Homophobia Costs India An Estimated $31 Billion Annually — Should Development Institutions Care?

"You reduce GDP by that much and you call it a recession," said the economist who calculated this figure during a first-of-its-kind panel at the World Bank.

Homophobia has an annual cost to India of $31 billion or more, according to a draft report presented Wednesday at a forum at the World Bank's headquarters in Washington, D.C.

This number is just a rough estimate, since economists lack the data to make a firm calculation. But the fact that the question is being asked by an institution like the World Bank is more significant than the number itself. If development institutions decide to make LGBT rights a priority — and could shape the billions of dollars that flow through them every year — LGBT rights advocates could have far more powerful allies than those they've won in institutions devoted to human rights.

The World Bank isn't the first such institution at the table: The United States Agency for International Development (US AID), the United Nations Development Program, and the development agencies of several European governments already have been working on LGBT rights. But the World Bank's size and reach mean it has the power to shift the global development agenda — it lends more than $35 billion annually, and serves as an important research hub for the development community.

Having a discussion about LGBT inclusion at the World Bank "may have a huge impact … for mainstreaming the issue," said Luiz Loures, assistant secretary general of the United Nations and deputy executive director of UNAIDS, who traveled from India to participate in the panel discussion, which was moderated by BuzzFeed. Organizations like his only get so far by making the human rights and public health case; people like Loures believe framing the issue in terms of dollars could tip the balance.

But making the economic case for promoting LGBT rights is not easy, in part because good data does not exist in most countries quantifying the number of LGBT people, let alone their experiences. There is no census that collects sexual orientation or gender identity data — and in India, there are many local concepts of gender identity and sexual orientation that don't neatly correlate with the idea of LGBT.

So the study's author, University of Massachusetts economist Lee Badgett, had to fill in gaps, sometimes drawing on data from studies done in the U.S. and Europe. She developed two estimates based on different assumptions about how many LGBT people there are in India — one assuming 0.6 percent of the population, the other, 3.8 percent — and found the Indian economy lost the equivalent of anywhere between 0.1 and 1.7 percent of its GDP.

This is likely a "conservative" figure, Badgett said, and it is significant even in this range. "You reduce GDP by that much and you call it a recession," she remarked.

Badgett factored in several ways that homophobia costs a society. The most visible may be increased health costs: If stigma keeps LGBT people from accessing health services, there may have higher rates of HIV and AIDS. But stigma also can contribute to a greater burden of depression and other mental illness, which can make LGBT workers even less productive. And if discrimination keeps LGBT people from working or forces them into lower-paying jobs, the economy loses the full value of their labor.

This argument is analogous to the "business case" used to make the status of women a mainstream concern for development institutions in the 1970s and '80s, said Amy Lind, who studies development policy at the University of Cincinnati. But it was less controversial to use this argument to make the case for prioritizing women's rights than it is for LGBT rights, she said, because the development community already had a way of understanding their economic contribution as "women's work" in the home.

LGBT people, on the other hand, have been invisible from the economic conversation until quite recently, and many of the countries in which institutions like the Bank invest criminalize homosexuality. A decision of the Indian Supreme Court recently recriminalized homosexuality there, for example, and 64 percent of Indians said homosexuality is never justified in a world values survey.

And it is still an open question of how far the Bank is ready to go in embracing this agenda. On February 27, the Bank suspended a $90 million health care loan to Uganda just after it enacted a bill imposing up to a life sentence for homosexuality and criminalizing LGBT advocacy. The Bank's president, Jim Yong Kim, also published an op-ed in The Washington Post declaring that discrimination against LGBT people — like other forms of discrimination — are "bad for people and societies" and "bad for economies."

But he then pulled out of participation in the panel on the cost of homophobia because the event "came up in the midst of internal discussions" with the Bank's board, according to a spokesman.

"This discussion … met more internal resistance than I ever would have expected," said Fabrice Houdart, the president of the World Bank's gay and lesbian employee association in introductory remarks to Wednesday's panel.

And not all LGBT advocates are enthusiastic about the Bank's investment in LGBT rights. In many parts of the world, the Bank is viewed as an arm of western colonialism and responsible for perpetuating poverty.

Former Human Rights Watch LGBT Director Scott Long articulated this point of view in a post on his blog published the day before the panel.

"For twenty-five years, the World Bank has pushed essentially unvarying policies across the developing world: privatization, cutting the public sector, fostering an export-based economy (so that poor countries become suppliers of raw materials to the industrial North, and don't grow their own industries and markets)," Long wrote. "Poverty spread, not development…. Praising a World Bank intervention for LGBT rights in Africa while forgetting this history is like praising Putin's tender concern for Crimean Russians, while forgetting the Ukrainians next door."

Houdart addressed this critique during Wednesday's event. "Whether you want it or not, the World Bank … has an impact on the lives of sexual minorities" in the countries in which it invests. "Working with the World Bank does not mean adopting everything that the World Bank is doing. But it means taking basically the share [that] belongs to you within the World Bank['s work]."

The challenge now is doing the research to establish what that share is.

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