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World Without World Bank Possible: Activists

Action Week on World Bank Brings Together Social & Political Activists, Probing their Past  and Demanding Accountability

Press Release |  October 16, 2020

New Delhi: A key message reverberating in the week long protest action was that a World Without World Bank is possible. Participated by people’s movements, civil society groups, senior political and social activists and concerned citizens, the week witnessed multiple actions, within the limitations imposed upon by the pandemic.

The Action Week from October 12-16, under aegis of Working Group on International Financial Institutions (WGonIFIs) was observed by online meetings, webinars and using social media to look into the past performance of the World Bank in critical sectors, which impacted the economy as a whole, and in particular, people, their livelihoods and environment. The purpose behind the protest week was to expose the Bank’s hidden agendas to push neo-liberalization and a lack of focus on either inclusive or sustainable support for the countries and people battling marginalisation. 

The week-long protest saw senior political and social activists and concerned citizens voice their concerns regarding the manner in which the World Bank has been pushing for a policy reform agenda changing the Indian economy and polity against the interests, rights and basic needs of the common citizens. In a video message eminent activist Medha Patkar stated World Bank is undemocratically influencing our policies, impacting our sovereignty and violating our constitution.” She further stated that “We can live without the World bank. The World without the World Bank can certainly be taking the alternative path, which we all are compelled to think about after COVID-19 and all calamities based on climate change.”

Many other activists, academicians and trade unionists voiced their concern over the manner in which the Bretton Woods Institutions have been pushing for privatisation in public services, dilution of environmental and labour laws, exploitation of natural resources in the name of Development , which have been detrimental to the interests of the marginalised. The other voices included Goldman Environmental Prize winner Prafulla Samantara, noted environmentalist Vandana Shiva, Afsar Jafri of GRAIN, CPI(M) Central Committee Member Vijoo Krishnan, Amulya Nidhi of Jan Swasthya Abhiyaan (JSA), Leo Saldanha of Environmental Support Group (ESG), Right Livelihood Award winner Sandeep Pandey, Former General Secretary of All India Bank Officers’ Confederation (AIBOC) Com. Thomas Franco; Madhuresh Kumar of National Alliance of People’s Movement (NAPM),  General Secretary of  Bank Employees Federation of India (Tamil Nadu) C.P. Krishnan, Joint Secretary of All India Bank Employees Association (AIBEA) Com. Devidas Tuljapurkar, Maju Varghese of Centre for Financial Accountability (CFA), General Secretary of the All India Trade Union Congress (AITUC) Com. Amarjeet Kaur, environmentalist Ashish Kothari,  President of Nagpur Municipal Corporation Employees Union Jammu Anand, Sreedhar Ramamurthi of Environics Trust, Vimal Bhai of Matu Jan Sangathan, Patron of All India Power Engineers Federation (AIPEF) K. Ashok Rao, Rajkumar Sinha of Chutka Parmanu Virodhi Sagarsh Samiti, Ashok Shrimali of Mines Mineral & People (MMP), energy expert Soumya Dutta and others who spoke about the impact of World Bank investments and reform agenda on agriculture, energy, environment, banking, health care sectors and on labour rights.

As part of the week long action, two international webinars were organized “IMF-World Bank: Did the Reform Agenda Get A Booster? –  Experiences Globally” and “World Bank’s role in creating Smart Cities  and it’s Socio political Impacts in Developing Countries- Voices from the South and Covid- 19” on the 13th and 15th of October, 2020. These webinars brought together speakers from the Netherlands, Philippines, Indonesia, Hong Kong, Bangladesh and India. Researchers, civil society members from across the world participated in the webinars, which especially brought together the voices from the global south,  coming together to discuss the commonalities of experiences vis-a-vis World Bank investments and policy push. 

In the webinar on COVID-19 speakers Nezir Saini from Recourse based in Netherlands, Hasan Mehedi from Coastal Livelihood and Environmental Action Network (CLEAN), Bangladesh  and Anuradha Munshi from Centre for Financial Accountability (CFA) agreed on the concerns regarding the increasing external debt situation as the support from these institutions are in form of loans. IMF and World Bank funding for COVID-19 in developing countries is attached to policy reforms which will affect the social and health sectors and  encourage private players. This would be disastrous when the need for good public health infrastructure and care is more than ever before. 

In the webinar on Smart Cities speakers Jelson Garcia, an Independent researcher from Philippines, Elisa Sutanudjaja from Rujak Center for Urban Studies, Indonesia, Prof. Kris Hartley from The Education University of Hong Kong, and Gaurav Dwivedi, Centre for Financial Accountability agreed that the World Bank’s push for large and smart infrastructure has disempowered the already marginalised communities and pushed them to peripheries, destroyed traditional livelihoods, undermined the local governance bodies like municipal corporations and is creating parallel governance structures and pushing for privatisation of public services through PPP model, etc.

The movements and CSOs vowed to intensify monitoring World Bank and other international financial institutions and their agenda, negatively impacting India and its economy.

Resources

Recording of Webinar :

  1. World Bank’s Role In Creating Smart Cities  And It’s Socio Political Impacts In Developing Countries – Voices from the South: https://www.facebook.com/wgonifis/videos/912890472453195/
  2. “Covid-19 and IMF-World Bank: Did the Reform Agenda Get A Booster? –  Experiences Globally”: https://www.facebook.com/watch/?v=255382015914969

The Video messages of Medha Patkar, Prafulla Samantara, Vandana Shiva and others can be accessed here:  https://wgonifis.net/videoswwwb/

Issued by Working Group on International Financial Institutions (WGonIFIs).

Contact:

Anuradha Munshi – anuradha@cenfa.org / 9792411555

Nishank – nishank@cenfa.org / 9910137929

Working Group on International Finance Institutions (WGonIFIs) is a collective of organisations and individuals in India to critically look at and evaluate the policies, programmes and investments of various International Finance Institutions (IFIs), and joining the celebration of the people and communities across the world in resisting them.


