World Bank's $1bn slap for
India By Siddharth Srivastava
NEW DELHI - In a stinging rebuke to
India's ingrained corruption and inability to
really deliver on its social and health missions,
the World Bank (WB) has decided to withhold more
than $1 billion aimed at health programs in the
county due to allegations of fraud and
misappropriation of funds.
India likes to
project itself as a modern, rising economic
powerhouse. But the World Bank's action places
India on the same level with a motley group of
rogue countries such as Bangladesh, Chad, the
Congo, Kenya and Argentina that have suffered the
same ignominy.
"The World Bank strongly
believes that corruption and leakages are a major
development issue, for they undermine the intended
outcomes for which public
money is spent," said the agency. "The government
of India shares this concern."
Funding has
been frozen for the second national tuberculosis
control project and the Karnataka health systems
project, both elements of the Bank-backed
reproductive and child health program. While the
WB has launched a probe into various allegations
of corruption in the procurement of
pharmaceuticals, the Finance Ministry has urged
states and federal departments to ensure complete
"transparency and integrity" in awarding
contracts.
The Indian Express quoted
Finance Minister P Chidambaram as having told
World Bank chief Paul Wolfowitz: "We are on the
same wavelength ... complete transparency and
integrity in project implementation is
imperative." Recently, the Finance Ministry
evolved a Governance and Accountability Action
Plan designed to strengthen governance, in keeping
with the bank's wishes.
The allegations
put a question mark on efforts by the government
to ameliorate the negative effects of economic
growth in the country through massive rural
infrastructure, health and education spending. To
this end, India has also been trying to rope in
the bank to garner funds and expertise.
In
August, the WB announced it would lend India $9
billion over three years for development projects
in rural areas. Wolfowitz said the funds would be
used to sustain the growth needed to lift 250
million people out of poverty. Over 260 million of
India's 1.1 billion people live in abject poverty,
despite economic growth of 6% per annum or more
since free market reforms were initiated in 1991.
While New Delhi has other sources of funds
(especially the growing kitty from a services tax)
to meet the challenge of lifting up the poorest,
the unhappiness expressed by the WB is symptomatic
of New Delhi's extremely bad record in getting the
money to those who need it.
The government
of Prime Minister Manmohan Singh launched a
massive project of rural employment guarantees in
August. It plans to spend more than $40 billion
per year to be implemented at the behest of public
servants across the country.
In detail,
the government will provide a guaranteed wage of
close to $1.5 per day to all rural households in
200 districts for a period of 100 days. Some 90%
of the expenditures will be borne by the federal
government, the remainder by the states. New Delhi
also announced an urban renewal scheme in December
that provides for disbursing funds to upgrade the
infrastructure of 63 selected cities. Over $12
billion has been earmarked for the project and
will be disbursed over seven years.
Unfortunately, the implementation of such
programs is invariably tardy and creates a huge
constituency of corrupt petty bureaucrats. There
have been various attempts to put a figure on the
dimensions of Indian corruption. By some accounts,
the government loses $50 billion due to tax
evasion; $10 billion due to delay in projects due
to bureaucratic red tape; and $7 billion to
various forms of outright corruption each a year.
Former prime minister Rajiv Gandhi
famously said that for every rupee spent by the
government for development less than a tenth of
the amount actually reaches the supposed
beneficiary. Sadly, this is probably not an
exaggerated figure.
Studies by the
Berlin-based Transparency International (TI) and
other indices such as the Corruption Perception
Index have consistently ranked India as one of the
world's most corrupt countries. In last year's TI
report, India secured a lowly spot at number 88
(out of 159 countries surveyed) of the most
corrupt places on the planet, along side Gabon,
Mali, Moldova, Tanzania and Iran.
The
World Bank has labeled the Delhi Development
Authority that oversees urban housing and
commercial property in the national capital as the
most corrupt organization in India. A Planning
Commission study has revealed that less than 50%
of food grains meant for people living below the
poverty line actually reached them. Such pilferage
amounted to almost a billion dollars.
One
cruel consequence of social and economic inequity
has been a vicious Naxalite and Maoist rebellion
throughout the Indian heartland. While the world
tends to focus on terrorism in Indian Kashmir, and
to a lesser degree, strife in the northeastern
states and other parts of India, a bloodier battle
is being waged in the hinterlands of Andhra
Pradesh, Madhya Pradesh, Bihar, Jharkhand,
Chhatisgarh, Orissa. In many places the Maoists
and Naxalites rule with the gun. Although there
are several causes for the Naxalite violence, one
of the main reasons has been the absence of land
reform and the persistence of extreme poverty.
The Maoists feed on the cadres of tribals
and dalits (considered to be of the lower castes)
who have been dispossessed of their lands. They
also exploit the alienation that many people feel
about indifferent state governments. Although the
police and landlords remain the two biggest
targets of the Maoists, the communist rebels
recently captured a train with more 250 passengers
in a remote part of Jharkhand.
In
February, Maoists attacked a truck convoy in
Chhattisgarh, killing 24 people and injuring 32.
In one of the biggest attacks staged in November,
over 1,000 rebels meticulously planned and then
executed the release of 350 of their comrades
lodged in the Jehanabad jail in Bihar.
A
study by the Home Ministry says murders of police
personnel by guerrillas jumped 53% to 153 in the
past year, while 516 civilians were killed, an 11%
increase on the previous year. In the early 1990s,
the number of districts affected by Maoist
violence stood at just 15 in four states. It has
now risen to 170 districts out of a total of 602
in the country.
The government has tried
to shine more light on aid transactions by
enacting the Right to Information Act that enables
greater public scrutiny of projects and programs.
However, as is apparent by the bank's rap, a lot
more needs to be done.
Siddharth
Srivastava is a New Delhi-based
journalist.
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