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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.

Read the full statement

Procedures for World Bank’s new accountability mechanism lacks transparency and inclusivity

In a press release issued early last week, the World Bank has announced that the review of its independent accountability mechanism, the Inspection Panel, has been completed and that a few major reforms were added to the Inspection Panel. Accordingly, a new accountability mechanism – an “expanded” one as the Bank says, called World Bank Accountability Mechanism’ will be in place from September 2020 and will constitute two separate roles – the Inspection Panel (IPN) will focus on the review of compliances of projects with Bank’s operational policies and a separate Dispute Resolution Mechanism (DRS) will resolve the grievances of affected communities, in a time bound manner, instead of compliance review. While housed under one umbrella, the DRS will organisationally be separate from the IPN to ensure its effectiveness and to avoid conflict of interests.

New Roles, Governance Structure

Independent Accountability Mechanisms (IAMs) of Multilateral Development Banks have different governance structures and varied roles with assigned functions. It is necessary to see the new reforms of WB’s IPN in comparison to the previously established roles of both Compliance Advisor Ombudsman (CAO) of the International Finance Corporation (IFC) and Accountability Mechanism (AM) of Asian Development Bank (ADB), since most of the complaints from Indian communities have been registered with these IAMs.

There were only four IAMs that offered both compliance review and dispute resolution services – namely CAO of IFC, the Complaints Mechanism (CM) of European Investment Bank (EIB), AM of ADB, and Independent Review Mechanism (IRM) of African Development Bank (AfDB). Now WB’s new IAM will also offer both compliance review and dispute resolution.

The CAO reports to the President of the World Bank Group, while the dispute resolution component or ‘problem solving function’– the Office of the Special Project Facilitator in ADB’s AM report to the Bank President, and the compliance review component – Compliance Review Panel in AM report to the Board of Directors.  The new IAM of WB will be governed by an ‘Accountability Mechanism Secretary’ (AM Secretary) who will be appointed by and report directly to the Bank’s Executive Directors. While administratively integrated in this new mechanism, the IPN members will remain fully independent and continue to report directly to the Board on all compliance investigation matters. Which effectively means, the DRS staff will report to the AM Secretary who then will report to the Board, whereas the IPN will directly report to the Board (Whereas, the CAO staff along with its three functions – dispute resolution, compliance and advisory- report to the CAO Vice President).

Organisationally in the new IAM, the IPN will have no role in DRS.  The IPN will continue to be constituted and operate as established in the IPN Resolution.

Operationally, the new IAM will apply the existing eligibility criteria of IPN for compliance for its dispute resolution function. There will be no change to the current practice of recommending eligibility, when a complaint is registered, based on the IPN’s current eligibility criteria. During the eligibility phase, the IPN recommends eligibility for compliance. After the Board has approved the eligibility for compliance, the AM Secretary will offer an opportunity for dispute resolution to the parties. If Borrower and Requesters voluntarily agree to go for a dispute resolution, the case will be referred by the AM Secretary to the DRS. The AM Secretary will inform the Board, the IPN and Management of the parties’ decision. In case the parties agree to use the DR process, the compliance process of the IPN will remain in abeyance. If the parties do not agree, the AM Secretary will inform the Board, the IPN and Management and the case will be taken up by the IPN for a compliance investigation. The Parties to the DR process would be the Requesters and the Borrower’s relevant project implementing agency.

While ADB’s AM has a slightly different approach – one can approach its problem solving function office – the Office of the Special Project Facilitator and file a complaint regardless of whether ADB operational policies and procedures have been violated ( this mandate is required only if one is approaching the Office of the Compliance Review Panel).

Meanwhile, the CAO’s Ombudsman function responds to dispute resolution complaints and if they are not solved, they are transferred to the compliance review function.

Extended Eligibility time limit for Requesters to file Complaints

Except the IPN, almost all other IAMs had established their own mechanisms much earlier. They all have longer eligibility time periods for complaints registrations than the IPN. Yet, In the case of the CAO, the eligibility ends when the institution’s engagement with the client or the project ends. Whereas for AM, the latest date by which a complaint can be filed is 2 years after the loan or grant closing date. This date is known in advance, disclosed to the public, and can be found on the ADB website. Their brochure also shows the timeline in which a complaint is processed and responded to.

For IPN, this time requirement will be changed so that any request filed up to fifteen months after the closing date of the loan financing the project can be accepted by the IPN. This requirement will be applicable only to new projects approved by the Board after these changes take effect.

