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Afzar Jaffri on The Water sector and International Financial Institutions

At the Kharghar meeting on IFIs in India, Civil Society researchers discussed Understanding IFIS – Investments, intelligence and trends in critical sectors.

Transport and International Financial Institutions: Rajendra Ravi

Overlap of Issues on Key Sectors in relations with International Financial Institutions. IN Transport, the emphasis seems to be on high-cost travel and with pricing systems that push the poor into more inconvenient modes.

Smart Cities and International Financial Institutions

Overlap of Issues on Key Sectors in relations with International Financial Institutions. Smart Cities project will make pockets of the cities exclusive zones high-cost zones, which will again result in the marginalised being excluded into dense low-grade services area.

Huge Overlap in Investments by MDBs, ExIM Banks, and Bilaterals on Critical Sectors

By Joe Athialy

Ever since the first lending from World Bank in 1949 worth $34 million to Indian Railways and the bilateral credit India received from the erstwhile USSR and USA in the early 50s, India has been a recipient of significant funds from different multilateral and bilateral sources.

While each of these lendings came with baggage, and often conditionalities, much of it was justified in the name of nation-building, and critiques of the enormous social, environmental and even economic costs were shut their mouth by the oft-repeated rhetoric of ‘somebody has to sacrifice for greater common good’. This was true not just for lending from international sources, but any investments.

What the Multilateral Development Banks (MDBs) brought, along with its lending, was a host of policy changes in almost all critical sectors. They often influenced and changed the course of development agenda of the country, by providing ‘Technical Assistance’ to governments, being the knowledge provider and taking the role of a development finance gatekeeper with their Doing Business Reports, Investment Climate Reports and many such.

With India opening up her economy in 1991, India has been a destination of many foreign corporations and by late 90s, with all systems in place for their smooth landing, they started pouring, starting with companies like Enron and Cogentrix. With the foreign corporations, came in financial institutions, both private banks as well as Export-Import Banks (ExIm Banks). Some of the institutions operating here in the past have deepened their operations. What was witnessing the past decade or so is an influx of these investments majorly in energy, transport, steel, dams, roads, urban projects, industrial zones/corridors, smart cities and other mega projects. The number of financial sources coming in, the pace in which these investments are finalised and the quantum of money pouring in is alarming and often do not give the opportunity to see the investments in toto.

There have been many struggles – small and big – against these investments and the devastation, which caused to the people – their livelihood and natural resources, and the environment. While the yardstick of measuring the successes and failures of these struggles could vary depending on who does it, the reality remains that the struggles have forced MDBs to relook the way they conduct business in this country, compelled them to adopt safeguard policies and compliance mechanisms and didn’t shy away from confronting them on the ground, on the streets and even at their doorsteps.

The Indian government, for past few decades, has stressed the need for large infrastructural projects for the country’s development and these projects are being seen as a stimulus to the growth of India’s GDP. This aggressive growth comes at the cost of displacing the lives of people who are dependent on land and natural resources for their livelihood and devastating the environment. This also often comes at the expense of displacing existing dwelling communities who are pushed to a life of poverty and whose life and livelihood cannot be commensurably compensated by money – in most cases, not even that.

This document is an effort to compile data of investments coming into India from MDBs, ExIm banks and other bilateral investments, to help understand the landscape of financing from these institutions and helping to understand the overlaps of international financial institutions in certain key sectors.

The data provided in this document is not comprehensive. While information from MDBs is comparatively easy to access, that of ExIms and bi-lateral sources are difficult to compile. Despite our best efforts, there are many we missed. We will keep this as a work in progress and will update the data as and when we get it.

We hope that this data and the broader understanding this document may help provide will strengthen the struggles on the ground as well as critical voices demanding transparency and accountability in financial institutions.

Tentacles-of-International-Finance-in-India

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IMF and World Bank: Marching to a G20 Tune?

By Nancy Alexander

This year, the G20 Finance Ministers and Central Bank Governors’ Meeting on October 12-13 overlapped with the IMF-World Bank annual meeting on October 13-15 in Washington, DC.

