BACKGROUND IN WHICH THE WORLD BANK IS GAINING STRENGTH IN INDIA

Since 1991, the process of neo-liberalism has been greatly accelerated by the new economic policies which have been brought in by the Indian government under the garb of ‘structural adjustments’ ostensibly to rescue itself from financial disaster। These policies have been blueprinted by the World Bank and the IMF in response to the government’s request for badly-needed foreign exchange loans.

Significantly, the earlier project-based role of the World Bank in India has moved to a much more powerful policy-based role। We must now question whether national and state policies are being set in India or in Washington, where the World Bank is headquartered।

Invariably, the worst sufferers of the degradation that is taking place are the most vulnerable section of society – forest dwellers, fisher workers, labour, dalits, farmers, women, children, rural and urban poor।

The WBG is best known for its fi nancing of large infrastructure projects, such as big dams (Sardar Sarovar is the classic example), power plants, highways, etc. These have often resulted in widescale environmental destruction, displacement of large numbers of people and impoverishment of others (through losing access to natural resources,etc.) Since 1991, as a result of India’s foreign exchange crisis, WBG has also given large loans for “structural adjustment” – the name given to a set of neoliberal economic policies which the government has been forced to adopt in return for hard currency liquidity. These policies include privatisation of public services (such as health, education, telephones, water and electric supply); reduction in state subsidies and increased user fees in public services; reoriented economic production towards export; and increased foreign investment and MNC control of the economy. These policies have been promoted as “poverty reduction” or “pro-growth,” but their primary purpose has been to increase the state’s foreign exchange reserves so that hard currency debts (to the World Bank, IMF and private lenders) can be paid off. The degree to which they are responsible for increased economic growth is debatable; but they have clearly been responsible for a growing gap between rich and poor and, in many cases, absolute increases in poverty.

The WBG is problematic not only because of its projects and policies but also its methodology. It operates in greater secrecy than even multinational corporations, as it is not subject to any disclosure laws, and treats its agreements with national governments as state secrets. Because of its control over international capital flows, it is in a position to dictate terms to the government and uses this power to circumvent democratic processes which might seek alternative economic policies. When existing bodies (panchayats, councils, etc.) are not to its liking, the WBG has been known to set up parallel governance structures to implement its projects, thus rendering irrelevant the
nation’s democratic structure. Its loans are sovereign debt, so regardless of the success or failure of its projects, the nation as a whole is obliged to repay them. The WBG determines the loan and attached conditions, but in case of failure, all costs are borne by the people, who are excluded from the decision-making process. Finally, as a treaty organisation, the WBG has claimed immunity from lawsuits.

All of these activities have been strongly criticised at the national and international levels, and every few decades, the WBG has issued a mea culpa and announced a drastic change in direction. The changes are always cosmetic; programs are renamed and reshuffled, but the WBG continues to extend its influence over borrowing countries and reinforce its neoliberal policies.

The World Bank, in its Country Report for India, sets out its plan for the years
2005-2008. It categorically mentions three areas in which it will do substantial lending:
1. infrastructure (road, transport, power, water supply and sanitation, irrigation, and urban development)
2. human development (education, health, social protection)
3. rural livelihoods, with an emphasis on community-driven approaches).
Particular regional focus is on Bihar, Jharkhand, Orissa, and Uttar Pradesh.

In addition to lending, the World Bank exercises influence through its role as a “knowledge provider.” Knowledge and ideology have always been important components of power. In recent years, with greater quantities of private capital being available to India, the World Bank has attempted to forestall a loss of influence by cornering the marketing on “development knowledge.” In effect, it is creating the intellectual rationale and justification for privatisation and globalisation, even as these policies have come under increased criticism globally.

Vast amounts of “knowledge” – studies, analysis, surveys, and reports – are being produced by International Financial Institutions (IFIs) like the World Bank and highly paid international consultants to push the LPG (‘liberalization, privatization and globalization’) process. In many cases, public policy and development projects are proposed, evaluated, financed, and implemented by these same institutions. It is clear from its World Bank Country Assistance Strategy (CAS) for India for 2005-2008, that the WBG views itself at the center of creating an intellectual base for pushing its formulation of development policies. This CAS will determine the strategy and priorities of the Bank’s lending to India for the next three years. Among the “Strategic Principles” that will “underpin the Bank Group’s work” in India is: That “the Bank will… aim to substantially expand its role as a politically realistic knowledge provider and generator.”

The World Bank has been so successful in spreading its neo-liberal philosophy that the independence of bureaucrats and politicians must now be questioned. The World Bank offers staff exchange programs, training sessions, junkets, seminars, and publications to the very individuals who negotiate with the Bank on behalf of the Indian people. As a result, alternatives to neo-liberalism find no champion within the Bank-government
relationship

Aiding the World Bank and other multilateral agencies in this are a few well-known (and very expensive) international consultants who are paid huge sums (which come to the country as grants or loans) to prepare water sector reform plans, privatisation plans and who even draft legislation to give effect to these. For example, the water sector reforms for Delhi have been designed by PriceWaterhouseCoopers through a project that was funded by the World Bank. The ADB gave a grant that funded a British consultant Halcrow to prepare integrated water management plan for Madhya Pradesh, which led to a World Bank loan for water sector “reforms” - a euphemism for privatisation and commercialisation of natural and common resources.