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DEVELOPMENT: World Bank Boosts Lending to India

Emad Mekay

WASHINGTON, Aug 26 2004 (IPS) - The World Bank said Thursday it will more than double its loans to India, one of the world’s largest economies, with a goal of halving poverty there by 2015.

But critics are panning the new plan, saying it was designed with little consultation and will put too much money into building costly and controversial dams.

The ‘World Bank Group Country Strategy for India’, 2005-2008, includes an increased lending programme totalling three billion dollars a year. After 12 months of work it was approved by the bank’s board of executive directors, despite some objections from non-governmental organisations (NGOs).

The country strategy is a class of document that describes the approach the bank will take to help a government achieve its development goals.

The bank says its India strategy will help the nation meet its targets outlined in the Millennium Development Goals.

The eight MDGs, set by the United Nations in 2000, include halving the incidence of poverty from 1990 levels, achieving universal primary education and developing a global partnership for development, with targets for aid, trade and debt relief, all by 2015.

“Assisting India, which is home to over one-quarter of the world’s poor, with best-practice knowledge and financing for development, is central to the Bank Group’s mission to help reduce global poverty,” said Michael Carter, the bank’s country director for India, in a statement.

The South Asian giant has experienced rapid growth in recent years, and its significant economic achievements helped to lift dozens of millions of people out of poverty during the 1990s. In April the bank said economic growth in India and China was primarily responsible for ending poverty for 500 million people worldwide.

In India, 359 million people – 35 percent of the population – lived in dire poverty in 2001, down from 382 million, or 55 percent, in 1981.

But the bank says the vast country of over one billion people is still a place where average incomes remain low, and that it has achieved little progress in some critical social indicators, including education and health, particularly the fight against HIV/AIDS.

The bank says its strategy document commits it to an increased focus on results and will include a new commitment to information technology.

Under the plan the Washington-based institution will increase its lending to infrastructure projects, including roads and power generation, and to other areas like water supply and sanitation, irrigation and urban development.

It will also direct some loans to education, health and social protection.

But critics warn the bank is putting some 550 million dollars into new dams in 2005-2008, leading some Indian and international civil society groups to reject the proposed strategy.

California-based International Rivers Network (IRN), which campaigns against displacement and environmental damage caused by large dams, said the bank is repeating previous errors.

“The World Bank has not learned lessons from its past mistakes in building dams,” said Ann Kathrin Schneider.

“The bank is currently considering dams in the Himalayas that would destroy vast areas of pristine forest, and would not increase poor people’s access to electricity. The Indian hydroelectric utility that will construct the dams, NHPC, is known for brutal displacement without resettlement,” she added in an interview.

Many Indian groups said in a statement that the new strategy, which has not yet been publicly released, was written without input from the Indian Parliament and after only a minor consultation with civil society groups.

They said the bank’s India office unilaterally set dates for consultation on the scheme within the country, and that these were organised a mere two months before the draft plan went to the bank board Thursday.

In their statement, some 20 Indian groups said the plan could be counter-productive to the country’s interests.

“We reject the World Bank Country Assistance Strategy,” they said, adding, “It does not represent the interests of the Indian population as expressed in the recent elections.”

The groups that signed the statement include Environmental Support Group, the Delhi Forum, Indian Social Institute and Jharkhand Save the Forest Movement, among many others.

They argued the assistance strategy deliberately ignores that electorates in three states – Andhra Pradesh, Karnataka and Madhya Pradesh – rejected the World Bank’s policies of privatisation and economic liberalisation when they voted out governments that closely followed those policies.

IRN criticises the bank’s decision to finance additional power generation, mainly dams, when it says almost 50 percent of power generated in India is lost through leakages in the system.

Many Indians remain unconnected to the public power system, the group adds, but the World Bank is offering no strategies that would help increase poor people’s access to electricity.