As of December 1, 2017, Argentina becomes G20 President with the past and future Presidents (Germany and Japan, respectively) as part of the G20 Troika.  At the October G20 meeting, Argentina announced that it’s two key G20 Finance Track priorities will be the Future of Work (shared with the Sherpa Track and possibly looking at automation, education, and womens’ entrepreneurship as well) and Infrastructure Financing, especially through financialising infrastructure as an asset class. The priorities of the Argentine Sherpa Track will be announced at the final German Sherpa Meeting on 9-10 November in Berlin.[1]

The individual G20 member countries hold the overwhelming majority of votesat the IMF and World Bank, so it is not surprising that G20 priorities are often identical to those of the institutions they dominate.  For example, infrastructure financing has been a G20 development theme since 2010 and a powerful Finance Track theme since 2014, except under Germany, when infrastructure issues were dealt with by the Sustainability Working Group and under the Compact with Africa.

Since 2010, the G20 has focused urging the Multilateral Development Banks to standardize, scale-up, and replicate mega-projects, especially public-private partnerships (PPPs) in emerging and developing countries.  Indeed, the G20 encouraged the strengthening of existing and start-up of new Project Preparation Facilities (PPFs) with the capability of accelerating mega-project preparation — especially for trade facilitation in the energy, water, transportation and ICT sectors.  In each geographical region and subregion, Master Plans for Infrastructure in these four sectors have already been designed.

Especially since 2014, the G20 has tried to solve the problem of how countries can attract private investors, particularly long-term institutional investors (pension and insurance and mutual funds and sovereign wealth funds) which hold over $100 trillion in savings. While the G20 and the MDBs have not succeeded in mobilizing much additional financing for PPPs from investors, efforts to overcome remaining obstacles are described in Boxes 1 and 2.[2]

Until the German Presidency, there was no effort to promote infrastructure that would be environmentally and socially sustainable.  Even under the German Presidency, the officials leading the powerful Finance Track said that sustainability is the job of the (less powerful) Sherpa track.  Infrastructure contributes approximately 60% of greenhouse gases (GHG) emitted to the atmosphere; therefore, it is crucial that urgent steps be taken to curtail infrastructure that locks-in carbon-intense technology and ensure that infrastructure meet criteria for mitigation of GHG and adaptation to the effects of global warming.  At present, all such criteria are voluntary whereas the rights of investors are legally protected in trade/investment agreements and the PPP contracts that include investment provisions.

  • At the 2014 Australian G20 Summit, the G20 Global Infrastructure Hub was launched to expand the project “pipeline” for preparation and financing.
  • Also, in 2014, the World Bank launched the Global Infrastructure Facility.  At the launch, Bank President Jim Kim stated “We have several trillions of dollars in assets represented today looking for long-term, sustainable and stable investments…In leveraging those resources, our partnership offers great promise for tackling the massive infrastructure deficit…”
  • In 2016, the World Bank’s private sector arm, the International Finance Corporation (IFC) launched its Managed Co-Lending Portfolio Program, a loan-syndications initiative that enables third-party investors to participate passively in IFC’s senior loan portfolio. The first partnership under the program was signed with the global insurance company Allianz. Under the agreement, Allianz intends to invest $500 million, which will be channeled into IFC debt financing for infrastructure projects in emerging markets.
  • 2016 was also the year when China launched the Asian Infrastructure Investment Bank (AIIB) and the BRICS (Brazil-Russia-India-China-South Africa) launched the New Development Bank (NDB).

Box 1: New infrastructure-related institutions

The G20 has directed each multilateral development bank to expand infrastructure financing for years, especially by “crowding in” the private sector. At the Hamburg G20 Summit in July, Leaders adopted principles to achieve this.[3]  These principles underpin the theme presented at the IMF/World Bank annual meetings — namely “Maximizing Finance for Development” (also known as the “Cascade” or “billions to trillions”). The October 14 Communique of the Development Committee emphasizes this theme, which is actually a relatively new paradigm for financing infrastructure.[4]The IMF and World Bank’s two papers[5]for the Development Committee meeting describe this paradigm and its implementation.