Formal recognition of the Inspection Panel’s advisory role

Advisory services focus primarily on the lessons that the IAMs learn about the functioning of MDB operational policies. The advice can be given as recommendations in specific compliance reports, lessons learned sections in annual reports and in other publications. The CAO has a robust advisory policy, where the CAO provides independent advice to the President of the World Bank Group and management of IFC and MIGA.  CAO advice focuses on broader social and environmental concerns, policies, procedures, strategic issues, and trends. CAO’s focus is on preventing future harm and improving IFC/MIGA’s performance systemically as their policy states,

The IPN did not have explicit advisory authority. The IPN does provide informal advice through statements in its compliance reports and its publications, including its annual report and Emerging Lessons series. The press release states that this advisory role has been formalised from 2018.

Formalization of the Inspection Panel’s practice of coordinating with co-financiers’ accountability mechanisms on joint complaints

The World Bank engages in co-financing arrangements with other MDBs. In these cases, requesters could file requests for investigations regarding the same set of issues with the IAMs at two institutions. This always led to two challenges. The first challenge arises when one IAM receives a request regarding a project whose agreements stipulate that the policies of another institution govern the project, like the case is with Asian Infrastructure Investment Bank (AIIB). The second arises from differences in the procedures of the two IAMs, such as different time limits for eligibility and different rules on sharing draft reports with the requesters. None of the IAMs have developed any explicit policies or practices on how to deal with these situations. Instead, they have dealt with these situations by signing a case-specific MOU detailing how they will cooperate in investigating the same project. The World Bank is yet to clearly state whether these challenges have been addressed or they remain the same, irrespective of formalising arrangements with co-financiers’ IAMs.

Sharing IPN report with requesters before consideration of the Board

This procedure came into effect from 2018, but is officially declared now under the enhancements for IPN. Earlier, IPN’s investigation report was not shared with the requesters until after the Board had approved it. The requesters maintain that this had created two problems. First, the practice was unfair because requesters were being treated differently from Management. Second, requesters lack the knowledge to engage effectively with Management about the action plan.

Independent and proportionate risk-based verification of Management Action Plans

All the IAMs, except the IPN, are expressly authorized to monitor the implementation of the management action plans (MAPs) developed to address the IAMs findings of non-compliance and the outcomes of dispute resolution procedures. All IAMs that engage in dispute resolution have authority to monitor the implementation of the outcomes of the dispute resolution if the parties so request. In addition, the IAMs including CAO and those at the AfDB, ADB, EIB, EBRD and IDB have authority to monitor the implementation of management action plans developed in response to findings of noncompliance. The authority of the IAMs does vary. In some cases, the IAMs are authorized to monitor all cases in which they have made findings of non-compliance. This is the case with CAO and ADB’s CRP.  In the case of the AfDB’s IRM and the IDB’s MICI this authority requires prior Board authorization. It is usually given at the time the board approves the IAM findings on compliance and is based on a recommendation from the relevant IAM.

From September 2020, the IPN can now verify MAPs in those cases where proportion and risk criteria will include (i) urgency of redress, (ii) risk of repetitive harms, (iii) number and vulnerability. The IPN recommendation, generally, will be made after substantial implementation of the MAP or, if the monitoring report indicates lack of implementation, at any stage of implementation. In exceptional cases, upon IPN recommendation, with input from Group Internal Audit, the Board can discuss and assign verification at the stage of approval of the MAP or shortly after. This process will avoid an automatic “one-size-fits-all” approach. The benefit of this option is that the Board would be assured of receiving independent reports on the adequacy of the management action plans, but restricted to few cases only.

How the procedures fell short

The World Bank’s Inspection Panel was the first accountability mechanism (1993) of its kind for the development finance institutions, which was established as a result of people’s struggles against the Sardar Sarovar Dam Project on river Narmada in India. The tenacious campaign around this project led to the formation of the Morse Commission, which strongly criticized the World Bank’s performance in the areas of environment and resettlement of people displaced by the construction of energy projects. Over the years, the Panel has played a major role in trying to adhere to accountability at the Bank and attempting to secure redress of grievances in some cases. Though established as an independent mechanism from the Bank management, the Panel majorly reported the eligibility of the complaint to the Board of Directors of the Bank and did not possess strong recommendatory powers.

When the review of IPN was first announced officially in 2017, Indian peoples movements, civil society and affected communities had called out to the Bank to keenly call forth to strengthen the IPN mandate. While appreciating the World Bank on this effort for a review on the occasion of Inspection Panel’s 25th Anniversary, the CSOs criticised the Bank for giving less than a fortnight to seek comments on this issue. They demanded to extend the deadline by at least two months in the interest of the sanctity of the process. They further stressed that wider publicity should be given to ensure better participation in the process. “The current consultation is designed and carried out to exclude affected communities, for whom the Inspection Panel is established,” the signatories said with much disappointment.

