Foreign aid is destroying our society

Bharat Jhunjhunwala
New Indian Express, 23 Jun 2010

The British government has ordered an inquiry into leakages from Sarva Siksha Abhiyan which financially is supported by it. This has been triggered by a report of our Comptroller and Auditor General that Rs 10 lakhs were spent under the project for the purchase of four luxury beds. Rs 90 lakhs were transferred to an unknown bank account. About 7,500 colour TV sets were purchased for schools that did not even have an electricity connection. Similar corruption is being reported from the Employment Guarantee Scheme. Worse, this type of foreign aid also changes the direction of our own government expenditure.

In an earlier World Development Report, the World Bank elaborated many ways in which aid was having a negative impact on recipient countries. Aid influences the nature of domestic spending. The donor may give aid for only capital expenses and expect the recipient to incur running expenditure from its own budget. A donor may make a huge hospital for AIDS, which is high its own agenda, and that may lead to the poor country spending towards the recurring expenditure on AIDS prevention. The recipient country then spends less on the prevention of tuberculosis or malnutrition which is more important and spends more on AIDS prevention.

Aid may be given for projects in which the recipient is not interested. Some villages in Rajasthan dug up their well-functioning tanks and spoiled them under government-led famine relief works because they would get famine relief only if they undertook earth works like digging tanks.

I once suggested to a foreign donor to finance research for locating tree species which the farmers would find profitable to plant. But the donor wanted immediate publicity and quick results. Thus it persisted with the programme of providing subsidy to the farmers for planting trees which were not useful to them. Donors may insist that the recipient government spend their own money in specified sectors as conditionality for receiving aid.

The IMF, for example, has insisted that the poor countries seeking debt relief have to open up their economies and follow an ‘open borders’ policy. That opens up those countries for the western exports and multinational corporations. Aid then becomes a tool of arm-twisting reluctant nationalist or swadeshi governments to fall in line.

The donor can bypass the existing slow-moving sustainable works and supplant them with fast-track works that are unsustainable. A NGO was encouraging people to make their village tanks with their own efforts. Foreign donors stepped in to support its good work. The result was that the tanks began to be made with foreign money. These tanks were often not repaired when they broke. The result was that sustainable tanks vanished and unsustainable tanks were built instead.

Foreign donors often provide big salaries to their domestic employees. A salary of Rs 50,000 per month or consultancy charges of Rs 5,000 per day is ‘normal’ for such appointments. The result is that those who may have joined ‘good’ politics are distracted. Consultants spend energy studying issues that are important for the donors rather than those that are important for our people!

Donors often provide the needed services directly. If a donor builds schools in the villages it takes the pressure off the government system to perform. The result is that the government system becomes worse. This undermines the departments of the recipient country in the long run. In Bangladesh many health and education services are being provided by the donor-NGO network. This reduces the accountability of the political system.

Our government continues to beg for more aid from western countries despite these negative consequences because it is easier to siphon money out of aided projects.

It is more difficult to siphon money from projects supported by domestic tax revenues because more taxes have to be imposed to make up for the leaked amount. This leads to resentment among tax payers. Leaking out money from aided projects does not cause such resentment. Only more aid is to be sought from the donor. Thus, the government has embarked upon the strategy of seeking aid and leaking it away.

It is fruitless to ask the government to put its house in order because everyone from the minister to the lowest contract worker is enjoying the fruits of this evil game. We have to hit at the philosophical idea on which this misconduct thrives.

The underlying misconception is that people’s welfare can be secured through the government machinery. People have been led to believe that it is the government’s responsibility to provide them with education, health care, water, food and housing.

The government is using this expectation as a smokescreen behind which it is merrily engaging in massive corruption. We will have to break this mindset of the people. Ministers say that corruption can be checked only if the people demand transparency. True. But if the society has to organise itself to control corruption by government employees, then, pray, why not organise to provide these services directly?

Instead of the village organising itself for seeking transparency in the running of the village government school, why not organise to run a school themselves?

Gurudev Rabindranath Tagore had said: “Today the thoughts of the Bengali people have been separated from the villages. Today the responsibility of providing water is that of the government. The burden of health provision is upon the government. The West has handed over all responsibilities to the state. India has done that only partially. The king was expected to assist and honour them but only partially. Generally this was the work of every householder. If the king stopped assistance, or if there was social upheaval in the society, even then the provision of education was not interrupted.”

We have to go back to this teaching. We shall be spared of this corruption. Only then the myth of welfare state will be broken.