The UK government's announcement about its international aid budget yesterday (Tuesday 1st March) caused much concern on news and radio stations and led to a flurry of emails, text messages and tweets from the public complaining that the government was 'wasting money'. At the heart of such complaints and the leading questions put to International Development Secretary, Andrew Mitchell, was that aid being given to India was inappropriate given India's status as a nuclear power and the fact that it also has a 'space programme'.
Mr Mitchell announced that aid to India would remain at its 2009-10 levels and so $295 million will find its way to the country, targeted at helping those who need it most. Mr Mitchell was keen to point out in the various interviews he took part in that despite strong growth rates in India, the number of people living in poverty is significant. More people live in poverty in India than the whole of sub-Saharan Africa put together. Mr Mitchell said that the UK had a moral obligation to help those in most need as well as its commitment to the Millennium Development Goals (MDG). In addition he said that providing aid helped keep the UK safer because where there is poverty there is the potential for terrorism.
Opponents of the decision to provide aid to India point out that the country has a growth rate of around 10 per cent a year, that it is now classed as a middle income country (MIC), that its government seem to have the money to spend on defence, nuclear missiles and a space programme so it should use some of this money to get its own population out of poverty rather than relying on other countries like the UK. They further pointed out that it was 'obscene' to be giving aid to India when there were elderly people in the UK dying of cold.
The debate over aid is always going to be emotional. The argument that a donor country could better use the funds elsewhere - especially on its 'own people' is a powerful one on the face of it. In addition the focus on questions to Mr Mitchell that if India can afford a 'space programme' that this in itself was proof that it was wasting money, which could be better spent on its own poor. There is of course merit in this argument - any decision has an opportunity cost but in analysing that decision the relative value of the benefits and costs involved need to be looked at more closely.
One expert on India who was interviewed on a radio station and given the question, asked in a clearly derisory tone, 'should a country that could afford a space programme really be eligible for aid from the UK?' His answer was telling. The 'space programme', said the expert, was more a satellite building programme and the satellites are planned to be used to help India monitor climate change, agriculture and so on and as such are of direct benefit to India in helping to improve its capacity to feed its own population. In addition, such a programme provides employment, helps improve educational capital which in turn have spill-over effects to other areas of the economy.
If India chose to cancel such a project would the value of the benefits foregone be greater or less than the value of the benefits gained by diverting the money freed up on helping the poor? That is the key question in these sort of debates but the somewhat crass line of questioning by some interviewers shows an alarming lack of understanding of even basic economics.
Indeed, if our concern for the elderly and others in our society is so great it could equally be argued that we should shut down some radio and news stations and divert the money which is wasted on these ill-informed presenters and divert the money instead to helping keep the elderly warm in winter!