Junk CAS

What civil society groups want the World Bank to do

By Clifford Polycarp
Published: Sunday 31 October 2004

On September 22, 2004, the World Bank (wb) officially unveiled its Country Strategy (cas) for India. That very day, a draft critique of the bank's strategy -- it is being developed by a group of 20 non-governmental organisations including Focus on the Global South, the Delhi Forum and movement-oriented coalitions such as the South Asia Network on Dams -- was quickly circulated. The draft says cas should be rejected in toto: it "does not reflect the needs of India's masses."

cas for India was approved earlier, on August 26. Then, the bank had chiefly received flak for its renewed interest in hydropower (see: Down To Earth, September 30, 2004). The draft critique, too, damns the bank for not accepting responsibility for "the unresolved social and environmental legacy" of its dam projects.

The critique also challenges the bank's assessment of reforms in India. While the latter says the post-1991 programme contributing to increased incomes and improved living standards, the critique argues to the contrary: what about the less than 2 per cent growth in agriculture since 1996-1997? What of rising graduate unemployment -- from 22 lakh in 1990-2000 to about 50 lakh in 2003-04?

Money flow
Composition of funding based on projects under consideration, 2005-2008
Project heads US $ million
Roads & Highways 2,550
State Water Sector 2,490
Urban reform, infrastructure & development 1,580
Health 1,559
State Structural Adjustment Loans 1,410
Powergrid, state power & rural energy access 1,320
State Livelihoods 662
Education, childhood development & vocational training 650
Agriculture — technology, productivity & competitiveness 640
Hydropower 550
E-governance 500
Forestry, Environment & Clean Energy 468
Slums 350
Rural & SME financing 270
State Rural Service Delivery 250
Others 474
Total 15,723
Note: The actual lending will be lower, remaining within the overall limit of US $12 billion
Source: Anon 2004, Country Strategy for India, The World Bank
The group criticised the cas consultation process. The bank had put up a draft on its website, available for less than a month; this excluded the vast majority that had no Internet access. For the four weeks the draft was available for comments, public consultations were held only in New Delhi, Lucknow, Mumbai and Bangalore. Civil society got only two days time to respond. The meetings were not open to the public and the criteria by which invitees were selected were not known either. Moreover, annexes to the document were held back until after the strategy was endorsed. In all, a "poor demonstration of the wb's commitment to transparency."
CAS spells out cas spells out wb's funding strategy for 2005-2008, and the composition of the assistance (see table: Money flow). wb's targeted loan amount is us $3 billion a year. A major reason it believes India will pick up all this money is because it has done away with "triggers" (rules internal to the bank, which it uses to determine how much loan is to be actually disbursed, as against the promised amount). In cas 2002-2004, such triggers -- like improvements in fiscal balances, privatisation and structural reforms -- had substantially reduced actual lending volumes of the International Bank for Reconstruction and Development (ibrd), particularly to states. Though ibrd's loan limit was us $2.15 billion a year, it actually shelled out us $1.7 billion. Why were the triggers removed this time? India's improved creditworthiness. In the last two years, India substantially pre-paid ibrd loans, so bringing India's outstanding loans to ibrd down from us $7.3 billion in 2002 to about us $4.3 billion on June 30, 2004.

This time around, ibrd's loan limit remains the same: us $2.15 billion a year. The rest will come from the group's International Development Association (ida) -- which provides funds in the form of concessional loans or grants -- and the International Finance Corporation (ifc), which lends to the private sector. How much India will get from ida depends, in turn, on how much ida will get from its 39 donors; this might be the same as that in cas 2002-2004: us $850 million a year. ifc is expected to lend about us $300-350 million a year.

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