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Why the US Should Help Fight Corruption in IndiaFor years, India has struggled with high rates of extreme poverty, as well as mass amounts of corruption within its economy and government. This has created a cause and effect cycle of poverty: creating easy access for corruption while corruption in government preventing a significant change in poverty. As a result, there has been very little change in the socioeconomic standing of many Indians, and foreign aid may seem like a futile attempt to rectify an impossible situation. However, foreign aid is critical to fighting poverty and corruption in India. And investments from the United States will have a promising profound effect on both countries.

Corruption and Poverty in India

In 2019, one in two Indians reported taking or paying a bribe, which was a 10% decrease from previous years. These bribes took all forms and appeared in many aspects of everyday life for Indians, from property registration, the police force, a tax department to municipal corporations. Furthermore, corruption can be found within the highest levels of government, and in legislation in particular. More than half of India’s public officials have received bribes, or acted upon another form of corruption, creating significant inconsistencies and ineffectiveness from the bureaucracy. Most recently, in 2019, the Corruption Perception Index gave India a score of 41 out of 100, suggesting corruption still has a significant presence throughout the country.

While the corruption within the government and economy is an issue on its own, its repercussions go far beyond an internally broken system. India has one of the highest rates of extreme poverty in the world, with one-third of its population considered poor by standards that they live on approximately $3.20 per day. Despite decreasing rates, about 50 million people still live in extreme poverty in India. With so many people resorting to living on the streets or in slums, the poor living conditions lead to disease outbreaks, high infant mortality rates and, ultimately, corruption.

The Connection Between Corruption and Poverty

Corruption and poverty in India work off of each other. Poverty creates desperate situations, leaving people with very few economic alternatives to make ends meet, whether it be food or housing, among other essential needs. Consequently, these vulnerable groups become easily exposed to exploitation. However, corruption not only thrives off of poverty, but it also worsens the situation. Internal government officials, among other community members, tend to pass money around for ranks, rather than focusing on creating effective legislation to change the poverty crisis.

As a result, the government struggles to end the continual cycle of corruption and poverty in India, and cracking down on corruption can have massive repercussions for its citizens. For example, in 2016, in an effort to reduce corruption, Prime Minister Narendra Modi discontinued the 500 and 1,000 rupees. This action began to fix stockpiling, a technique that the upper-class used to avoid paying taxes. The discontinuation voided cash hoarded overnight. And, as a result, many low-income workers had their salaries cut in half, especially those in the transportation industry.

In order to access the new forms of money, many had to go to the ATM or banks to acquire it, despite many ATMs being broken or overcrowded. Without the rich carrying around cash to pay people, such as drivers, in addition to unequal access to ATMs, there was no pay for people working already low-paying jobs. During that year, 97% of Indians didn’t make enough annual salary to qualify to pay income tax, a price of around 250,000 rupees, or $3,650.

The Importance and Benefits of American Foreign Aid

For many Americans, corruption and poverty in India may seem like the exact reason why the United States should not be investing its money in foreign aid, especially to India. However, the solution is contrary to what many may believe. Multiple studies have shown that corruption with foreign aid is an insignificant problem, compared to the solutions it provides, such as access to clean water and vaccinations. Besides the humanitarian solutions, investment in India has significant returns for the United States. With a continually growing economy, India is set to become the third-largest consumer market by 2025. In turn, this will have a significant, positive impact on the United States’ economy. Continuing to invest in India means that more and more people will not only be in the market but will be able to afford American exports, therefore improving the corruption and poverty rates of India, as well as increasing American jobs and the economy as a whole.

—Alyssa Hogan
Photo: Flickr

The World's Poorest Countries and Why They SufferAccording to Business Insider, the top ten of the world’s poorest countries are the Central African Republic, the Democratic Republic of Congo, Burundi, Liberia, Niger, Malawi, Mozambique, Guinea, Eritrea and Madagascar. Poverty is directly correlated to a nation’s institutional quality, corruption levels, geography and economic prospects. These sub-Saharan African countries suffer from several factors that keep their citizens well below the poverty line. Why do these nations struggle with poverty?

 

Institutions

The world’s poorest countries struggle to overcome poverty due to a lack of institutions. While many organizations are working to address this issue, there is still a substantial lack of quality institutions in education, agriculture and medicine. When institutions such as schools are created for impoverished people, it reduces the overwhelmingly low literacy rates, which increases opportunities for those facing extreme poverty. Funding the creation of more institutions for developing countries creates opportunities and advantages for impoverished people, which encourages a nation’s industrialization and economic success.

 

Corruption

Central African Republic and the Democratic Republic of Congo also made Business Insider’s list of the world’s most corrupt countries. Political instability and corruption create an environment that hinders growth. In the world’s poorest countries, political corruption is common and often discussed with severity, but rarely fought against. A strong governing body is less susceptible to corruption, but many of these nations have weak governance. This corruption, paired with conflict such as terrorism, can prevent an impoverished nation’s upward mobility. A stronger, more powerful government could be the solution for conflict and corruption in developing nations.

 

Geography

The world’s poorest countries are often at the mercy of their geography. Landlocking, poor soil and natural disasters can keep a nation at a disadvantage. When a nation is landlocked, the success of its economy is often correlated to the success of surrounding nations. For example, a landlocked country in Europe, where fewer countries are impoverished, has a better chance at success than a country in sub-Saharan Africa, where many nations are underdeveloped. This is based on the concept and reality of economic growth crossing borders. As well as landlocking, many of these nations experience disasters such as droughts which discourage agricultural success.

 

Economy

Economic growth for the world’s poorest countries is based on myriad factors, some of which are beyond a nation’s control. Many developing countries face the lack of a free market, landlocking and high trade barriers, all of which slow the upward mobility of a nation. Free markets encourage a blossoming economy; therefore, a lack of international trade affects a nation’s GDP substantially.

Trade barriers prevent developing countries from expanding their economic gains because they experience high tariffs on their products, which are commonly textiles and agricultural goods. Trade barriers are costlier for developing countries, even though it is more common for developing nations to export goods to other developing nations rather than industrialized nations. In this common situation, both developing nations suffer. Impoverished nations like Burundi, the third poorest nation in the world, rely on foreign aid from wealthy countries for survival because they struggle with trade.

 

How to Move Forward

Developed nations, which are industrialized, have implemented foreign aid laws and programs which encourage and fund the development of impoverished nations. To remain active and diligent in the support of progress for the world’s poorest nations, encouraging Congress to vote for laws that protect and create foreign aid funds is essential to the progress of these developing nations. Long-term development for economic and social progress starts with developed nations lending a humble hand to those less fortunate.

– Courtney Hambrecht

Photo: Flickr