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Case Study on India’s Experience with Independent Accountability Mechanisms

25 years of Inspection Panel has a special significance for India, having played a key role in its formation. As in the case of all safeguard and other policies, the independent accountability mechanisms (IAMs) of multilateral development banks are also a result of the valiant struggle fought by the communities affected of various projected financed by these institutions. Particularly the struggle led by Narmada Bachao Andolan since the late ‘80s demanding a review of Sardar Sarovar (Narmada) dam for its social, environmental and economic costs leading to the formation of Independent Review (first time in World Bank’s history) was a watershed moment in the history of struggles against international financial institutions.

This is a compilation of six prominent cases from India to different IAMs. Each one of them had different experiences and results. These are reminders to us that while these are tools for communities to highlight the violations of their rights, one needs to go beyond IAMs for holding international financial institutions accountable.

Symposium on India’s Engagements and Experiences with Accountability Mechanisms of Multilateral Development Banks

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The Inspection Panel is completing 25 years in its role, as an accountability mechanism of the World Bank. As you are aware, the Bank’s failure to comply with its operating policies was seen by the entire world in the Bank’s financing with the Sardar Sarovar Dam project on River Narmada. The tenacity of massive grass-roots uprisings from our communities in the 80’s and the sustained hard work of our social movements along with our resoluteness to link it with international coalitions to question the hegemony of the Bank, subsequently led the Bank, for the first time, to commission an independent review of its project. The Independent Review Committee (Morse Committee) constituted by the Bank in 1991 to review the social and environmental costs and benefits of the dam, after years of consistent struggle by Narmada Bachao Andolan (Save Narmada Movement) and its allies led to a demand from the civil society around the globe for the creation of a grievance redressal system for project-affected communities, which ultimately pressurized the Bank to constitute the Inspection Panel in 1993. We expected this might be a crucial backstop and an opportunity for us to raise our issues of livelihoods, economic loss, displacement from our lands, alienation from natural resources, destruction of environment and threat to our biodiversity and cultural hotspots, where Bank invested in large, supposedly ‘development’ projects like mega dams, energy and other infrastructure projects. Yet, the outcome we expected rarely delivered sufficient remedy for the harm and losses people have experienced over the years.

A number of accountability mechanisms over the next couple of decades in several development finance institutions were formed following the model of World Bank, commonly known as ‘Independent Accountability Mechanisms’[IAMs]. Each year the number of complaints rise which is an indication of the increasing number of grievous projects happening around the world. While IAMs of most MDBs are advertised to provide strong and just processes, many of our experiences imply that the banks are accommodating practices which suit their own needs and their clients, which are borrowing countries and agencies, and not the people for whom the IAMs were built to serve.

Many a time, we have been disappointed by these mechanisms, since these are designed by the banks who are lending for disastrous projects in our lands. And as a result, the already existing narrow mandate of IAMs is further restricted.

In our efforts to hold the lending bank accountable, the communities are always presented with the arduous process of learning the complex formalities and detailed procedures to initially approach the IAMs and get our grievances registered. Our many years’ time and energy then is channelised into seeing through the various cycles of these complaint handling mechanisms, that our entire efforts go into this process, and often our complaint gets dropped off in midst of the procedural rules of the IAMs. People are made to wait many months to clear procedural levels and our cases with the IAMs get highly unpredictable. Further, we face intimidation and reprisals from the state and project agencies for having contacted the IAMs who themselves do not possess any authority to address the violations hurled out to us when we seek dignity, fair treatment and justice from them. There are many of us who feel a loss of morale after long years of struggling with lenders when we fail to see concrete benefits or changes in our circumstances, by which time considerable irreplaceable harm is already done to our lives, environment and livelihoods.

In this manner, our immediate and larger goal of holding banks for their failure to consult with and obtain consent from communities before devising action plans for our lands, water and forests is deflected in the pretext of problem-solving and grievance hearing offered to us in the name of IAMs.