Indian Civil Society Groups Announce “World Without World Bank” Action Week

Highlight the Impacts on Key Sectors in India During IMF-WB 2020 Annual Meetings

Date: 12 October, 2020

New Delhi: People’s Movements, Civil Society Groups, and concerned citizens are coming together to protest the World Bank’s policies, interventions and impacts which negatively impacted the Indian economy as a whole, and in particular in some key sectors, in a week-long protest, “World Without World Bank – Action Week India” from October 12-16. The purpose behind the protest week is to expose the Bank’s hidden agendas to push neo-liberalization and a lack of focus on either inclusive or sustainable support for the countries and people battling marginalisation.

The IMF-Bank is having its 2020 Annual General Meetings (virtual) from October 12-18, 2020.  

The World Bank Group continues to be the lead Multilateral Development Bank (MDB) defining development and reshaping policies and economies to fit the neoliberal agenda. COVID-19 has provided the Bank a window to reinvent its relevance through support to countries in fighting the pandemic. This support is coming through development policy loans which are silently pushing for policy reforms. The Bank’s Ease of Doing Business report, now tainted and halted for fudging of data, has played a devastating role in watering down environmental and labour laws in India and elsewhere. The Bank’s World Development Report for 2021, which sets forth the interest and direction of its investments, points towards commodification of data. 

India’s engagement with the World Bank dates back to several decades back with the first lending in ‘50s for the railway project. Later in 1968 a huge protest against the then World Bank President Robert McNamara for his role in the Vietnam war as the Defence Secretary of US, when he visited Kolkata led to his return from the airport itself, without being allowed to step out of it due to protests.

The late ‘80s and early ‘90s witnessed protests against World Bank lending to Narmada dam and later Singrauli power projects, directly resulting in World Bank’s withdrawal from Narmada dam and constitution of Inspection Panel, the first ever accountability mechanism in any MDB.

In late ‘90s, government tried to nominate WB staff to the Planning Commission of India, which the Left parties vehemently opposed and thwarted.

A number of protests happened during the decades of 90s and 2000s. Some of the significant ones are against Vishnugad Pipalkoti and Allain Duhangan hydro projects, Mumbai Urban Transport Project, struggles against the privatisation of health, water and power sectors.

The decade following that saw a valiant struggle against the power project in Kutch Gujarat – the Tata Mundra project. Filing a case in United States against the private sector arm of the World Bank – the International Finance Corporation – resulted in the Supreme Court of US ruling that World Bank does not enjoy absolute immunity from law suits, taking the efforts to hold MDBs accountable to a different level and giving an opportunity to communities around the globe to hold World Bank legally liable for the damages causing to them because of irresponsible lending.

The Bank continues to grow its influence in India through state partnerships impacting local governance structures. They pursue new and what seem to be more lucrative territories promoting privatisation and commodification of data, coastal regions, large renewables, large infrastructure, agriculture, health, etc. with little regard to impacts on communities, their rights over resources and to human rights. With the approach of maximising finance for development, there is a deeper connection of Development Finance Institutions with private financial entities making funding more complex and difficult to trace. These institutions despite claims of responsible funding and poverty alleviation continue to operate with lack of accountability and transparency.  

During the week-long protest Indian groups plan to organise a media campaign, online seminars and meetings to highlight the impacts of  the World Bank funding  in various sectors in India including health, agriculture, infrastructure, energy, labour, environment and on the Bank’s agenda of neoliberal policy reforms.

For more details: www.wgonifis.net

Issued by Working Group on International Financial Institutions.

Contact:

Anuradha Munshi – anuradha@cenfa.org / 9792411555

Nishank – nishank@cenfa.org / 9910137929

Working Group on International Finance Institutions (WGonIFIs) is a collective of organisations and individuals in India to critically look at and evaluate the policies, programmes and investments of various International Finance Institutions (IFIs), and joining the celebration of the people and communities across the world in resisting them.

World Without World Bank

Action Week -India; 12th  to 16th October, 2020

Context

The World Bank Group (WBG) continues to be the lead Multilateral Development Bank defining development and reshaping policies and economies to fit the neo liberal agenda. COVID-19 has provided the Bank a window to reinvent its relevance through support to countries in fighting the pandemic. This support is coming through development policy loans which are silently pushing for policy reforms. The Bank’s now tainted and halted for fudging of data,  Ease of Doing Business report has played a devastating role in watering down environmental and labour laws in India. The Bank’s World development Report for 2021, which sets forth the interest and direction of its investments, points towards commodification of data. 

The World Bank continues to grow its influence in India through state partnerships impacting local governance structures. They continue to venture into new and what seem to be more lucrative territories promoting privatisation and commodification of data, coastal regions, large renewables, large infrastructure, agriculture, health with little regard to impacts on communities, their rights over resources and to human rights. With the approach of maximising finance for development, there is a deeper connection of DFIs with private financial entities making finance more complex and difficult to trace. 

It is important as civil society, we respond and expose the Bank’s hidden agendas and lack of interest in inclusive and  sustainable development for marginalised communities. The Bank organising its Annual general Meetings(virtual) from the 12th to 18th of October, 2020.  

As a sign of protest to the Bank’s policies and interventions and impacts on economies Working Group on IFIs is organising a week of protest “World Without World Bank- Action Week- India” from 12th October to 16th October. 

Program (12th -16th October, 2020)

12th October, 2020-

  • World Bank Reform agenda (social media campaign)
  •  Agricultural Reforms (Social media campaign)

13th October, 2020- 

  • Health Sector, (Social media campaign)
  • COVID-19 Response (Social media campaign)
  • Webinar on “Covid-19 and IMF-World Bank: Did the Reform Agenda Get A Booster? –  Experiences Globally”  

14th October, 2020- 

  • Public Sector Banking Reforms – (Social media campaign)

15th October, 2020 – 

  •  Ease of Doing Business, (Social media campaign)
  • labour sector Reforms (Social media campaign)
  • Webinar on “World Bank’s role in creating Smart Cities  and it’s Socio political Impacts in Developing Countries- Voices from the South”

16th October, 2020- 

  • Energy Sector Reforms (Social media campaign)

More details will follow.