During the deliberations in a symposium organised in India at the 25th year of IPN, in which both the Inspection Panel and Compliance Ombudsman Advisor (CAO) participated remotely, the inadequacy of IAMs in functioning independently and efficiently; lack of capacity and powers to promote and ensure accountability; failure in intervening timely to ensure that the voices of the affected people are adequately heard, addressed and issues resolved; and lack of powers to stay the progress of project construction in cases of extreme violations, were highlighted.

A brief look into the newly released report of the Bank,  ‘Report And Recommendations On The Inspection Panel’s Toolkit Review’ (March 05, 2020) shows that the external review “did not  make recommendations but provided options in seven areas: (i) advisory services, (ii) Bank Executed Trust Funds (BETFs), (iii) co-financing, (iv) sharing findings with Requesters, (v) problem solving/dispute resolution, (vi) time limit on eligibility for requests and (vii) monitoring of Management Action Plans (MAPs)”. And that subsequently, a Working Group of the Committee on Development Effectiveness (CODE) that included members from all Executive Directors’ offices, was established to consider the areas identified by the Review.

When the Bank announced in 2018 that CODE was inviting submissions from relevant stake holders, the Indian civil society had strongly asked for transparent and wider consultative processes with extended time period for affected communities. Opening up the process; adhering to the principle of free, informed and prior consent; adequate time; holding consultations widely and not in national capitals/metros alone; unmasking the ritual format of such processes; IPN having suo moto powers; IPN having suo moto powers for timely intervention – even during the early stages of project appraisal; IPN having a pro-active role even to delay the progress of any project until the violations of the project have been comprehensively corrected and compensated; IPN having monitoring function; IPN having punitive powers and measures for demanding for a fresh Environmental and Social Impact Assessment (ESIA) wherever erroneous ESIA have been found, were the recommendations from the Indian groups.

During both times, the Bank did not acknowledge the receipt of the submissions from India. Despite the recorded exhaustive measures which were being adopted by the Bank to see through this review, this process has been quite the opposite in nature– opaque, extremely limited opportunities for concerned civil society stakeholders and especially for the affected communities to share relevant inputs. The information available in the public domain was restricting in its scope and the final draft proposal was not shared, despite requests being sent by concerned groups from outside India to the Bank. This was a striking drawback, especially in the wake of IFC having faced defeat at the United States Supreme Court on the Immunity Verdict last year, on the case filed by Indian farmers and fishworkers on serious violations caused by IFC-funded Tata Mundra Ultra Mega Power Project in Gujarat India.

With the assistance of the IPN and Management, CODE identified eleven projects whose stakeholders had experience in the IPN process within the last seven years to provide feedback. The selected projects took into consideration regional representation and included projects that had gone through all the different steps of the IPN process. The procedures for arriving at this decision and who all were the stakeholders from these eleven projects is not in the public domain. This tunnel vision and consequent decision making is flawed.

The entire process lacked transparency and inclusivity.

It is further stated in the recommendations that the new Mechanism will be headed by an “Accountability Mechanism Secretary” (AM Secretary) who will be appointed by and report directly to the Bank’s Executive Directors. The AM Secretary will be responsible for planning and overseeing the processes of the Accountability Mechanism in line with agreed procedures and will be responsible for keeping the records of the AM proceedings. She/He will also oversee the Dispute Resolution Service. All staff of the Accountability Mechanism will report to the Accountability Mechanism Secretary with the exception of the Inspection Panel members, who will continue reporting to the Board of Directors. The DR process would have a one-year time limit in order to provide assurance that the process is not prolonged and incentivize the parties to reach an agreement. This administrative challenge is going to present problems with the affected communities who would find it challenging – in the first place to finish the eligibility process of their complaint in English language, the wait during delayed timeline of these complex processes and now having to identify whether they need a compliance review or a dispute resolution.

While it is appreciated that requesters of complaint can submit their grievances beyond project closure (for new projects with effect to the new change in IPN), a distinct DRS will be operational in six months, and an independent and proportionate risk-based verification of Management Action Plans would be established as an additional assurance, they still do not address the fundamental questions ever posed at the Bank by the communities. Will these changes impact the affected people in any positive way? The tight schedules and methodologies lacked a genuine effort for meaningful consultation. Currently, the onus of identifying Bank’s lending to a particular project, understanding the Bank Operational/Safeguard Policies, knowing about the existence of IPN and developing a complaint in a manner acceptable to IPN is on affected communities. This structure disempowers the communities for they are never consulted in advance with full disclosure of impacts, lenders and of compensation/rehabilitation for their losses in most of the projects. Hence in projects, IPN has knowledge about serious impacts, it should have powers to take suo moto investigation as well as actions. Particularly in cases of high risk or ‘Category A’ projects, knowing the potential irreparable consequences, the IPN should proactively look out for the involvement of the potentially affected communities and facilitate their observations/complaints. Sadly, none of these reflect in the “enhancements” mentioned in the review report for the mechanism which boasts of 27 years’ wealth of documented information and engagement with affected communities and civil societies all around the world.

