The Hindu Business Line : Preaching vs implementing best practices

Though the World Bank asserts that assisting India with best practice knowledge and financing for development are central to the Bank group's mission, doubts persist about the Bank's adherence to its own social and environmental policies.

THE World Bank, in a recent statement, announced its decision, taken at the August 26 meeting of its Board of Executive Directors, to enhance lending to India from approximately $2.2 billion last year to $3 billion per year in the 2005-2008 period, adding up to $12 billion.

The Bank says that it has identified three programme priorities — improvement in government effectiveness, support for investments in people and the empowerment of communities, and promotion of private sector-led growth.

According to Mr Michael Carter, World Bank's country director for India, "what emerges is a picture of India occupying two worlds simultaneously. In the first, economic reform and social changes have begun to take hold and growth has had an impact on people's lives; opportunities have opened up. In the other, citizens appear almost completely left behind by public services, employment opportunities, and brighter prospects. Bridging the gap between these two Indias is perhaps the greatest challenge facing the country today... "

Indeed.

Shortly after the announcement of the enhanced lending, the Planning Commission Deputy Chairman, Mr Montek Singh Ahluwalia, informed the media that leading Indian companies and multilateral agencies such as the World Bank and the Asian Development Bank will, henceforth, be involved in the country's planning process and that their representatives will be members of the consultative committees being set up by the Planning Commission to evaluate the Tenth Plan (2002-07).

Mr John Briscoe, Senior Water Adviser at the World Bank, will be on the committee on water resources, and Mr Sudipto Mundle, chief economist of the ADB, on the committees on agriculture, transport and financial resources. Indian companies have been involved in the planning process in the past — but this is the first time that the Planning Commission has explicitly sought the assistance of multilateral agencies.

The rationale for this, according to Mr Ahluwalia, is that the World Bank and the ADB give a large amount of aid to India and, therefore, it is deemed appropriate that their views "be taken on board" in sectors "where they are active."

While Mr Ahluwalia's sense of fair play is admirable, not all are convinced about the advisability of co-opting the World Bank into India's planning process, however irrelevant it might be.

This is because though the World Bank asserts that assisting India, which is home to over one quarter of the world's poor, with best practice knowledge and financing for development are central to the Bank group's mission to help reduce global poverty, doubts persist in certain quarters about the Bank's adherence to its own social and environmental policies.

In this context it is worth taking note of the observations of Mr Peter Bosshard, Policy Director of International River Network, in an article titled `The World Bank's high-risk hypocrisy' published by Bretton Woods Project in April, 2004. According to Mr Bosshard, recent trends show that the World Bank is not serious about the social and environmental policies it trumpets at global conferences. He writes: "Senior World Bank staff in its India office indicated that they neither know nor care about procedures that are supposed to make its infrastructure lending socially responsible. The Bank management appears to have no interest or political will to follow their own best practice guidelines and take minimal steps to challenge the vested interests of governments and corporations which often dominate when infrastructure is built."

Mr Bosshard argues that infrastructure development is urgently needed — but should be undertaken to meet community needs. "Vested interests of politicians, governments, aid bureaucracies and equipment suppliers favour the promotion of new centralised, capital-intensive investments over the efficient management of existing infrastructure.

Foreign consultants subsidised through trust funds are favoured over domestic expertise, and entrench a bias for imported equipment financed by foreign capital."

In fact, at a meeting with NGOs last November, the World Bank vice-president, Mr Nemat Shafik, had agreed that such vested interests need to be balanced by comprehensive, participatory and accountable processes of options assessment. Following the report of the World Commission on Dams, the Bank had agreed that `gaining public acceptance' was an important objective and in July, 2003, had produced a sourcebook stating: "... stakeholder involvement and the assessment of options are important elements in the preparation of World Bank supported water resources and energy projects. Sector plans will no longer be just technical exercises undertaken solely by professionals."

India, according to Mr Bosshard, is an "important test case" in that it is the largest single recipient of World Bank lending in cumulative terms, having borrowed $59 billion for various projects, including many dams and other mega-projects. "Numerous studies have demonstrated that Indian large dams have an abysmal social, environmental and economic track record. They have displaced at least 42 million people, often without rehabilitation. A 2002 Operations Evaluation Department (OED) report found that in India, `the Bank still has good reasons to be wary of projects involving resettlement.' Yet, the Bank refuses to accept responsibility for the continuing impacts of the projects it has backed and is actively considering investments in new high-risk projects."

He goes on to write: "Two of the key authors of the World Bank's infrastructure and water strategies are now based in India, where the government is very keen to get Bank support for new dam projects. They are Praful Patel, vice-president for South Asia, and John Briscoe, the senior water advisor. In December 2003, the World Bank announced that it would double its lending for India within two years and that all additional lending would likely go into infrastructure.

Interestingly, World Bank reviews of both power and water in India have determined that the systems are extremely inefficient, both technically and managerially. In October 2001, the World Bank's country director had said that "the most important element of power sector reforms is to combat widespread theft, graft and corruption." An International Finance Corporation country director had added "there is no point investing in generation if the power does not reach the consumer."

In 2002, OED had evaluated the Bank's water sector strategy in India and found that "approaches have been top-down, bureaucratic and fragmentary, rather than participatory, client-oriented and integrated."

Further, taking into account the systemic problems in the sector, it had concluded that "the Bank's current operations have moved away from new construction and are focusing on making existing infrastructure work efficiently... This is most appropriate given the poverty alleviation mission of the Bank."

Although these findings were in consonance with two preceding reviews, the Bank had adopted a new water strategy involving a new emphasis on investments in large new infrastructure.

Mr Bosshard says that he and Mr Himanshu Thakkar of the South Asia Network on Dams, Rivers and People, had met Mr John Briscoe and other officials of the Bank's Delhi office. "We asked if World Bank officials responsible for designing and implementing the new water sector strategy agreed with the findings of the Bank's 2002 evaluation of water in India. Briscoe said he had never heard of it. This is particularly surprising as the evaluation was an input into the new water sector strategy which he had prepared just one year earlier... "

"The Bank's new options assessment sourcebook recommends that lending operations in the water sector are based on a balanced, participatory assessment of all options, including policy and institutional changes. Again, the World Bank officials said that they had not read this, and John Briscoe claimed that its recommendations represented only the opinion of its author.

India was a sovereign country and so `the recommendations of the sourcebook are not going to happen in India.' While the sourcebook itself does not carry any such disclaimer, Alessandro Palmieri, the sourcebook's main author, agreed that `the document reflects only the opinions of the authors.' And since the sourcebook does not constitute formal Bank policy, he does not expect follow-up activities, and discussing the implementation of its recommendations made `no sense.'

This, notes Mr Bosshard, "casts further doubt on whether civil society groups can rely at all on the plethora of non-binding best practice documents which the Bank has touted in recent years... "

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