While the World Bank is tasked with expanding private investment in infrastructure, the IMF’s Infrastructure Policy Support Initiative provides tools to help countries assess the macroeconomic and financial implications of various investment programs and improve their institutional capacity.

The gist of the “Maximizing Finance for Development” paradigm is that nothing should be publicly financed if it can be commercially financed AND that if commercial financing is NOT forthcoming for a project, a country must promote a more investment-friendly environment and/or private sector guarantees, risk insurance and other inducements should be provided.  My blog criticizes the paradigm[6], which relies heavily on expanding the launch of PPPs, including by packaging them in portfolios for trading.

Figure 1: Maximizing Finance for Development (“the Cascade”). Creator: Jim Yong Kim, Speech at LSE 04/11/2017.

There are Cascade pilots in nine countries (Cameroon, Côte d’Ivoire, Egypt, Indonesia, Iraq, Jordan, Kenya, Nepal and Vietnam) which are intended to introduce private sector solutions in energy, transportation, and other infrastructure sectors. The pilots will gradually expand to include other sectors and countries.

The “Maximizing Finance for Development” paradigm responds to the G20 interest in attracting private investors, especially long-term institutional investors such as pension and insurance and mutual funds as well as sovereign wealth funds. As it is, OECD pension funds ($30 trillion) and insurance funds face staggering gaps and potential insolvency unless they can get higher yields on their savings.  Many long-term institutional investors, such as pension funds, will work with hedge funds and private equity funds to deploy their assets under management (AUM) in infrastructure portfolios for these higher yields.

The idea of this paradigm is for the public sector to take high risks at the early stages of project identification, design and construction and the long-term investors to take a revenue stream over 20 or 30 years. To counter this agenda, a Global Campaign Manifesto on PPPswas launched by 152 national, regional and international civil society organisations, trade unions and citizens’ organisations from 45 countries to “sound the alarm on dangerous PPPs.

Megaprojects and PPPs are not inherently dangerous, but when their design fails to produce adequate social and environmental co-benefits and heap risk on governments, they become so.  When risk is heaped onto governments, PPPs tend to increase inequality by privatizing gains and socializinglosses. The World Bank “Guidance on PPP Contractual Provisions” proves how heavily the World Bank proposes heaping risk on governments as well as introducing “stabilization” procedures that would inhibit the right to regulate/legislate in the public interest.  Motoko Aizawa summarizes key critical pointson the Guidance and links to the legal analysisof the Guidance by the firm Foley Hoag. Despite major problems with the “Guidance” – it will be launched in Cape Town, Kuala Lumpur, and possibly Abidjan — unless the process is stopped in order to radically revise it.

In Africa, the “Compact with Africa” report by the Africa Development Bank, World Bank, and IMF (March 2017, Baden Baden) describes how public utilities would be taken “off balance sheet” and user fees and domestic resources would be mobilized, along with aid, to shoulder public risks and, meanwhile, development banks would offer guarantees and liquidity facilities to offset risks to the private sector.

The heavy policy conditionalities proposed by the G7/G20 for each African country participating in the “Compact” include requirements that governments use the World Bank’s “Guidance on PPP Contractual Provisions” which would impose enormous risks on governments while hobbling their capacity to protect the public interest.  The conditions also require that governments develop Systematic Investor Response Mechanisms (SIRMs) to satisfy investor grievances before they reach international tribunals (Investor-State Dispute Settlement).  Concerns for investors are not matched by concerns for citizens who often lack even basic information about the development of projects that will affect their lives.

In light of the heavier push for financialising infrastructure, we have a recent NEPAD announcement which calls for African asset owners to raise the percentage of assets under management for infrastructure from 1.5% to 5%. This strategy is aggressively promoted by Africa’s Continental Business Network (CBN), which issued a communique in September calling for the adoption of this strategy at the AU Summit in January 2018 with a roadmap presented to the African Finance Ministers meeting in March 2018 as well as the G7 and G20 Summits later in the year.

