Ever since the government that promised free power to the farmers has been in place in Andhra Pradesh, the World Bank has viewed the Congress government's 'populist' free-lunch policy with suspicion. While the Bank will continue to assist various other programmes such as urban poverty alleviation, water conservation and improvement of roads in the state, the Bank's country director Michael Carter has expressed the apex lending institution's inability to support some of the components of the structural adjustment programmes in the state. Defending this, Carter maintained the Bank had not lost sight of the 'human face' when it had designed its funding programme in the State. In response, the Chief Minister raise the ante by declaring that the Bank's withholding of funds is 'an anti-people condition for lending.'
If what had happened in Andhra Pradesh in the past decade has had a human face, as Carter argues, then the World Bank supremo in India may well have to re-check his facts. The growth of GDP in the state was around 5 percent during 1994-2001, well below the national average. Employment growth fell to a dismal 0.29 percent during the same period; and an estimated three thousand debt-ridden farmers had committed suicide in the state along that time. Government estimates, moreover, are notorious for undercounting bad things. Is that the human face?
The Bank had left no stone unturned in its dealings in Andhra Pradesh. Since 1998, it has funded power reforms, as well as given grants and extended loans for rural poverty alleviation schemes. In addition, it also provided Rs.1600 crores to the Naidu government for economic reconstruction of its administration and another Rs.2000 crores to help bridge the huge revenue deficit in the state. Together, that's the sort of package the Centre is now offering Bihar to rescucitate that state. Also, Britain's DFID, the World Bank's fellow donor. made 15 times more investment in the state then the amount it had sent to Ethiopia for famine relief.
The stand-off before the finalization of the World Bank's Country Assistance Strategy (CAS) for 2005-08 unfolds some less-discussed facts about its lending strategy. The continued insistence with what has been proved 'disastrous' by all accounts raises serious doubts about the genuineness of the Bank's country assistance strategy. Given the fact that it wields significant influence over the donor fraternity, the intentions of other donors will be viewed with suspicion too. Naidu has been a poor symbol of what the World Bank's assistance can do a state and its people. The Country Assistance Strategy hopes to imitate and replicate this failed example, rather than steer a different course. Continuing with its argument against agriculture sector's so-called dependence on high price support and large input subsidies, CAS argues that bold action from policymakers will be required to move away from the existing subsidy-based regime. But how does the Bank justify much higher subsidies to the agriculture sector in the EU and the US?
Clearly, the CAS is pursuing a hidden agenda for promoting privatisation. In no uncertain terms, the strategy document mentions the role of International Finance Corporation, a member of the World Bank Group, to bring about private investment in water infrastructure and its advisory services to promote private management of water utilities. All this, when it isn't even clear why anyone should care what the Bank thinks, anyway. After all, its scaled-up lending, under the best of conditions, is less that 0.2% of the nation's GDP. Why, then, should the World Bank be allowed to influence policy at any significant level?
The CAS makes interesting, if somewhat expected and disturbing reading. Expectedly, documents of this kind highlight critical development dilemmas and then try to build upon them the assistance strategy. For instance, the document raises a compelling question: why do infants and young children die in India? But having pondered the question, the answers are fairly limited. In its diagnosis of the cause for growing infant mortality rate (IMR), it has failed to identify reasons for the poor IMR in Andhra Pradesh (65, as against 62 in Bihar) despite the lengthy assistance programs in the state.
Outwardly the CAS may seem in line with the Common Minimum Programme of the present government, it however fails to acknowledge reduced employment and a shrinking natural resource base in a large agrarian society as the reasons for continuing poverty. With its lending based on pre-determined conditions, the Bank will prefer a Naidu at the cost of a Reddy. Meanwhile, the real verdict on the Bank's strategy comes in everyday, in the form of endless suicides by the farming community!