A Case which made World Bank Legally Accountable

On February 27, a year has passed since the Supreme Court of the United States ruled in a 7-1 judgment that World Bank does not enjoy absolute immunity. The judgment shook the foundations of the financial world, which hitherto enjoyed absolute immunity for whatever consequences their lending led to. It’s not business as usual for them anymore.

It empowered the communities around the world, who have always been at the receiving end of lending to big projects – be it big dams, mining, plantations, energy or infrastructure projects. Already two cases – one from Honduras against the private sector arm of the World Bank, the International Finance Corporation (IFC) and another from China against the World Bank – are currently being considered by different courts in the US.

First, a recap of the case, which led to this landmark judgment.

IFC lend $450 million to Tata Mundra (Coastal Gujarat Power Ltd) – a coal-based thermal power project in Kutch, Gujarat in 2007. The fishworkers, who are severely affected by the project construction as well as the effluence from the project, were not even considered as project-affected, let alone any compensation for their loss. Not just the fishworkers, thousands of farmers, salt pan workers and cattle herders were neither considered, nor compensated.

The affected communities, under the aegis of Machimar Adhikar Sangharsh Sangathan, approached the accountability mechanism of IFC, the Compliance Advisor Ombudsman (CAO) in 2011. After two years of investigation into the violations of IFC’s policies, CAO confirmed nearly all concerns raised by the people in their complaint, holding IFC responsible for the violations and oversight.

Instead of taking it as an opportunity for course correction, IFC chose to ignore the findings first, when pressure was mounted on them from far and wide, they engaged different agencies to conduct a series of studies, which should have done before the project was approved. The findings of those studies were never made public.

The Government of India allowed CAO to visit the project site only once post the report. Their requests for permission to visit the project to monitor the progress of compliance of the policies where declined time and again. Sab ka saath, Sab ka vikas slogan is preserved for the privileged. Riding on the immunity claim of IFC and a government that loathes any independent assessments of projects or situations like in Kashmir, the company continues to ignore people’s concerns.

Having given the project in a platter by the government in 2006 under the newly planned Ultra Mega Power Projects, this project every sop, until Indonesia, from where the coal was procured, revised their coal tariffs. It took the financial viability of the project for a tailspin. In January this year, the company wrote to the Power Ministry that they could not run the project beyond the end of February because of losses. Earlier this week, they wrote to the states who have a Power Purchasing Agreement with them – Gujarat, Haryana, Rajasthan, Punjab, and Maharashtra – that they won’t supply power to them unless the tariffs are revised.

While the company is keen to mitigate the loss by all means, the loss of the people and of many generations, caused because of their project, continued to be meted with indifference and arrogance.

In 2015, the fishworkers and farmers approached the US court – the DC Circuit Court, to hold IFC liable for the livelihood loss their lending caused. IFC claimed immunity from court cases. The Circuit Court and thereafter, the Appeals Court upheld IFC’s claim. Finally, the Supreme Court took it up for an oral hearing and ruled that IFC and its parent body, the World Bank, do not enjoy absolute immunity.

The judgment was meted with disbelief by both sides – obviously for different reasons! Having engaged the best legal batteries to lose the case was beyond IFC’s comprehension. That the Davids can take on the Goliaths even today was a revelation to the communities in Mundra, and around the world.

Having settled the immunity issue, the case in US returned to the DC Circuit Court for hearing on the original petition of IFC’s liability. Again, trying to dodge responsibility for the damages they caused, IFC raised issues of jurisdiction and other legal technicalities. A week before the first anniversary of the immunity case, the Circuit Court ruled in favour of IFC, opening up the road for a long legal battle.

Meanwhile, the condition of the people on the ground went from bad to worse. Because of the effluence, the fish catch went down drastically. Fly ash and coal dust falling on the crops and grazing land made agriculture difficult and animals sick. The intake channel and the continuous dredging of it, expanded the land affected by sea ingress, turning large tracts of agricultural land barren.

A part of what IFC has been paying to its lawyers for defending and covering up their violations would have helped restore people’s livelihood. World Bank Group, a leader amongst the multilateral development banks across the globe, has failed in this case to ensure that people are not left to perish while pushing “prosperity for all”.