Box 2: G20 compact with Africa

The G20 will measure the performance of each MDB by the extent to which it leverages private investment[7]and, in turn, the MDBs will measure the performance of many countries by how effectively they leverage private investment.

In conclusion, the “Maximizing Finance for Development” approach would create greater reliance on commercial financing and reduce the need for World Bank lending to governments, as would the Trump/Mnuchin push to reduce World Bank lending operations to creditworthy countries (See FT 10/13/17 “US Demands China loan rethink as condition of World Bank cash”). If these approaches are implemented, the World Bank could shrink as the Asian Infrastructure Investment Bank (and others) expand. Potentially the finance available for public goods (stable finance, sustainable development and climate goals, urban infrastructure such as sanitation…) would become even more scarce. Privatization and deregulation would give market players, even the predators, freer rein.

[1]At the final German Sherpa meeting on November 9-10 in Berlin, the Argentine Sherpa will announce the priorities for the 2018 Presidency.  The Germans have chosen 7 topics for this meeting: 1) a review of outcomes of the Hamburg Summit (Trade, Migration, Anti-Corruption, Terrorism, and Digitalization); 2) the Climate and Energy Action Plan; 3) the Global Forum on Steel Excess Capacity; 4) Main Outcomes of the Finance Trade, including the Compact with Africa; 5) G20 Governance; 6) We-Fi/Business Women Leaders’ Taskforce; and 7) Health.
[2]For descriptions of financialization, see an article by Nick Hildyard of Corner House and a blog by the World Bank Group’s Chief Financial Officer.
[4]Communique of the Development Committee, IMF and World Bank, October 14, 2017.
[6]N. Alexander, “Beware the Cascade,” JustGovernance, Boell Blog
[7]See Annex 2 of the Hamburg Principles and the report of the Global Infrastructure Hub to the G20 Finance Deputies.   These two documents established the metrics for the first Joint Report of the MDBs on mobilizing private finance. This sets up a competition among the MDBs in terms of their efficiency and modalities for mobilizing private finance, in general, and for infrastructure, in particular.
Nancy Alexander is the Program Director, Economic Governance & G20 at the Heinrich-Böll-Stiftung North America.
The analysis first appeared here.

Investing in Losses

By Joe Athialy

Like India once had a Ministry of Disinvestment, it’s time she has a Ministry of Loss Making. How else can one understand government’s eagerness to buy out all loss-making projects, whether in coal, hydro or steel sectors, collectively a few lakhs of crores of rupees worth?

Thermal power projects of about 25,000 MW are on sale, a report says, while there are not many buyers in the market. The government jumps in and offer to buy some of them. Last month after a meeting with leading bankers Power Minister Piyush Goel said that the Centre is designing a new plan where public sector banks will buy off stressed assets or projects which are running on losses, and the state-owned National Thermal Power Corporation (NTPC) will operate it.

What magic could turn these loss-making projects profitable by buying them off from private corporations who, despite subsidies and other incentives given by the centre and state governments, failed to make their projects economically viable? If one looks at the fate of Air India today, one wonders if the government could convert loss-making sectors to profit-making ones, why did they fail in saving Air India!

This buy off undermines the effort Reserve Bank of India (RBI) is doing to recover nearly 25% of non-performing assets (NPAs), listing down 12 stressed accounts through the Insolvency and Bankruptcy Code and cast a shadow on the tall claims of curbing the menace of NPAs.

The other day, nine thermal power projects (TPP), run by private corporations were shortlisted for bank takeover. Three of the major ones are said to be Jindal’s Derang project in Odisha; RattanIndia Power (erstwhile Indiabulls Power) plant in Nashik, Maharashtra; and Lanco Infratech’s Babandh power project in Odisha, with a combined capacity of 6660 MW.