Updates from IMF: Forecast for Post-COVID Economy and Debt Levels

The International Monetary Fund (IMF) released two updates in the month of June – first was the World Economic Outlook, titled A Crisis Like No Other, An Uncertain Recovery and another was the Financial Stability Report.

These reports and updates are some of the most watched reports by economists, policymakers and businesses. The earlier Economic Outlook in April, 2020 had predicted a growth in India by 1.9% and a sharp rise back to 7.4% in 2021. It seems that IMF again missed their economic forecast and this time by leaps as it revises their predictions yet again.

One is reminded of the Economic crisis of 2018 when IMF financial surveillance could not predict any significant risks to the global economy in their Economic Outlook reports. IMFs own working paper based on GDP forecasts of over 63 countries for the year 1992 to 2014 finds that the ability to predict turning points are limited and they miss the magnitude of recession by a wide margin until the year is almost over.

Likewise, a Bloomberg analysis of more than 3200 same-year country forecasts, published each spring since 1999 found its forecasts underestimated GDP growth by 56% of cases and overestimated it in 44%. Noted Indian economist and former member of the Economic Advisory Council to the Prime Minister (EAC-PM), Mr Rathin Roy had earlier commented on IMF projections as usually 80% wrong.

What is important to note is that IMF not only forecasts but also provides billions in bailout loans in exchange for implementation of strict austerity measures and other neo-liberal policies imposed in the country that are opposed by workers, civil society and citizens.

WORLD ECONOMIC OUTLOOK

IMF in the World Economic Outlook forecast has reversed their earlier observations and is now projecting a deeper recession in 2020 and a slow recovery in 2021, different from predicted few months back. Global output is projected to decline by 4.9 % in 2020. It also has estimated that the total output loss to the economy in 2020 and 2021 will be over $12 trillion.

India’s forecast has been cut by a sharp 6.4% to -4.5% for 2020. In the last forecast, IMF had predicted Indian economy will grow by 1.9% but it was revised to -4.5% in the update. This according to Gita Gopinath, chief economist IMF, is due to longer duration of the lockdown than it was assumed and rise in Covid cases in India.

Synchronized deep downturn

The update projects a synchronized deep downturn in 2020 for both advanced economies (-8%) and emerging markets and developing economies (-3% to -5%, if excluding China), and over 95% of countries are projected to have negative per capita income growth in 2020. The report mentions among other things the severe hit to labour market. It quotes ILO on the global decline in work hours which in the first quarter of 2020 was equivalent to 130 million full time jobs and predicts loss of 300 million full time jobs in the next quarter.

It estimates India’s liquidity support announced in different packages as of 4.5% of GDP in the form of loans and guarantees for businesses and farmers, and equity injections into financial institutions and the electricity sector.

Mounting Debts and deficits

Public debt is projected to reach the highest level in recorded history this year, in relation to GDP, in both advanced and emerging markets as well as developing economies. This is predicted due to steep contraction in output, fall in revenues and high fiscal support costs. The global public debt is expected to reach an all-time high, exceeding 101%of GDP in 2020–21—a surge of 19 percentage points from a year ago. India’s Gross Debt is projected to increase to 84 % in 2020 compared to 72.2% in 2019.

Read World Economic Outlook Update, June 2020

GLOBAL FINANCIAL STABILITY REPORT UPDATE

IMF also came up with an update for its Global Stability Report. The report captures an overall easing of financial conditions as there is a surge in risk appetite in financial markets and equity markets rallying back. This according to the report is due to the swift and bold actions by central banks and have boosted market sentiments. However this has created a disconnect between the real economy and financial markets. The Economic Outlook has predicted a further reduction in global output, loss of working days, reduction in revenue etc.

The pandemic has exposed the financial vulnerabilities including corporate and household debt which could become unmanageable given the continued economic lockdown during the pandemic.

Historically, globally debt has reached $55 trillion in 2018, described as the largest, broadest and fastest of all the debt so far. Aggregate corporate debt and household debt has increased in many economies and some of which will face an extremely sharp decline. This has led to broader impact on the solvency of companies and household.

The report has warned that rising debt levels and potential credit losses resulting from insolvencies could test resilience of the banking sector. Banks have to provision more for expected loses as they assess the ability of the borrowers to repay their loans. The Non-Banking Financial Companies (NBFCs) which now have a greater role in the financial system are vulnerable to pro cyclical corrections and the behavior of NBFC during a deep downturn is untested.

Read Global Financial Stability Report Update

In India, the increase in the stress of the banks is a pre-existing condition according to the Financial Stability Report of RBI published in December 2019. The Gross Non Performing Assent ratio of banks was estimated to increase from 9.3% in Sept 2019 to 9.9% in September 2020. The report also said state-run banks’ GNPA ratios may increase to 13.2% by September 2020 from 12.7% in September 2019. However as per the RBI Governor, the economic impact of the corona virus pandemic may lead to higher non-performing assets and capital erosion of banks.

Rating agency CRISIL in its report on Covid-19 impact has said that gross non-performing assets (NPAs) of lending institutions are set to rise 150-200 basis-points (bps) this fiscal due to higher slippage and lower recovery. This according to Fitch Ratings can be anywhere between 200 and 600 basis points (bps). Considering the Covid-19 impact, CRISIL has projected GNPAs in the range of 11-11.5% for the financial year 2021.

According to RBI itself, there is a need for re-capitalisation plan of public sector banks as the minimum capital requirements of banks will not be enough to absorb the loses.

