Remittances and Foreign aid in India

CREATED BY DEMBA DIBBA

Claim

Remittances compared to foreign aid have been one of the effective means of financial relieve in tackling poverty in India.

Global south

India

Background

The world’s 2nd largest population with 1.2 billion people 1.7% natural increase 2025 – approaching 1.4 billion Will surpass China by 2032 India is still 70% of the population live in rural area .

TAJ MAHAL

Background

The world’s largest democracyMultiple party system Congress Party, BJP Hindu Party Prime Minister – Manmohan Singh Capital – New DelhiForeign policy Nuclear power with a long history of conflict and mistrust of

neighboring Pakistan

Notable political leader

Mohandas K. Gandhi

Background

83% Hindu Approximately 150 million Muslims Minorities of Buddhists, Sikhs, Jains,

Zoroastrians, Christians and Jews.

Caste system

Strict and distinct class system outlawed but still practiced.

A person is locked in their caste throughout this lifetime.

You are not to marry outside of this caste. Still largely arranged.

Distinctive names, dress, and even language may distinguish castes

India’s internal Issues

Overpopulation Poverty Literacy rates (education) Agricultural misuse or overuse Hindu – Muslim relationships: India – Pakistan tensions(Kashmir situation) Sikh nationalism Hindu nationalism

Poverty

Per Capita GDP - $3600

There are over 220 million people living in poverty in India (Rural poverty September 2014)

Approximately 80% of all Indians live on the equivalent of less than $2 a day.

One half of India’s poor is located the three states of Uttar Pradesh, Bihar, and Madhya Pradesh

Maharashtra, West Bengal and Orissa account for 22.5% of poverty Lack of food and health care due to low income/assets is associated

with the higher probability of a new born child dying between birth and the age of one

Why is this Happening

Even though India’s economy is growing there wealth distribution is uneven

1/4 of the nation's population earns less than the government-specified $0.40/day

Unemployment and underemployment Over-reliance on agriculture High population growth rate Mismanagement of resources Social conflicts Corruption

Solution

RemittancesForeign aidhttps://youtu.be/Oj8eFu72_fchttps://youtu.be/Oj8eFu72_fc

Remittance

What is Remittances ? Remittances is the transfers in cash from a migrant to household

residents in the country of origin (Migration Policy Institute, 2003).

The World Bank defined remittances as the overall transaction of the inflow, and outflow of money, investments from individuals, which are known as the balance of payment (Adams and Page 2010)

Remittances

purpose of remitting Better standard of living Better healthcare Good education Investment and savings

Remittances in India

India is the second largest migration country in the world population being estimated to be 25 million people. 110 foreign countries (Afram, 2013)

Major destinations of Indians migrants : Oman, Qatar Kuwait, United states Saudi Arabia United kingdom Canada Australia

$70.1 billion dollars to India

Benefits of remittances at the individual level(household)According to the (India Human development survey) 60% of Indians household rely on remittance. 80% Recipient of remittances had better

healthcare higher and education 90% of recipients had Low infant mortality rate in

households receiving remittances 65% of recipients shift to middle class bracket

Why is remittances an effective means of financial relief in India ?Accessibility Recipients of remittances have immediate access to funds at their

disposal The money received by recipients are not control by government

except for the fees they obligated to. The proportion of households in rural areas that receive remittance

is very high. Uttar Pradesh, Tamil Nadu, Punjab and Kerala are the top international remittance dependent states in India

The Government makes money out of the fees generated by the money transferred from abroad estimated to be 5% of the money sent.

Western Union and Money Gram recognized International money transfer companies.

Why is remittances an effective means of financial relief in India ? Promotion of Investments Bank of India projected that worker remittance has boosted

investment and GDP about 3% within the past three years .

Remittance have surpass foreign aid and foreign direct investment

Hewlett-Packard, IBM, Motorola, Intel, Honeywell, Cisco, Philips, and Dell

The Indian Government promoting subsidies to attract big business to come an invest in India.