Joe Athialy is a social activist based in New Delhi

US Federal Court Rules in Favour of IFC in Tata Mundra Case: Fishworkers and Farmers to Challenge Decision.

IFC hides it shame & guilt behind technicalities of jurisdiction

Kutch, Gujarat / New Delhi: The fishworkers and farmers of Mundra affected by the Tata Mundra Power project will challenge the ruling from a federal judge in the District of Columbia, United States, that the International Finance Corporation (IFC) – part of the World Bank Group – is immune from being sued for damages inflicted as the commercial activity was not carried on in the United States. IFC has been granted immunity for lack of subject matter jurisdiction.

In a long legal battle to hold IFC liable for the social and environmental damages caused by the Coastal Gujarat Power Ltd (Tata Mundra) co-financed by IFC, which started in 2015, the community won a decision from the U.S. Supreme Court last year that the IFC does not have “absolute” immunity to all lawsuits. On Friday evening, United States District Judge John D. Bates again granted the IFC’s motion to dismiss, finding that the IFC is immune under the facts of this case.

The court took a narrow view stating that, “the mere fact that someone in the United States approved a letter that defended IFC’s approach to environmental and social risk management for the Tata Mundra project and announced that IFC will consider certain suggestions raised by the CAO is not sufficient to establish that plaintiffs’ complaint is based upon conduct carried on in the United States”.

It is not only unfortunate but also unethical and legally liable, that in spite of causing irreversible damage to the fragile ecosystem of Mundra coast, destroying the livelihood of thousand of fishworkers, farmers, saltpan workers and cattle grazers IFC gets to hide behind the technicalities of law. When there is growing documentation on IFC’s failure in upholding their own safeguard policies, which was confirmed by its own accountability mechanism – the Compliance Advisor Ombudsman (CAO), the courts have provided immunity on technical grounds.

Budha Ismail Jam, a plaintiff in the case said,  “We are disappointed by the decision, but are determined to take this fight ahead. To save our livelihoods and protect our environment for future generations, we do not see any other way. We know we are up against a wealthy and powerful institution, but we are determined to make our voices heard. We will continue to seek justice.”

“The IFC refuses to be held accountable for the damages this plant is inflicting upon farmers and fishers in Gujarat, but no institution is above the law,” added Richard Herz, Senior Litigation Attorney at EarthRights, who pleaded the case. “Even the IFC’s own accountability mechanism criticized the IFC’s role in the project, finding myriad failures. The IFC has not denied causing harm, and it is unconscionable that it would claim immunity when it harms local people.”

Tata Mundra Power project has been a complete failure. Recently, Tata power had announced to the Union Ministry of Power that Tata Power might be forced to stop operating its imported coal-based Mundra ultra-mega power project. From the violation of national laws to the failure to apply the environmental and social safeguards, from environmental and social destruction to financial disaster, to failed policies of energy security, this project is a case study of what should not be done. IFC has been an active participant in this story of financial failure and environmental and social damage by rejecting the findings of its own compliance mechanism. Instead of hiding behind the safety of technical aspects of law, IFC’s focus should be on using its resources to restore the environment and livelihoods of those negatively affected by this power plant.

Download judgment: https://www.cenfa.org/wp-content/uploads/2017/06/Jam-Opinion-granting-2019-MTD.pdf

For background & more information: https://www.cenfa.org/projects-in-focus/tata-mundra-ultra-mega-project/

Contacts:

Dr Bharat Patel
Machimar Adhikar Sangharsh Sangathan
+ 91 94264 69803
bharatp1977@gmail.com

Joe Athialy
Centre for Financial Accountability
+91 98711 53775
joe@cenfa.org

Tata Mundra Ultra Mega Power Project: A decade of disemPOWERing communities

Almost a decade after the construction for the Tata Mundra Ultra Mega Power Project and eight years since the operations of the project started, a revisit to Mundra tells the story of the destruction of livelihoods, environment and disempowered communities. The project was envisaged as India’s first ultra mega power project that would add two percent to total generation capacity in India and provides power to 16 million people in five states. It would also supply cost-competitive power to manufacturing industries and services. What was not assessed was how the project would impact the most marginalized communities in Mundra whose life and livelihood were based on Mundra’s unique biodiversity and ecology.

The Project:

The Project is a 4000 megawatt (MW) power station, comprising five 800MW units, in Gujarat, India. The plant was commissioned in 2012-2013 as part of the Government of India’s ambition to develop large capacity projects at the national level of 4,000 MW capacity each under tariff-based competitive bidding route using super critical technology on build, own and operate basis. A consortium of Banks including multilateral agencies and Exim Banks invested in this project, which costs US $4.14billion. Both the International Finance Corporation(IFC) and the Asian Development Bank(ADB) have put US$ 450 million each. The project since its inception has been marred with environmental and social concerns.