Indian groups reject World Bank’s concept note for World Development Report 2021: “Data for better Lives”

The annual World Development Report (WDR) is a flagship publication of the World Bank. The 2021 WDR report is in the process of being drafted and is titled “Data for Better Lives”. The Bank has shared the concept note for the Report for comments. As per the concept note, the World Development Report 2021 will look into role of data for development, current data landscape and the opportunities of integrating public and private data and new institutional frameworks to manage a range of regulatory, policy and governance challenges in this context. 49 Indian civil Society organizations wrote to the Bank rejecting the concept note and the intent behind the concept note in which data is identified and presented as a commodity. The concept note is deeply problematic at many levels: it disregards the rights of people over their data and is based on flawed assumptions that have no basis in reality. 

The Concept Note, Data for Better Lives outlines a framework that enables corporations and the state to profit and advance their particular interests under the guise of public interest, poverty reduction and bettering the lives of people. Data that is built from information about the everyday lives of people will become one of the new engines for economic growth.  The document is neither rooted in experiences of communities nor based on any evidence.It’s unfortunate that the approach of this concept note is limited to business for private companies for which certain power needs to be given to the state and paternalism to the poor. The more significant issues of state coercion, protection of people’s rights over their data and information is in the peripheral in this document. 

Disaster Funding and COVID-19 response of MDB’s in India

Over the years increasingly institutions like World Bank and other MDBs have started using post-disaster situations and climate change as an opportunity to bring in policy reforms. Post disaster rehabilitation and recovery programmes provide institutions an easy entry with little resistance to the massive policy reforms that come along. Also, the language of resilience and sustainability is built into the narrative, which find very little resistance. Institutions like the WB are taking multiple roles of assessment, planning, financing project through development policy loans and monitoring specially in cases of disasters. It is a classic case centralization of powers. World Banks language of resilience, sustainability and post disaster recovery needs to be decoded. With increase in natural disasters in this decade and with climate change realities, disaster capitalism has also become a reality.

In an article on “The Rise of Disaster Capitalism” in the Nation Naomi Klein points out, “governments will usually do whatever it takes to get aid dollars–even if it means racking up huge debts and agreeing to sweeping policy reforms. But shattered countries are attractive to the World Bank for another reason: They take orders well. After a cataclysmic event, governments will usually do whatever it takes to get aid dollars–even if it means racking up huge debts and agreeing to sweeping policy reforms. And with the local population struggling to find shelter and food, political organizing against privatization can seem like an unimaginable luxury.1

In the recent years India has witnessed an increase in climate disasters and the World Bank has used every opportunity to bring in the post recovery and rehabilitation projects, which come along with policy reforms. Post 2013 till now, India has witnessed some major disasters. The responsiveness of the Bank to these disasters has been of an opportunity for implementing economic and governance reforms under the garb of disaster preparedness, rebuilding and building resilient infrastructure. The Uttarakhand floods, Cyclone Phailin, Cyclone Hudhud, flooding in Srinagar and the larger valley region, the Kerala floods and being some of the disasters for which, the World Bank has supported the GoI in conducting rapid post-disaster damage and needs assessments in the first four listed disasters. The assessments provided clear guidance on the post-disaster recovery path that needed to be taken. Subsequently, emergency projects were prepared and are currently under implementation. These projects focus on recovery and reconstruction as well as strengthening long-term resilience and emergency response capacity at the State level in the affected States2.

In 2018 and 2019 Kerala saw floods and landslides paralyze almost the entire state. The disasters had a huge negative impact on the biodiversity of Kerala and the already fragile environment. In 2018, a prolonged southwest monsoon over the state of Kerala resulted in one of the worst floods in 100 years, causing estimated losses of US$ 4.25 billion.  This post disaster situation has been used as lucrative opportunity by institutions like the World Bank into financing programmes focused on disaster management with rehabilitation, post disaster recovery, building resilience as hook words. The Bank has found an easy entry point for development policy loans and other financing, which are coupled with policy reforms as well.

TheWorld Bank in October 2018 extended a support of up to $500 million to the Government of Kerala’s comprehensive flood recovery efforts and to build greater resilience to future shocks3. In June 2019 the World Bank board approved The First Resilient Kerala Program Development Policy Operation as a Development Policy Financing of 150 million USD4.The proposed operation supports Government of Kerala (GoK’s) resilient recovery from August 2018 floods. The proposed programmatic operation, the first in a series of two Development Policy Loans (DPLs), will support policy and institutional reforms recovery, mainstreaming long-term resilience to disaster risks and climate change into sectors of key importance.

The most problematic aspect of the reforms is that they are expected to mainstream disaster risk reduction and climate resilience into critical infrastructure development and service delivery. The priority sectors include water supply, sanitation, solid waste management, transport, and agriculture. The World Bank’s long-standing agenda of privatization is actualized through these reforms.

This case is very similar to what happened in Indonesia post the 2004 Tsunami disaster, where post disaster funding pushed privatization. With project loans worth $ 1.1 billion and the policy reform support loan, the Bank pushed for privatization and other new regulations that would support economic liberalisation. From this loan, came Indonesia’s new law on oil, gas and electricity that allows for the privatization of respective state-enterprises5.

In the post covid time the MDB’s have already invested close to 5.5 billion USD in India as support for dealing with the crisis. The world bank’s 1 billion USD supported COVID-19 (Coronavirus) Emergency Response and Health Systems Preparedness Project does not only look into immediate support for the public health systems, there is also considerable focus on integrating systems with push for private entities like health insurance companies to integrate with government schemes. We have already in India seen the fallouts of such systems.

India’s also negotiated a Development Policy loan for ‘Accelerating India’s COVID-19 Social Protection Response Program’ with World Bank . Development Policy loans have strings attached in terms of a neo-liberal agenda. These are loans given by the World Bank on the condition of policy changes, which are promised by a country and in line with the Country Partnership Framework for the country. Many of the reforms, which were announced in the financial package, are directly from the reform book of International Finance Institutions who have been demanding a rollback of labor regulations, environmental regulations, power sector reforms and relaxation of the land acquisition laws.

