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Journalism of Courage
It is not the size of the latest batch of World Bank loans for India that is remarkable but the purposes for which some of the loans were approved. Indian officials and their counterparts in the World Bank should be congratulated for managing to defeat the post-Pokharan US blockade on loans for purposes other than “basic humanitarian” ones. It was either that or a suitably broad definition of “humanitarian” that helped loans for fiscal, power sector and public sector reform in Uttar Pradesh get past the Bank’s board.
There is insufficient evidence to show the US has given up interfering with the Bank’s essential functions. But it is the first time since May 1998 that WB loans for purposes that Washington does not regard as strictly humanitarian have been obtained. Uttar Pradesh gets $511.3 million, the lion’s share of five loans totalling $743 million; $110 million is for health systems, $150 million for the power sector and $251 million for fiscal reform and public sector restructuring.
Other loans are for community development programmes in Rajasthan and the national immunisation and polio eradication programmes. These two causes, incidentally, shot into the international limelight during Bill Clinton’s visit to India. At Nayla he had an opportunity to see first hand what community development programmes can ac-hieve. He noted also that India’s polio eradication campaign was the most massive health initiative the world has ever seen. This is not to say that it needed a presidential visit to make the World Bank sit up and take notice but it was useful public relations, all the same. It may just make the appropriate impact on those who control the purse-strings in Washington but do not normally appreciate how WB dollars can make a difference to people living thousands of miles away.
The loan to UP in the form of a structural adjustment loan (the first of its kind for any state in India) is intended to help the government put its finances on a sounder footing by proceeding with reforms in the areas of deregulation, expenditure reduction, tax policies and privatisation of the public sector. Funds for the power sector will be utilised for setting up a regulatory framework and institutions preparatory to the separation of power generation from transmission and distribution. The loans are small in relation to UP’s needs in both areas. In addition to policy reform and infrastructure development, UP also needs huge investments in the social sector before its poor economic growth rate can be accelerated.
Without sustained and simultaneous efforts to speed economic growth, improve health and education standards and attack poverty directly, the state will remain among the most backward. Such issues are getting more attention at the WB. The same cannot be said of the US government which not only makes wholely unsustainable distinctions between humanitarian and non-humanitarian purposes but is downright wrong to block WB loans in support of policies and programmes which will lead to the reduction of poverty in India. A $1.6 billion loan for infrastructure development is coming up for approval. New Delhi must lobby hard to ensure it comes through smoothly.