A study, which looked into TPPs which are 1000 MW and up, and which secured environmental clearance between 2005 and 2015, said that over Rs. 6 lakh crore was lent out by national and international financial institutions, banking and non-banking, for 125 projects, with a capacity of 2.4 lakh MW. Of which, 89%, or Rs 4 lakh crore was lent by national institutions. The above three projects are part of the 125 projects considered for the study, and they borrowed from national banks as well as non-banking institutions like Rural Electrification Corporation and Power Finance Corporation, for a combined cost of Rs. 27,255 crores.

But where did all this start? The coal sector is reeling under heavy financial stress with more and more companies trying to shed their liabilities off. Expansion of coal-based power sector a decade back was devoid of any sense or reasoning. How else would one justify approvals of over 700 GW of power projects by 2011, with nearly 85% of the coal-based projects, when the Integrated Energy Policy of the Planning Commission was projecting a power requirement of only 230 GW by the year 2032? One could trace back today’s financial stress of the sector to that mindless expansion, into which companies which hitherto was only making/dealing with compact disks, electronic items and running newspapers jumped into to make quick bucks.

Coastal Gujarat Power Ltd (Tata Mundra) and Adani Mundra plants are other two projects, which sought government bailout in the recent past due to mounting losses.

One of the first Ultra Mega Power Projects, Tata Mundra has been the poster-boy of TPP in India. A 4000 MW, $4 bn project, financed by every major financier one can things of – World Bank private sector arm, International Finance Corporation, Asian Development Bank, Korean Exim Bank, BNP Paribas, India Infrastructure Finance Corporation Ltd, HUDCO, State Banks of India, Bikaner and Jaipur, Hyderabad, Travancore, Indore, Vijaya Bank and Oriental Bank of Commerce.

Claiming to be using supercritical technology, and hence less pollutant, they procured coal from Indonesia, prices of which trebled within a few years making the project more non-viable.

The colossal environmental damages, loss of livelihood and a host of social and environmental issues recognised as serious impacts by accountability mechanisms of IFC and ADB – the Compliance Advisor Ombudsman and Compliance Review Panel – were never counted in the costs, nor tried to compensate or mitigate.

Since the time of its commissioning, the Mundra project has been a drag on the financials of Tata Power.

Adani’s 4260 MW coal based power project in Mundra, a neighbour to the Tata project, has been reeling under growing stress the past many months. Adani Power recently reported a consolidated net loss of ₹4,960 crore in Q4 of FY17 compared to a net profit of ₹1,085 crore in Q4 of FY16. Last month, Adani Power had discontinued 1,250 MW power supply to Gujarat Urja Vikas Nigam Ltd. (GUVNL), a Govt of Gujarat entity, mainly due to the inviability of imported coal to run its power plant at Mundra.

In April, Supreme Court had disallowed any relief to Adani Mundra plant (and Tata’s Mundra plant, both located at Mundra) in a five-year-old contentious issue of compensation due to the unforeseen increase in imported coal prices for their power plant.

Economic and Political Weekly, in a recent investigation, found out how the NDA government amended rules related to Special Economic Zones to favour one company – Adani’s Mundra Power, benefiting the company with Rs. 500 crores by giving it an opportunity to claim refunds on customs duty, which it never paid. It says:

In August 2016, the Special Economic Zones Rules, 2016, were amended by the department of commerce, to insert a provision on claims for refund under the Special Economic Zones Act, 2005. The SEZ Act under which the SEZ Rules are framed did not initially provide any provision for refunds of any kind before this amendment was introduced. According to reliable information received by the authors of this article, the amendment was made to specifically provide Adani Power Limited (APL) an opportunity to claim refunds on customs duty to the tune of 500 crore. The APL has claimed that it has paid customs duty on raw materials and consumables—that is, coal imported for the generation of electricity. However, documents leaked to the EPW indicate that the APL had not, in fact, paid the duty on raw materials and consumables amounting to approximately 1,000 crore that had fallen due at the end of March 2015. It appears at face value that by amending the SEZ Rules to insert a provision for companies to claim refunds on customs duty, the department of commerce is allowing the APL to claim refunds on the duty that has never been paid by it in the first place!

How will a project plagued with controversies, with possible legal and certainly financial liabilities, be of any good for a public sector undertaking?

