Updated: February 8, 2011 22:27 IST

An indictment of the World Bank schemes

K. Subramanian
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THE WORLD BANK IN INDIA — Undermining Sovereignty, Distorting Development: Edited by Michele Kelley, Deepika D'Souza; Orient Blackswan, 3-6-752, Himayatnagar, Hyderabad-500029. Rs. 895.
The Hindu
THE WORLD BANK IN INDIA — Undermining Sovereignty, Distorting Development: Edited by Michele Kelley, Deepika D'Souza; Orient Blackswan, 3-6-752, Himayatnagar, Hyderabad-500029. Rs. 895.

This book is a collection of essays covering an array of economic issues ranging from agriculture, poverty, food security, power, water, to governance, environment impact and sustainability of growth, and the impact of the World Bank on them. Even a cursory reading would show that it is a shocking indictment of the World Bank.

The material for this book emerged from a two-year preparation that culminated in the holding of the first national “Independent People's Tribunal on the Impact of the World Bank Group in India,” held in 2007 in New Delhi. Over 150 persons presented testimonies and these were discussed or elaborated further at the Tribunal. A 12-member jury went into those testimonies and framed as many as 29 ‘charges' (listed in the concluding chapter of this volume).

Among the contributors are leading intellectuals, journalists, judges, and civil activists who are genuinely committed to public purpose and promoting justice and welfare. This creates a moral dilemma for a reviewer: it may seem an act of effrontery if he disagreed with them; at the same time, he may fail to hold the balance evenly if he agreed.

Moral anger

Much of the writing gives vent to moral anger bordering on despair over the results of World Bank programmes and discusses how they have distorted national priorities and marginalised the poor through the so-called poverty alleviation schemes. Their impact on agriculture and food security is examined. The ‘Green Revolution' was perhaps a temporary blimp driven by the Bank at the behest of global chemical and fertilizer giants. Several authors have described ‘disaster' stories of privatisation like the Delhi Jal Board, and the Orissa Power Sector. Many refer to the land use and urbanisation under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM). In his crisp analysis, Prabhat Patnaik narrates how the Kerala government forgoes more revenue through stamp duty remissions than it gets as project aid! There are first-hand accounts of bending the country's environmental policies and promoting polluting industries.

The authors portray harsh realities and give evidence in support, though some of them overstate their cases. Most of the authors are idealists and have not tried their hands on economic diplomacy, especially economic aid as a foreign policy tool.

In the post-Second World War years, aid and assistance have played a direct role in promoting relations, especially during the years of Cold War. There were behind-the-door haggling and competition for aid. Aid could be used to promote trade and commercial projects and also to get political good will.

Within years, there emerged an unstated coordination among developed countries, which came to be led by the U.S. Even when bilateral loans were negotiated, the attempt by all the developed countries was to promote market capitalism. It had not been under the rubric of Washington Consensus — it happened in late 1970s. By then, bilateral assistance had dwindled and all loans were routed through the World Bank Group.

More distressingly, the World Bank stepped in only when the country concerned was facing a very serious economic crisis — as India in 1991 — and the so-called negotiations with the borrowing country were a farce. They had to sign on the dotted line and many, including India, were happy to do so. The request for aid/loan will be given in a formal proposal which is drafted by the World Bank and sent back to it for approval. There are no discussions in Parliament or debate in public on the loan conditions. “Reformers” maintain they were not under pressure!

At arms’ length

The only country which has dealt with the World Bank at arm's length is China. China made it clear that it would seek “technical aid” from the World Bank to improve its systems, etc., and did not want project aid. It was determined to use the high level of domestic savings available in the banking system to finance projects. China's saga of infrastructure promotion through loans extended by its banks is unmatched.

When China sought World Bank loan, it made it absolutely clear that it would not agree to policy conditionality. It was able to get along with the World Bank because it was not dependent on aid. Where differences could not be reconciled, as in the Seven Gorges Project, China chose to use its own resources.

China has resisted all attempts to privatise its state-owned-enterprises. It did not allow the sale of its banks nor did it agree to unrestricted entry of foreign banks. Does a comparative study suggest that the fault is not with the World Bank but in us? This situation may not change as long as the current “reformers” remain in power.

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