Asian Development Bank has funded USD 1.5billion COVID-19 Active Response and Expenditure Support Program(CARES) project which will support the government mitigate the severe health, social, and economic impact caused by the coronavirus disease 2019 (COVID-19) pandemic. ADB with its operation in health sector has altered and influenced health sector policies in India for sometime now. This emergency operation is built upon previous and ongoing health sector operations and policy dialogues. Since, the first health sector operation in India in 2013 through the support to the National Urban Health Mission (NUHM), ADB’s health sector engagement has been increasing. Following the launch of Ayushman Bharat in 2018 and implementation of NUHM under the National Health Mission, ADB is now developing a program to support delivery of comprehensive primary health care in urban areas (2020 pipeline). 

Asia Infrastructure Investment Bank has invested 1.25 billion in COVID response. They have funded two projects both co- financed one with ADB and other with the World Bank. As usual AIIB is riding the back of lead financiers, exhibiting its commitment to COVID without accountability on their end. 
New development Bank has provided a loan of USD 1billion for Emergency Assistance Program in Combating COVID-19 for support in public health and social safety sector.

The total lending of USD5.5 billion is not huge for a 3 trillion economy and whose annual budget is over Rs. 25 lakh crore. But the influence to change the economy and the mosaic of this country, through these investments, is huge and disproportionate to their lending. 


The World Bank and other MDBs are increasingly taking up all the roles of assessment, planning, financing projects and financing through development policy loans . The World Banks language of resilience, sustainability and post disaster recovery needs to be demystified. With increase in natural disasters in this decade and with climate change realities, disaster capitalism has also become a reality. With economies globally in shambles and in need for additional support, this vulnerable situation should not allow MDBs like the World Bank to push their agenda of disaster capitalism with ease.

1 https://www.thenation.com/article/archive/rise-disaster-capitalism/

2 file:///Users/anuradhamunshi/Downloads/world-bank-india-disaster-risk-management-program-2016.pdf

3 https://www.worldbank.org/en/news/press-release/2018/10/16/world-bank-commits-support-to-rebuild-a-more-resilient-kerala

4http://documents.worldbank.org/curated/en/428421551979689773/pdf/Concept-Program-Information-Document-PID-Resilient-Kerala-Program-P169907.pdf

5 https://www.brettonwoodsproject.org/2005/01/art-108058/

A Big Win- IFC World Bank to Freeze Investment in For-Profit Schools

Recently, a piece of good news has appeared that World Bank Group’s International Finance Corporation (IFC) upholding the right to education in an official commitment and decided to freeze investments in private for-profit pre-primary, primary and secondary (k-12) schools. Currently, the whole world is facing the devastating impact of the COVID-19 pandemic and passing through very trying times, with a third of the global population under lockdown. School closures are impacting more than 1.5 billion children. In such a scenario, this is a big win for civil society and an encouraging decision in favour of billions of children, especially those who are at the margins and dependent on the public system.

This landmark decision by IFC has responded to the concerned voices about the effects on segregation and exclusion, inadequate education quality, avoidance of standards and regulations, poor labour conditions, and profit-seeking behaviour of commercial schools. Hundreds of civil society organisations including Right to Education Forum (RTE Forum) and individuals from different part of world urged earlier to the World Bank through an open letter to take a clear and principled position in support of free, publicly provided education and against the use of development aid to fund for-profit or commercial education. They raised the issue of increasing phenomenon of commercialization of education in lower-income countries because donors are actively using public aid money to drive privatization in these countries, including the World Bank group. They mentioned that while most of its funding goes to support public education provision, the World Bank is also funding some market-oriented public-private partnerships (PPPs) through its International Development Association (IDA). It is also actively advising countries to pursue PPPs and adopt reforms that reduce regulations and incentivizes the growth of private education markets. It has also increased its direct support to commercial private education providers through the International Finance Corporation (IFC)-including fee-charging, for-profit school chains, which clearly undermine state obligations as defined in international human rights law. 

European Parliament and Global Partnership for Education (GPE),the biggest multilateral fund for education, had already taken strong positions against to support commercial or for-profit education provision. The UN Human Rights Council, the African Commission on Human and People’s Rights and various UN Treaty Bodies have also recognized the obligation to progressively secure free, public, not commercialized, education as a right. 

In the year of 2015, The UN Special Rapporteur on the right to education Mr. Kishore Singh has submitted his report to United Nation General Assembly wherein he had raised his concerns on the rapid expansion of privatization of education through deregulation and liberalization of education sectors. In this report, he has majorly highlighted the challenges of public-privatete partnership in education in safeguarding education as a public good. On similar lines, Education International, world’s largest teachers’ union held its 7th World Congress in Ottawa on July 2015, where it passed a resolution against privatization of education services.In its resolution, it said, “EI is concerned that privatization and commercialization policies have the effect of undermining the right to free quality public education and may create, exacerbate and entrench inequalities in access and participation as well as erode teaching and learning conditions in schools.”

These positions uphold the principle that education is a right, not a market commodity. Investing in free and inclusive education of good quality is the best way to ensure the fulfilment of SDG 4.

In India, there has been an incremental rise of privatization of education both in terms of increase in the number of private schools as well as in the numbers of students enrolled in them. The DISE data has provided trends of elementary education in India according to which there has almost 24.28 per cent increase in the number of private schools in between 2010-11 to 2014-15. In contrast, the growth of government schools is only 1.51 per cent. When it comes to the enrolment of students, during the same period, there is a steep rise of 24.42 per cent in private schools as against an 8.55 per cent decline in enrolment in Government schools. We need to keep in mind that it was in the year 2010 that the Right to Education Act 2009 came into force and in spite of this, there is a visible declining trend in public education both in terms of the number of schools as well as in enrolment of students in public schools. On the other hand, during the period private schools have not only been opened in large numbers and attracted students leaving the public school system. Inadequate spending on education by Govt of India proved one of the significant barriers for slow implementation of RTE Act within the stipulated timeline. It shows the apathy of state towards the strengthening of the public education system.