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In 2011 the fishworkers affected by the project filed a complaint with the accountability mechanism of IFC regarding the violation of IFC’s operational guidelines. A similar complaint was filed with the accountability mechanism of ADB in 2013. Despite reports by accountability mechanisms confirming the concerns of the community of largescale social and environmental damages due to the project, largely the management rejected the reports and a flawed remedial action plan was drafted; which till now has not been implemented properly. In April 2015 the fishhworkers, represented by Earth Rights International, filed a suit against IFC in federal court in Washington D.C., where the IFC is headquartered. In July 2015, the IFC filed a motion to dismiss the complaint arguing that it is entitled to “absolute immunity” from suit in US courts under the International Organization Immunities Act(IOIA). In February 2019, in a historic 7-1 decision, the U.S. Supreme Court decided that international organizations like the World Bank Group do not enjoy absolute immunity, giving hope to the community to go ahead in their fight to hold IFC responsible for the damage caused to them.

 The Decade:

Ten years since the project’s construction was started, and after eight years of its operations, the fishworkers of Tragadi bandar (harbor), Kothadi bander, and Navinal, (who were impacted by the in-take and outtake channels of the project) are left on the verge of poverty. With the consistent decline in fish catch due to hot water discharge from the outlet channel, destruction of mangroves and creeks, the fishworkers are now finding it very difficult to maintain their basic living standard. During a conversation with fishworkers on Tragadi gaon, most fisworkers complained of the debt cycles they were caught in. One of the fishworkers, Jam Buddhabhai said, “We used to take loans earlier as well from the merchants who come to buy our fish but we were able to pay the loans in one fishing cycle (9 months) but for the past 3 years the cycle has been unending.” Most fishworkers have also started looking for daily wage work on days they are not fishing which is difficult for them to find as their skill and knowledge both are is of the world of the sea. mundra6-2

Another important change has been the death of pagadia (on foot) fishing. With creeks blocked and mangroves destroyed the fish closer to the sea have almost become negligible. Most of pagadia fishworkers have started working either as wage labour worker for people who own boats. Prawns and lobsters, which were found close in the creeks and mangroves, have declined drastically. Even for fishworkers who had been fishing on boats now don’t find much fish catch near the coast. They recall that in 2010 they would catch fish to capacity in a boat twice and did not have to go beyond 2 to 3 kilometers in the sea. Today, they have to venture at least 8 to10 kilometers in the sea to find fish. This has increased the input costs and the risk they have to endure for fishing. From increase in diesel cost, to having to stay put on the boat for days and not come back to save costs of fuel, risk of fishing gear damage by ships, with endless wait to find the fish catch, past ten years have left the fishworkers struggling to make their ends meet.

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Women, the Most Affected:

This decline in fish catch has left the women from fishing families in a worse condition. Women were mostly engaged in sorting, grading and drying fish once men bring the fish catch. They would also sell the certain small fish in the local market, which would contribute to their personal income. This has totally stopped. With the decline in fish catch, there is just enough for household consumption and selling to the merchants who sell for export. In Tragadi village, the fishworkers families traditionally went to Kotadi bander to stay during the fishing season. Once the in-take channel of the project was built the access route to the bander became longer. They no longer accompany menfolk to the bander now. With an increase in travel costs, the decline in fish catch and men having to be in the sea for days together to catch fish, it became difficult for women to stay at bunder. In a conversation with fishworker women in Tragadi village they feel helpless that they can’t contribute to the work or income and keep sitting at home the entire day. The quality of life, personal expenditure, movement and economic independence have all been affected. One of the girls form the community who is now 18 years old, Asifa told us, “we remember a time our mother gave us money when they would come back from markets. We all had piggy banks and our small savings, it’s been long since I have seen that in any home now.”

