Social services


Contradictions in the World Banks India Country Assistance Strategy

21 September 2004 | Guest comment

The India Country Assistance Strategy (CAS) identifies the operations the World Bank intends to finance for the period 2005-08 and the rationale for these operations. The CAS is ambitious and comprehensive in its coverage; it intends to significantly influence reform in governance at the central and state level, on macro-economic issues as well as in key sectors such as energy, health, water, education, agriculture and trade as its basis for extending loans. On 7 August 2004, representatives of social movements, national alliances and civil society organisations met in New Delhi and issued a statement explicitly rejecting the Bank’s strategy for India.

The Bank invited comments on the CAS for less than a month on its website. This was clearly insufficient for a public consultation as it excluded the vast majority of people and groups in India who do not have access to the internet. Moreover the CAS was incomplete; crucial annexes constituting important policy directives (for e.g. guidelines for lending and the private sector development strategy) were unavailable to the public.

The central thread of the document with respect to the power sector is the key role of privatisation and high investment; evident from the fact that the bulk of the Bank’s initiatives are dealt with in the section ‘promoting private sector led growth’. It is shocking that the Bank continues advocating privatisation as ‘the policy option’, when there have been serious demonstrated problems, in the Indian power sector. Limitations of the existing regulatory mechanisms to handle private sector actors and market forces, complexities created by the existing information asymmetry, imbalances in service costs to various classes of consumers, and the limited role and ability of civil society organizations to provide checks and balances to market forces need to be taken into account before privatisation attempts can be furthered.

It is shocking that the Bank continues advocating privatisation as 'the policy option'

The Bank’s plans to offer investments in hydroelectric generation ignore important lessons from the past. With dam projects such as the Sardar Sarovar in the Narmada valley, infrastructure lending has a contentious history in India but the Bank has consistently refused to accept its responsibility for the unresolved social and environmental legacy of its dam projects. Incredulously the CAS claims that some major actors including the National Hydroelectric Power Corporation (NHPC) have started to “improve their environmental and social safeguards practices”. By deciding to work with the NHPC the Bank aids an institution that is notorious for brutal displacement without resettlement, no guidelines for public hearing and poor environmental and social assessment. Violations have been reported from almost all the on-going hydro projects of NHPC – from Jammu and Kashmir to Arunachal Pradesh.

The Bank is appreciative of the recent reduction in average tariffs on agricultural products and advocates for the improvement in the legal framework to enable the easy sale and transfer of lands. The former has already resulted in the dumping of agricultural products, causing a free-fall in farm prices whereas the latter will erode the very livelihood base of India’s small-hold and marginal farmers. Considered one of the prime causes of suicides by farmers, it is unimaginable to think of them as solutions to the problems of the agriculture sector. The CAS comes heavily against subsidies in any form and advocates strongly for full recovery of recurring cost of generating and distribution of electricity. Electricity is not just a tradable commodity for farmers. Along with water and farmgate price, it is one the three crucial elements for the sustenance of their occupation.

The Bank also seeks to increase its array of partnerships with local research and academic institutions in both developing its analytical work and disseminating important findings; re-shaped analytical and advisory activities (AAA) will actually promote its reform and private sector-led development paradigm trying to change the country’s face of information gathering and dissemination mechanisms. The Bank aims to use its immense financial resources to produce its own version of ‘knowledge’. The Bank’s strategy here is not to stifle dissent as much as it is to neutralise it… it is more to “normalise” its view of the world and development issues.

The Bank through its reform programmes, knowledge activities and private sector dominated worldview will shape India’s policy, economic and social environment. But the extent to which this is possible should be determined by India’s democratic institutions. Civil society groups have mounted a campaign calling upon local governments, legislative assemblies and the Indian parliament to reject this document, as it is an affront to the social justice and democratic traditions of the Indian constitution.

Comment by Benny Kuruvilla of Focus on the Global South