Private schools across rural and urban areas have been on the rise and a significant segment of education today, almost 30% of elementary education, 60% secondary education, and 75% higher education are privatized. There are different types of private unaided schools with varying fee structures: from low fee to elite, high fee demanding schools. Andhra Pradesh Government has signed an MOU with the private school chain, Bridge International Academy (BIA) for making the state their knowledge hub in the year of 2015. The Government of Andhra Pradesh has also invited the BIA to set up its India headquarter in Vijaywada, Andhra Pradesh. The entry of a big player like BIA with its deep pocket and highly influential investors like Facebook, Bill and Melinda Gates Foundation, World Bank etc, may lead to an even greater push for privatization of education in the country. Civil society in general and RTE Forum, in particular, have vehemently opposed the stance governments. Private schools are also trying to redefine the quality of education by their minimal standard of learning outcomes like reading, writing and numeracy. Five States of India –Manipur (73.3%), Kerala (62.2%), Haryana (54.2%), Uttar Pradesh (51.7%), and Meghalaya (51.7%) – have more than 50 per cent children in private schools (in the elementary school age group).

This trend of increase in private schools indicates the fact that education as ‘social public good’ is losing its base and privatization, commercialization and corporatization of public education are gaining momentum. There is an internationally known trend that reinforces the positive correlation between income and private schooling. In India, as household income increases, there is a greater tendency to send children to private schools, whereas children from the poorest households continue to access government schools. The data also clearly highlights gender bias in terms of more number of boys being sent to private schools as compared to girls. At a time when there is a fast growth of private schools in the country, thousands of government school are getting closed across India in the name rationalization/merger of schools.

According to a longitudinal study carried out by Azim Premji Foundation in Andhra Pradesh on school choice programme, “contrary to general perception, fee-charging private schools are not able to ensure better learning for children from disadvantaged rural sections as compared to government schools.” It also makes it clear that private schools do not add any value as compared to government schools when socio-economic factors are adjusted. It also says that several factors, both inside and outside of school, have a bearing upon the learning outcome of a child. This is a trend that is also highlighted in international literature: the DFID comprehensive review on the functioning of private schools (Day Ashley et al, 2014) also concludes that there is ambiguity about the size of the true private school effect.

The recently adopted Abidjan Principles on the right to education lays out the existing human rights obligations in this regard and guide how IFC can ensure its investments support the right to public education.

Civil society organizations welcome the IFC’s leadership in recognizing that its education investments must not undermine the right to education, including public education, and that there have been concerns with past investments in this regard. 

Corona Uncovering the Cracks in Capitalism

The COVID-19 corona epidemic that has taken over 16,99,019 lives all around the world has undoubtedly been a disaster with no parallels in modern history. Political and social analysts describe this pandemic as the reason for the most sustained period of worldwide public suffering since World War II and it indeed remains a fact that the global outreach of the virus has brought forth societal and economic shutdowns. The virus has not just wrecked the physical well-being of people globally but has also set in motion a precarious chain reaction that is all set to upset the veneer of stability in one country after another. If anything, this pandemic has laid bare the contradictions of the capitalist system like never before; for this time, unlike the 2008 global financial crisis, it would be difficult for the capitalist and neo-liberal models to rescue themselves without conceding ground to the biological implausibility of capitalist globalization.

While the national bourgeoisie is busy shifting the blame for the economic crisis on to the virus and many countries are significantly looking forward to accelerate protectionist tendencies, what the virus has in reality exposed is the deep-seated contradictions within the neo-liberal framework accumulated through decades. Hence, the crisis that we see today is a crisis of capitalism as a whole, as much as it is one triggered by corona. While it must be acknowledged that capitalism always delayed impending crises through different means such as massive credit expansions and racking up debt, thereby stonewalling growth, the bogey of capitalist advancement had to confront its current pandemic-sponsored rupture without any prior warnings. Thus, the virus seems to be only an unforeseen episode that turned spotlight on the deep fault-lines in non-democratization of economic power and freedom. While forfeiting the opportunities for building a truly international public healthcare infrastructure at the altar of the large pharmaceutical companies, little did the developed world envisage a time when thousands would be left dead with no antidote in sight for the worst ever viral attack.

It is in this context that many left wing intellectuals like the American historian and sociologist, Mike Davis, sees these times as a possible opportunity for “a second New Deal; the moment to reclaim social ownership and democratization of economy” (Zitelman, Forbes, 30March, 2020). However, the exhilaration over the assumed retreat of hyper-globalization, while presenting a chance to reset both global and personal landscapes, could also be a scenario where states get to reinforce nationalism. This is precisely because of how state is essentially a coercive institution which nurtures itself through class divisions in society. Consequently, as citizens world over would turn to their respective governments to protect them from the pandemic, the emergency powers at the disposal of these states currently, to combat the viral outbreak, in all likelihood would become the new status-quo. The “democratic aura” of the West has clearly been damaged by the lack of swiftness in their responses to tackling the crisis in comparison to say China, South Korea or Singapore. Hence, COVID-19 would by default become the most potent soft-power tool to turn the world into a less open, less free and more surveillance space.

It is indeed true that this crisis presents the best opportunity for fascist forces to engineer a parallel pandemic of despotism that would embolden deep-rooted resentments and frustrations in societies along religious, national and social prejudices. A societal set-up where the mob becomes the moral prosecutors and pro-bono law enforcers would definitely help in satisfying the morbidity of masses who finds the pandemic an excuse for a dangerous catharsis. The attack against Muslims in India, the linking of the pandemic to migrant population in Hungary, the furtherance of acrimony towards the Latinos and Hispanics and strengthening of border controls in USA are all testimonies to how every despot loves a good pandemic. Nevertheless, approaching the corona crisis as a crisis of industrial capitalism is also inspiring several anti-globalization activists and economists to understand the corona crisis as an avenue for radical wealth redistribution and as a way forward for catalyzing a transformative leap.