Farmers & herders:

The situation of the farmers and cattle rearing community is not any better. The years of operation of the plant, with in-take channel bringing seawater deeper into the land has resulted in the drastic increase in the salinity of water. This has severely affected the agriculture in the area. In our conversation with farmers from Navinal, Mota Kandagara and Siracha, with the groundwater turning saline, the farmers have to rely on rains as bore well water is no longer fit for irrigation and where people are still using bore well water for irrigation, the quality of crop has turned bad. This has not only made farming unpredictable because of uncertainty of rains but has also changed the traditional agricultural. Crops like peanuts and chiku can longer be grown. Even for crops, which are grown traditionally like cotton, dates, bajra the production has reduced and the quality deteriorated. Many farmers have just left farming, as it is no longer bringing any income. Many have just left their fields unattended and now seek daily wage labour work. Apart from that the coal dust and fly ash that settles on the crop deteriorates its quality specially cotton which becomes black in colour and dates (coal dust and fly ash allow water to settle on it which ruins the fruit). This has resulted in a steep decline in the market value of these crops. The farmers in Navinal said that, “Once our cotton crop used to fetch the same value in the market as Bhuj cotton but today, the story is different. We are paid less than half of what Bhuj farmers will get for cotton but its understandable ours is black in colour.”mundra4-4

The situation of the cattle rearing community is no different. With grazing grounds having been acquired for the project, they are left with no other option but to buy fodder for their cattle. Tata and Adani (both having acquired land for the power projects) both are providing some fodder daily for cattle but that is much less than what is required. Most of the fodder has to be purchased. Also, whatever little grazing land is available has become barren due to increase in salinity of ground water. Also, fodder which is bought from local farmers and a few grazing lands are covered with coal dust which when eaten is resulting in increased cases of cattle falling sick. Premature births, increase in mortality rate and skin infections in cattle have become common. Now in desperate situations, cattle rearers have started migrating with their cattle to other talukas (blocks) in Kutch for grazing.

Air Pollution & Effluents:

The operations of the project and the conveyor belt have resulted in increase in air pollution in the region. Respiratory disorders have become common. The air pollutant display machine outside the plant is always switched off in spite of it being mandatory for them to display pollution levels at all times. Fishworkes also have to face severe skin infections. Chemical water discharge from outlet channel has caused severe skin infections in fishworkers due to long exposure chemical hot water discharge. Salinity increase has also impacted the drinking water, which has also become saline. Even though Tata provides tankers at Tragadi bander and an RO plant in Navinal village, this is not sufficient. Most people have to buy water from tankers or if they cannot afford it they mix ground water with little drinking water that is provided to meet the water requirement. Cases of kidney stones and joint pains have become common among the population consuming water with such high salinity levels. mundra2-5

Given this situation of the communities impacted by the project, it is only ironic that on its official page, IFC states that, “CGPL’s community outreach initiatives focus on improving education and healthcare, increasing access to safe drinking water and energy, natural resource management, and infrastructure improvement. The initiatives also focus on improving income generation and livelihood opportunities, empowering women, enabling access to government development schemes, and strengthening community based institutions.”

After pushing people to poverty, depleting and destroying their livelihood, damaging the marine environment, being responsible for increased pollution levels and taking away the economic independence of women these claims seem nothing but disingenuous. This project is a classic example of a failed due diligence and economic assessment with the project also running into losses. With enough measures for the rescue to the company, it is the project-affected community that has been at the receiving end of the forced development.

AIIB’s newly wrapped ESG investments

AIIB’s newly wrapped ESG investments: Asia ESG Enhanced Credit Managed Portfolio Project

After fifty investments being approved and many more in pipeline, along with much criticism against India’s Infrastructure Fund [IIF], National Infrastructure Investment Fund [NIIF], IFC Emerging Asia Fund and Asia Investment Fund, two months ago a new partnership has been announced by Asian Infrastructure Investment Bank [AIIB] with UK’s Aberdeen Standard Investments [ASI] for AIIB’s Asia ESG Enhanced Credit Managed Portfolio Project.

As part of their initiative ‘Sustainable Capital Market’, under which this portfolio is categorised, AIIB intends to promote investments in corporate, green and quasi-sovereign bonds in infrastructure related sectors in Asia. Announced to boost ESG investment and with the target of returns at a rate of 5-7%, these bonds would be screened, assessed and managed on ESG principles laid down by the AIIB’s Environmental and Social Framework and managed by ASI who is globally the leading asset manager in ESG investments. ESG score, according to AIIB and ASI, would be created using information provided by corporates and third party rating providers.

According to AIIB, it will evaluate among other factors, a firm’s trajectory and its willingness to improve its ESG standards, once they benefit from this fund. Their framework is also designed for AIIB to engage when triggers such as firm’s reputational risks or strategy shifts happen and put the securities of these firms under watchlist. Meanwhile, ASI believes that conditions are “ripe” globally for investments in Asia over the next five to ten years, since “influential asset owners” have already started making the transition to ESG investments. AIIB also intends to invite other financial actors like insurance firms, pension funds and sovereign wealth funds to invest in this portfolio once it is established.

What are ESG Funds?