With over 50 registered complaints sent to different IAMS from India in the past 25 years, many more left unregistered due to technical reasons and only a few got investigated, assessed and monitored at different levels, we have a baggage of mixed experiences with the IAMs. A few of the prominent cases from India apart from Narmada project are Vishnugad Pipalkoti Hydro Electric Project [WB’s IP], Tata Mega Ultra-01/Mundra and Anjar [IFC’s CAO & ADB’s CRP], India Infrastructure Fund-01/Dhenkanal District [IFC’s CAO], Allain Duhangan Hydro Power Limited-01/Himachal Pradesh [IFC’s CAO] and Mumbai Urban Transport Project (2009) [WB’s IP].

As we now know, what is being witnessed recently is an influx of approved and proposed investments majorly in energy, transport, steel, roads, urban projects, bullet trains, industrial zones/corridors, smart cities, water privatization and other mega projects in India. This has been financed from different multilateral and bilateral sources, foreign corporations, private banks as well as Export-Import Banks (ExIm Banks). It has become a brutal challenge for communities, social movements and CSOs, with lenders and governments constantly shutting their eyes and ears to us who demand accountability for their actions. A compelling and timely need has arisen among diverse groups amongst us to gather together and critically analyze the various trajectories of our engagements with accountability mechanisms of MDBs in order to bring together past 25 years’ learning, insights and reflections of various actors of this accountability process. This urging demand is also an attempt to define the collective experiences in India among our social movements, projected-affected communities and CSOs with IAMs and lending banks, especially appropriating the global political opportunity of Inspection Panel celebrating its 25 years this year.

The schedule and list of speakers will be shared soon.

An Indian Perspective on New Development Bank & Asian Infrastructure Investment Bank

The Asian region has experienced the emergence of new MDBs over last few years. For many years, the Asian Development Bank was the only development bank in the region and has been dominated by the Japanese owing to the number of votes it has as compared to other members. However, the newly constituted NDB in 2014 has two key Asian members, India and China. The Asian Infrastructure Investment Bank (AIIB) led and initiated by China in 2015, and with a mandate to have at minimum 70% of shares allocated to Asian countries is sure to become another major player to support infrastructure development activities of the region as well as global south. The AIIB and NDB are two separate entities in their operations and constitution even though there are overlaps in memberships of the two banks.

The Key Infra Projects are Anti-people

“AIIB has created a superstructure, an ecosystem which acts as a complex web of shining terminologies and projects to attract investments, which actually is a smoke screen to hide the fact that there’s no human development happening” senior activist Medha Patkar said in her speech.

The Infra being Pushed is not what the People Demand

Senior activist Ulka Mahajan of Sarvahara Jan Andolan said, “The infrastructure that is being developed is not what people demand, but it is what global capital demands. The international financial institutions are promoting corporate interests over that of people and also pushing the states to the financial debt. On the one hand, the Maharashtra government does not have money to allocate 26,000 crores for the social sector, on the other hand, it has 42,000 crores for the Mumbai-Nagpur expressway, which will reduce the present distance only by 24 km.”

Sucheta Dalal on the Growing Crisis in the Indian Banking Sector

Financial analyst and journalist Sucheta Dalal said that the Indian banking system is at the verge of crisis, reeling under the mounting bad loans, caused by unfettered corporate loans. Referring to government’s announcement in the Parliament that Rs. 2.4 lakh crore bad loans are written off, she said that “ if farm loan waiver was proposed the world would have gone on a spin, while the loans of big corporations are written off and there isn’t a whimper.”

Riding on Debt: Financial Assessment of Delhi Metro

Delhi Metro is the largest metro system in India and is also considered one of the most “successful” public transport projects. After nearly three decades of construction and operation in Delhi, the demand for creating metro systems in all million plus cities has grown despite being a capital intensive project. Few scholarly articles published in the last decade which have questioned the relevance of metro system in Indian cities have often been dismissed by the policymakers and popular media.