set to continue while Indian aid is in jeopardy. Statistically, India has more than 75% of its population living in poverty – struggling to survive on less than US$2 a day. In total, this is some 900 million people – men, women and children who are unable to afford the basics such as proper shelter, food, sanitation, clean water, medicine and education.
India is a country of stark contrasts. Booming industries and a colourful, vibrant culture sit alongside overcrowded slums filled with families living in some of the worst conditions imaginable. India may be the sixth largest economy in the world, but for close to 900 million of its citizens, this prosperity is a world away.
Some sobering statistics:
• 31.7% of Indian adults aged 15 and above are illiterate, unable to read or write.
• 69% of the population lives without access to adequate sanitation, increasing their risk of disease.
• 450 mothers die in childbirth in India for every 100,000 who go in to labour. In Australia, this number is just 4.
Clearly, the need for development in India is still immense.
Can’t they look after their own problems?
Unfortunately, the existing poverty in India actually works to prolong the country’s poverty cycle. Although a middle class has recently emerged in India, it bears little resemblance to Australia’s social structure. Essentially, there are simply not enough people earning adequate salary levels in India to pay sufficient tax – funds needed to support ‘their own’. While the exemption threshold to pay income tax in India is a yearly income of just Rs.180,000 (approximately A$3,790), there are only 35 million taxpayers in India. This tax base simply cannot fund the health, education and infrastructure needed for the 1.1 billion people who call India home.
How then can India afford to have its own international aid program and other initiatives?
While India is home to significant poverty, it does also offer international development assistance, but this is true of many aid recipient countries.
Indonesia, for example, is set to remain a dominant (and worthy) recipient of the government’s aid spending. However, Indonesia in fact offered assistance to Australia in the form of $1 million and a forensic team after the terrible Black Saturday Bushfires. Similarly, Papua New Guinea, who in 2009-10 received more than twenty times the funding of India, also gave to Australia after our year of devastating flooding and fires.
With its international development aid program, India is establishing itself as a good neighbour in the international community. Its own needy citizens should not be penalised for this.
Commentators have also raised questions over India’s spending on its space program, and whether this money would be better spent by the Indian government on development and helping its people out of poverty. This is indeed a legitimate question, but it does not justify Australia taking no action and withdrawing its assistance. If we refuse to help India’s poor (out of protest on the Indian government’s priorities), are we not also perpetuating the suffering of people living in poverty in India?
How much money does the Australian government spend on Indian aid?
In 2009-10, India received $20.5 million in Australian aid. Despite the large size of its population and shocking poverty levels, it has been a small recipient of Australian aid compared with countries such as Papua New Guinea, which received $450 million. Since 2008, Opportunity International Australia has sent 1.5 times the government’s 2009-10 spend, sending $32.2 million to fund microfinance programs in India, helping people start businesses and work their way out of poverty themselves.
Microfinance in India ticks the government’s goals
In its report, the government defined three core principles for Australian aid:
• That poverty eradication is its main objective
• That as well as being the right thing to do, it is in our national security interests
• That is focuses on areas where it can make a real difference
It then listed its strategic goals which, among others, include:
• Saving lives
• Opportunities for all – including in employment, education and the opportunity to develop self-reliance
• Investing in sustainable economic growth
10 development objectives were also noted, in order to give effect to the strategic goals. These included:
• Improving incomes, employment and enterprise opportunities for poor people in both rural and urban areas
• Empowering women and girls to participate in the economy, leadership and education because of the critical untapped role of women in development.
Opportunity’s microfinance programs in India are perfectly aligned to these goals and objectives. A sustainable solution to poverty, microfinance gives people (principally women) the tools they need to start their own business, earn an income and become self-reliant. We are currently serving more than 1.5 million people in India, the majority of whom are women who, after growing their businesses, take on a greater role in their communities, leading local development initiatives, sending children to school and rewriting the future for their families.
Microfinance has a positive effect on local economies as a whole. By offering people a means to grow their small businesses to the point where many employ other people, microfinance has flow on effects for local economies – decreasing unemployment and providing incomes for other poor families in the community. In addition, with an increased income (and therefore more money spend on items such as food, clothing and transport), microfinance clients become active participants in their local economies, which also benefits the providers of those products and services. By boosting local economies, microfinance benefits the developing world beyond the aid of a one-time hand-out.
Sources: UN Human Development Report 2009/2011, UNICEF, Times of India, Business Standard
See more on the review here: http://www.ausaid.gov.au/hottopics/topic.cfm?ID=872_6918_7937_5970_8092&From=HT
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