The casualities of natural events like Ebola, Zika, MERS, SARS, Influenza or now Corona are not just external shocks which are “given factors external to the economic system” (Nayeri, Our Place in the World, 27 March,2020). They are rather archetypes of how capitalist accumulation serves as the root cause of eco-social crises and how all such existential threats amplifies the overall crisis by undermining the most vulnerable groups and regions first off. The financial and economic crises kindled by corona are unearthing the structural weaknesses inherent in all the major world economic models including the USA. And this, being a far worse situation than 2008, also necessitates a coming together of various brands of political ideologies to devise fiscal policies that would help “slow, if not stop, the unfolding recession” (Goodman, The New York Times, 13 March, 2020). Societies are bound to change and look different post every major crisis and therefore, while all economic and political life was relentlessly committed to an upward redistribution of wealth for the past many decades, the anti-capitalist advocates believe that the solution to a pandemic of this scale lies in seizing the opportunity for a redistribution of financial resources as per social needs. They believe that the virus has in fact demonstrated the need for states to reorganize themselves beyond the framework of private accumulation of wealth (Damon and North, ICFI, 10 March, 2020).

The need to shift away from a market-oriented economic model  towards a  state-controlled supervision of the pandemic is best reflected in the words of the French Economist Thomas Piketty, when he talks of how “drastic state-led interventions in the economy during the corona crisis could show governments how much they can regulate the economy” (Zitelman, Forbes, 30 March, 2020). Many governments world over are being forced to take measures, unthinkable till a month back, in order to help people sail through the crisis. Paris Marx in his essay on Think (24 March, 2020) gives several such examples ranging from the nationalization of all private hospitals and health care providers in Spain to writing off mortgages in Italy to suspension of taxes, rents and utility bills for several companies in France including possible nationalization of bankrupt companies to halting evictions in USA, with states like California planning to provide shelters to at least 108,000 of its homeless. Many political analysts and economists are thus hopeful that the blind spots of capitalism and bad governance would necessitate a radical shift in political and economic practices. Consequently, they see the possibilities for a universal health care system, free medical coverage for low and middle income groups so that they do not have to dive into medical bankruptcies due to the prevailing private insurance mechanisms and an economic stimulus package that would encourage the state institutions to pump more money into the stock markets and ease off the burden of interest rates and loan debts on students and other vulnerable communities.

The renewed hope for a fundamental reorganization of society in these times comes from the understanding that this crisis has hit the capitalist model differently from the 1970’s or 2000’s as, while the virus followed the route map of global capitalism and transmitted itself world over through business, tourism and trade, its cardinal cause is also external to the economy. No scientist or economist can deny the fact that it is the fundamentals of the global capitalist model that helped the pandemic widen its target group- be it the heavy reliance of most on labour market or the grandeur of international connectivity. And these are not features specific or exclusive to any one economic policy paradigm; rather they are the essential characteristics of capitalism as such, making the corona crisis a global watershed moment. It is for this very reason that many left-wing intellectuals like William Davies vehemently talks about “how a crisis of this magnitude can never be truly resolved until many of the fundamentals of our social and economic life have been remade” (Zitelman, Forbes, 30 March, 2020).

While the neo-liberals are yet again managing to oversimplify the crisis by putting the responsibility of institutional failures to tackle the crisis on the state which they say had inadvertenly overindebted itself, the anti-capitalists too should exercise caution while clamouring for an all-powerful state in the pretext of mitigating the crisis of capitalism. Solidarity cannot be a synonym for ruthless state intervention. Nevertheless, the inoperability of many of the contemporary capitalist consumerist models under the present conditions necessitates a cultural, scientific and dogmatic alteration in the ways in which social formations are typically conceived by populations across space and time. The masses of the most advanced capitalist countries are entering this new phase of crisis not really after a period of growth and prosperity but rather after more than a decade of economic austerity and slowdown and this makes class struggle inevitable.

It is beyond doubt that the society at present is going through a phase that best represents the deficiency of a system of rule and social order based on capitalist advancement. The inadequacies of the market model have turned most of the market forces into temporary “socialists” who are waiting for the states to bail them out by passing on the unpaid bills to the working classes. The request from multi-billionaire Richard Branson for a state-supported bail-out of his Virgin Atlantic airlines with a net worth of 4 billion pounds while simultaneously asking his employees to go on unpaid leave bears testimony to how the bourgeoisie are relying on public money to rescue themselves from the chaos. However, it is the responsibility of the state systems to form the front line of defense when it comes to public health and safety and this can only be possible by discarding the austerity measures solely intended to design tax cuts and subsidies to redeem the corporates and the rich. As the endless accumulation of capital is clearly falling apart from within, all over the world, and the recklessness of consumerism is intensifying environmental degradation, a social democratic vision that couples public health measures with employment/ livelihood protection of the weakest seems to be the best way out.  

Elite Capture of resources, the continuing saga of exploitation: A case of World Bank

World Bank Aid or that matter any aid and its impact on countries has been a controversial discussion in development finance circles.  While it is true that aid provides an important source of income for poorer countries and has an effect on reducing poverty, there are debates on how the powerful and economic elites capture these resources.  It is also seen that the level of corruption is very high in aid-dependent countries and some of these resources serve their interests. 

The study Elite Capture of Foreign Aid Evidence from Offshore Bank Accountsby Jørgen Juel Andersen, Niels Johannesen, Bob Rijkers looks into this question of elite capture of foreign aid and finds that aid disbursements to highly aid-dependent countries coincide with sharp increases in bank deposits in offshore financial centers known for bank secrecy and private wealth management, but not in other financial centers. 

The paper is very controversial after the ‘Economist’ magazine carried an article on the correlation of delay in publishing of this research and untimely resignation of the World Bank chief economist,  under whose supervision the paper was produced.  The paper was subsequently published by the World Bank.  The paper  study the aid diversion by looking at World Bank aid disbursement and data on foreign deposits from the Bank for International Settlements (BIS).