NPAs stand at a staggering Rs. 7.6 lakh crore at the end of March, or 9.3% of the gross advances by the banks – a rise of 135% in last two years. Public sector banks account for almost 88% of these loans, which have now exceeded these banks’ combined market value.

It’s a double blow to the public – first their deposits in the banks have been turned to NPAs, and then their tax paying money is used to bail out the ones who turned their assets to NPAs.

The bailout of corporations by the government sends a wrong message to the banks and regulators and takes away the confidence in the public that the government is serious about tackling this issue. It’s a simple case of privatisation of profits and nationalisation of losses.

Without putting bold and long-term measures to tackle the issue of NPAs, piece-meal measures of bailing out selective corporations will only lead to the ripping off of the banking system. The long-term measures could include a moratorium on corporate debt restructuring and non-transparent debt write-offs, blacklisting willful defaulters and preventing them from further borrowings, and stringent measures to recover from defaulters.

Budget Session of Parliament: An Overview

By Maju Varghese

The Constitution of India has accorded the Parliament the supremacy among the three organs of the Union government viz legislature, executive, and judiciary. Parliament not only makes the laws but also enables the citizens to participate in controlling the government. The Parliament applies various oversight mechanisms to ensure transparency and accountability in the system. The two mechanisms available in our country are questions and debates on the floor of the house and various committees which scrutinise the public finances and policies.

The budget session of the Parliament was held between January 31 and April 12, 2017. The session had a recess between Feb 10 and March 8, 2017, during which the standing committees examined the demand for grants from various ministries. The session was convened in the context of upcoming assembly elections and also of post demonetisation distress.

This session was important for many reasons. The budget was introduced on February 1 instead of the last working day of February as per the tradition.  The government claims that advancing the presentation will result in necessary legislative approval for annual spending plans and tax proposals could be completed before the beginning of the new financial year.  According to eminent economist Arun Kumar, early presentation of Budget will help the entire exercise to get over by 31 March, and expenditure, as well as tax proposals, can come into effect right from the beginning of new fiscal, thereby ensuring better implementation.

Besides advancing the date, the government decided from this year to merge Union Budget and Railway Budget.  Earlier, Railway budget was presented first followed by the general union budget.  Another interesting development this year is doing away with the distinction of the plan and non-planned expenditure in the budget-making monitoring difficult on capital infusion in developmental planning.

The budget session held 29 sittings for 178 hours in total in which 24 bills were introduced, and 23 bills were passed.  Members raise 560 starred questions and 6440 un-starred questions during this session.

Some Major debates in the Parliament

The budget session saw the introduction of some major bills and discussions around those.  These are: The Finance Bill, 2017; The Specified Bank Notes (Cessation of Liabilities) Bill, 2017; Bills related to Goods and Service Tax; The Payment of Wages (Amendment) Bill, 2017; the Maternity Benefit (Amendment) Bill, 2017; the Mental Health Care Bill, 2017; and the Employee’s Compensation (Amendment) Bill, 2017.

Analysis of Questions in Parliament

During the budget session, about 6440 un-starred questions and 560 starred questions were admitted in the parliament.  However, the lack of interest in the functioning of the IFIs was evident as just 7 questions asked on the topic in Lok Sabha out of 5203 questions, and 7 in the Rajya Sabha from the total 5064 questions.  The break-ups of the questions are given below.

IFI Name Lok Sabha Rajya Sabha
World Bank 6 3
ADB 1 2
AIIB 0 2
NDB 0 0

Rising NPA’s and Parliament

The debate on Non-Performing Assets continued to be debated in the parliament with many parliamentarians raising the issue through questions. There were about 18 questions asked in the Rajya Sabha and 21 questions in Lok Sabha. K.V Thomas, then chairman of the standing committee on public accounts, said that the current non-performing assets stood at 6.8 lakh crore or 6.8 trillion of which 70% are those of big corporate houses. There were debates on the bad bank and how the banks could be cleared of the mounting NPAs. Interestingly, the same bankers who were asking the state to take care of their bad debts came against debts being waived off for farmers who are facing an acute crisis due to a variety of reasons leading to suicide deaths.