Evidence of the effectiveness remittance Currently India adds 40 million people to its middle

class every year estimated 300 million Indians now belong to the

middle class one-third of them have emerged from poverty in the

last ten years It is predicted that by 2025 the Majority of Indians

will live in middle class They have a space program.

Foreign aidWhat is foreign aid ? Foreign aid is funds in the forms of loans and grants given

from one government or an international financial institution to another government.

Purpose economic stabilization with sustainable development . The tenacity of a country offering foreign aid is for financial

security enhancement. foreign countries is also used to promote development of the

economy, relieve the pain and suffering caused by human and natural calamities which include war, famine and disease

Foreign aid

Types of Foreign aid Grants and loans

Forms of loans Economic aid Financial aid Military aid Technical aid Food aid

Foreign aid to India

$2.1 billion dollars aid received The U.S gives India an approximate estimate of $26 million is utilized

in these programs (Merrill, 1990).

India’ s foreign aid is distributed among these programs : development assistance child survival and health HIV/AIDS initiative activities food aid narcotic control

Reasons for the Ineffectiveness

Donors of foreign aid takes advantage of the developing nation by being in charge of aid, instead of the recipient country being in charge of disbursing aid.

Food aid offered by foreign countries has been impacting local farmers making local food more expensive in the expense of foreign aid.

Foreign food aid at times does not reach the ones in need since they are illegally sold by corrupt people who are in control of the food aid.

World Bank granted $1.2 billion for the Narmanda Dam project for irrigation purposes. But drawback was destroying the 35000 meager hectares of forest cover, increasing the incidence – cholera, dengue, malaria and other water Bourne diseases

NAMANDA PROJECT

Purpose Irrigation Electricity production Flood control

Reasons for the Ineffectiveness

Malpractices and inefficiency of government officials on allocation of aid greatly affects the equal distribution of foreign aid.

caste system, which means some Indian are denied opportunities because of their color, so there are some regions in India that do not receive aid

What's wrong with foreign aid in India? Mismanagement Corruption Caste system

Contrast between remittance and foreign aidRemitances Foreign aidRecipients funds are secure Government are in control of fundsNo corruption high level of corruptionIndividual can spend their own money without interference

The government oversees aid spending

Attracts investments It does not promote InvestmentsNo discrimination involved when receiving fund

Discrimination is involved when distributing funds

Work cited

"India." Grameenfoundation.Org. 2007. India Advisory Council. 21 Apr. 2008 <http://www.grameenfoundation.org/where_we_work/south_asia/india/?gclid=CPCXp_ek7JICFQN-lgodf3NR4g>.

  "Poverty in India." Indiainestop.Com. 2007. Ontrack Systems Limited. 21

Apr. 2008 <http://indiaonestop.com/povertyindia.htm>. Mehta, Aasha. "Chronic Poverty in India: Overview Study." Eldis os 1.1

(2002): 1-79. 23 Apr. 2008 <http://www.chronicpoverty.org/pdfs/07Mehta_Shah.pdf

Adams JR., R.H. (2011). Evaluating the Economic Impact of International Remittances on Developing Countries Using Household Surveys: A Literature Review. Journal of Development Studies, 47(6), 809-828. doi:10.1080/00220388.2011.563299

Work cited

Rural Poverty Portal. (n.d.). Rural poverty in India. Retrieved October 7, 2015

Ratha D., Silwal A., & World Bank. (2012). Remittance flows in 2011 – an update. Migration and Development Brief 18. Washington, D.C: World Bank.

Remittance Data. (2003, June 1). Retrieved November 18, 2015, from http://www.migrationpolicy.org/article/remittance-data

Remittances to India projected to increase by 2.5 per cent in 2015: World Bank - The Economic Times. (2015, October 23). Retrieved November 18, 2015, from

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