The study consisted of 22 most aid-dependent countries of the World Bank.  It was seen that there were significant increases in the value of bank deposits in tax havens in the same quarter of World Bank aid disbursement.  The spike in the deposits to tax havens in the same quarter of disbursements and no subsequent hikes in quarters before and after reveals a massive siphoning of World Bank aid meant for poorer countries who also happen to be high in the corruption index. 

The study revealed that when a country receives aid equivalent to 1% of GDP, its deposits in havens increase by 3.4% relative to a country receiving no aid. The report states that at a mean about 5% of all the aid ended up in tax havens.  This ratio increases with aid dependency.  The more the aid, the more will be the leakage as is seen in the sample of countries which received 3% of GDP where the leakage rate is around 15%.

Much of the aid could be traced back to bank accounts in Switzerland and Luxembourg operated by the powerful elites from the aid-dependent countries.  This, however, is just a tip of the iceberg as it calculates only the money which has flowed into tax havens and does not include investments in real estate, gold and other luxury goods including automobiles etc. 

World Bank funding generally goes as either Development Policy Financing (DPF) or for Investment Project Financing (IPF), the latter being the one which is meant for projects which are supposed to reduce poverty.  Project financing is said to be more robust and difficult to divert given the various policies including procurement and is tied to specific expenditure. However, the study reveals that an aid disbursement of 1% of GDP is associated with an increase in haven deposits of around 2.8% when the aid takes the form of DPF and 5.3% when it takes the form of IPF, bursting the myths of higher accountability and transparency in its funding. 

While the above-mentioned study is regarding World Bank aid-dependent nations, the learning is relevant to countries like India which have also seen the capture of public resources meant for the poor and transfer of common resources to the countries elite.  The level of corruption that existed when state-dominated economy earlier continues in new ways in the post-liberalisation era.  Former Prime Minister Rajiv Gandhi in one of his famous statements acknowledged the leakages due to corruption.  He stated that only 15% of the government intended to the poor reaches them.  The situation did not change after liberalisation too.  The former deputy chairperson Montek Sigh Alhluwalia has stated based on the planning commission study on PDS that only 16 percent was reaching the targeted poor in 2009. 

In fact, the corruption scandals which involved public money being diverted to corporates have intensified after liberalisation when state-owned companies changed hands to private parties at throwaway prices or massive financial scams which seized public resources for private profit.  India has seen a phenomenal rise in billionaires who have given from natural resources and its extraction be it coal, forests and state gifting of public resources like land.    The increase in inequality post-reform period has reached such insanity that the combined total wealth of 63 Indian billionaires is higher than the total Union Budget of India for the fiscal year 2018-19 as documented by Oxfam India. 

The recent financial scams including the high non-performing assets (NPA) where corporates took loans from public sector banks but diverted its uses and fattened themselves and later got huge subsidies, tax rebates and cuts and write-offs for the money they owed to the public banks.  The study by Jørgen Juel Andersen, Niels Johannesen, Bob Rijkers though limited to World Bank aid also brings forward the issues of the capture of public resources which gets diverted for private profit.  The mechanisms and policy prescriptions by the World Bank on Public Private Partnership and newer models of the same which pushes more and more risks to public exchequer need to be evaluated in this light. 

The study calls for more transparency of public funds, strong accountability mechanisms and creation of quality democratic institutions and democratisation of existing ones to truly represent people to eliminate the elite capture of resources. 

AIIB’s review of their Environmental and Social Framework

Indian groups submit recommendations for AIIB’s review of their Environmental and Social Framework

The Asian Infrastructure Investment Bank (AIIB), after four years of its operations, is undertaking a review of its environmental and social framework. 30 Indian Civil Society Organizations submitted their recommendations and concerns regarding the process of review and it’s content and scope.

As one of the biggest recipients of AIIB’s funding, this process has significant meaning for India especially, given the context and trajectory of development followed. India, in recent times, has focused on developing massive infrastructure, which require enormous investments. This resulted in India opening itself to mega projects financed by international, national and private financial institutions. In these circumstances, it is essential for Multilateral Development Banks like AIIB to develop robust, comprehensive and strong environmental and social policies which are implemented and monitored well. To merely rely on the country systems is not enough; rather the ESF should go beyond the country system to strengthen them further. At a time when other MDBs are also undergoing review of their policies, AIIB should take a progressive leap as the first MDB from the global south to show its commitment towards building infrastructure through robust policies and with entire commitment towards protecting people and the environment.

In the four years of operation, AIIB’s membership has grown to 102 approved members worldwide and has funded 64 projects across Asia to the tune of USD12.24 billion. India alone has received investments close to USD 3 billion for the 14 approved projects. These projects include investments in energy, transport and water sectors. Of the 14 approved projects 4 are financial intermediary projects and 4 are co-financed projects. Of the current approved portfolio for India, 33.33% projects are co-financed and the other 33% are financial intermediary projects while only 33% constitutes stand alone projects. Co-financed and FI projects with current policies only bring limited liability and accountability for AIIB. The AIIB’s current ESF is not adequate to prevent risk and harm arising from this form of lending. The policy is inadequate and needs to be relooked. In its brief lending history, AIIB has funded several projects of mega scale which are been marred by massive environmental and social concerns like the Mumbai Urban Transport Project – Phase III (MUTP), Bangalore Metro Rail Project – Line R6 both projects of massive scale.  The now scrapped Amravati Sustainable Capital City Project, which was being considered by AIIB for financial support as a co-financer along with World Bank as the lead financier, also speaks volume for the need to have multiple checks and balances.

Currently, 5 projects worth USD1.7 billion are proposed for financing in India. These include energy, water and transport sector Projects. Chennai Metro Rail Phase 2 Project – Corridor 4 is one of them, which is a co-financed project. The other to proposed project to watch out for is Karnataka Rural Water Supply Project (KRWSP) worth UDS 400 million which will basically promote Public-Private Partnership (PPP) models in water supply and sanitation.

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