New trend of undermining  democratic institutions

The Parliament is witnessing a new trend of bypassing Rajya Sabha in important matters including amendment of acts where both Lok Sabha and Rajya Sabha is responsible. The introduction of the Finance Bill[1] first with 10 amendment of acts and later to change 40 different acts including Reserve Bank of India Act as well as the Representation of the People Act was according to opposition first in the history of Parliament itself.  This act has robbed the Parliament its right to refer the bill to a standing committee or to scrutinise it clause by clause as to every amendment and the power of Raja Sabha to discuss, propose and incorporate amendment.

The very fact that the finance bill is a money bill gives the option of not incorporating Rajya Sabha view in the bills. All the five amendments passed in the Rajya Sabha was not incorporated into the finance bill, and it was passed as such.  Centre has got 22 Money bills passed in Lok Sabha ignoring the Rajya Sabha, and this has kept a bad president for the functioning of the democracy as such.

Executive legislation through Ordinance rather than legislation

The ordinance is an independent legislation brought out by the Executive; it is the wisdom and authority being exercised by the Executive. An Ordinance can only be done in extraordinary situations when the houses are not in session or a critical condition.  The Ordinance encroaches the right of the parliament in law making.

The government seems to issues ordinance after ordinance despite the fact that this could be brought before the parliament for legislation in the first instance. According to the PRS Legislative, the government in the last three years has promulgated 27 ordinances, including the ones on land acquisition, demonetisation, payment of wages bill, etc. Many of the ordinances were promulgated multiple times. It is interesting to read the observation of the Constitution Bench of the Supreme Court observation in Krishna Kumar Vs State of Bihar delivered on January 2, 2017, that promulgation of ordinances is a fraud on the Constitution and a subversion of democratic legislative processes. The latest subversion is the Banking Ordinance, on which the finance minister refused to share details of the ordinance before Presidential assent.

While there were interesting debates in the parliament this session, it seems some of the issues are not being captured in the discussions.  This includes life and livelihood issues of people who are getting displaced/ affected by development projects, investments of bilateral and multilateral agencies including World Bank, Asian Development Bank, IFC and new development banks like New Development Bank, Asia Infrastructure Investment Bank, etc.  A point to make in this regard is about New Development Bank, a multilateral Bank initiated by BRICS nations.  There seems to be no real engagement of the Parliament in influencing the nature of the Bank given that Mr K. V. Kamat is the chief of the Bank.  The Bank is in the process of developing its policies with regards to the environmental and social framework, disclosure policy, etc in their lending.

The other major lack of oversight is on negotiations in the trade policy.  India is Negotiating a free trade agreement, Regional Comprehensive Economic Partnership – RCEP [2] in the Asia Pacific region.  According to India FDI Watch, “In the past four years and to this day, no text has been made available to members of the public, parliamentarians, civil society or media,”. The trade negotiations are happening under a veil of secrecy where Parliament and parliamentarians are kept in the dark.

Parliament does not have an institutional space like Standing Committee where trade negotiations, Indian investment abroad and Multilateral and Bilateral investments to India and its effects on Indian policy environment is being discussed.  The failure of the Standing Committee to come out with a report on the demonetisation in this session with full facts and figures were a let down on the process particularly when it was announced that it would come out before the end of the budget session.

[1]          The finance bill is for ordinarily introduced to give effect to financial proposals of the Government of India for the following fiscal year and not to make permanent changes in the existing laws unless they are consequential upon or incidental to the taxation proposals.

[2]          RCEP is a 16-nation trade pact that includes the Association of Southeast Asian Nations (ASEAN), along with China, Australia, India, Japan, South Korea and New Zealand, a region that accounts for 46 percent of the world’s population and that produced nearly 30 per cent of global GDP in 2016.

 

Parliamentary Supremacy Undermined? An Analysis of Parliamentary Debates in India on International Financial Institutions (1984-2009)