Funds which claim to have environment social and governance aspects reinforcing all their investment activities are broadly called ESG investments or funds. Originally launched by the mutual funds industry, ESG funds have sustainability as the generally underlying theme. Under SEBI’s guidelines, these funds come under thematic funds and focuses on non-financial actors like environment, climate, impact investing, best practices, resource efficiency, employment, supply chain issues, governance etc. to try to manage a firm’s strengths and weaknesses. In short, these funds invest in stocks of companies that has no reported violations of environment damage and social risks. An elaborate list would be – water, waste, plastics, circular economy, biodiversity, deforestation, toxic emissions, pollution, clean energy, carbon footprinting, decarbonisation, transition economy, energy efficiency, working conditions, health & safety, equal opportunities, staff retention, training & development, labour relations, talent retention, collective bargaining, modern slavery, child labour, supply chain issues, inequality, lack of access to resources, land rights, food & nutrition, data privacy, community relations, anti-bribery & corruption, audit issues, board balance, board diversity, remuneration, business ethics, director independence, shareholder rights, accountability, cyber security and tax.

There are also ESG assessment reports published annually by Principles for Responsible Investment [PRI], which is a voluntary self-regulation platform formed in 2006 by corporate and financial actors. PRI is endorsed by UNEP Finance Initiative and UN Global Impact. According to their website, “the six principles for responsible investment are a voluntary and aspirational set of investment principles that offer a menu of possible actions for incorporating ESG issues into investment practice.” Reporting is done through the assessment reports based on self-defined criteria and indices as part of ongoing learning and development. The report also documents ESG indicators covering asset classes like farmland, forestry, infrastructure, equity funds, hedge funds etc. The irony is these principles were created by the investors themselves and more than 2000 companies have signed, including the top ten leading global investment companies. There has been attempts to integrate ESG investments in real estate industry as well, since ever increasing rampant infrastructure projects directly involve capital, labour and especially land intensive activities. In India, Kotak Mahindra Asset Management Co. Ltd was the first asset management company to sign PRI in April 2018.

India’s first ESG fund was launched early this year by Avendus Capital Public Market Alternate Strategies. Avendus Capital, which already manages India’s largest hedge fund, seeks to raise USD 1 billion through international and national market for their Avendus India ESG fund to invest in listed equity companies. Among the members of their advisory panel is former Deputy Governor of RBI, Dr. Rakesh Mohan.

SBI Mutual Fund renamed its SBI Magnum Equity Fund to SBI Magnum Equity ESG fund which became first ESG Mutual fund of India. Three months ago, Quantum Mutual Fund launched India’s first ESG Equity fund, Quantum India ESG Equity Fund. National Stock Exchange has also introduced NIFTY 100 ESG and NIFTY 100 Enhanced ESG indices, and Bombay Stock Exchange has S&P BSE ESG index, as thematic indices.

Yet another evasive investment of AIIB

With its founding principle of being a clean, green and lean multilateral development bank, AIIB has always been under the scathing review of civil society and peoples’ groups for non-compliance to its own policies and for the aggressive pace of investments which they package in different ornamentations such as their founding principles and as a friendly bank from the global south.

While it is seemingly appreciable that firms are made to adhere to such standards in this particular ESG credit portfolio, the larger picture is strikingly clear – funds and investments are now packaged under the semblance of ESG to make it more attractive and investible for private players. We have been stunned earlier by observing multilateral development banks recklessly aiding the wealth extraction of private players through many such funds, policy influences and reputational privileges in the name of development projects globally. We have seen them sans any accountability also with huge funds channelled through financial intermediaries which does not require disclosures yet.

AIIB’s recent investments in India were approved last month which focus on financing renewable energy, power transmission & distribution and water infrastructure construction projects in India – the Tata Cleantech Sustainable Infrastructure On-Lending Facility with financing plan of USD 75 million and the L&T Green Infrastructure On-Lending Facility with USD 100 million. Both claim to increase the supply of renewable energy through mobilizing private capital investments in order to align Government of India’s plan to reduce carbon intensity under the Paris agreement. Objections have been raised and it is known that AIIB’s ESF policy itself is under review. It is nonsensical that they continue expanding, not just with 100 member countries but with investments already loaned out to the tune of USD 9.64 billion in a span of four years, while in the process of getting their policies and directives in place! And talk about not having a robust ESF system in place, while the larger and older MDBs like World Bank and IFC continue conducting periodic reviews of their robust policies!

And here we are, repeatedly manipulated with the branding and wrapping these funds are allowed to come in to our country, now robed with ‘ESG’. This is just another contriving moment for AIIB with the initial USD 500 million tied to the bandwagon, beginning to exploit this new ‘investible’ ‘green’ opportunity.