Preliminary Findings

Preliminary Findings by the Jury

of the Independent People’s Tribunal on the World Bank Group in India

We, the twelve jury members, have listened to four days of testimony and depositions from affected people, experts and academics from some 60 grass roots, civil society groups and communities from all over India. The presentations covered 26 different sectors of economic and social development, ranging in scope from the macro-economic impact of wide ranging economic policies to testimony from representatives of communities said to have been harmed and impoverished by specific World Bank financed projects. Our members include former justices of the Indian Supreme Court and High Courts, lawyers, writers, scientists, economists, religious leaders, and former Indian government officials. We note that the World Bank Delhi office received an invitation to attend the Tribunal two weeks in advance, but did not wish to participate in the proceedings.

First and foremost, the evidence and depositions we have witnessed presents a disturbing and shocking picture of increased and needless human suffering since 1991 among hundreds of millions of India’s poorest and most disadvantaged in rural areas and in the cities. It is clear to us that a significant number of Indian government policies and projects financed and influenced by the World Bank have contributed directly and/or indirectly to this increased impoverishment and suffering. All this has taken place while a minority of India’s population that constitutes the middle class and rich has enjoyed the fruits of an economic boom.

The most disturbing leading indicator for this suffering is the alarming increase in farmer suicides since the 1990s. From 2001 to 2007 alone, according to the Indian Minister of Agriculture, 137,000 poor farmers have killed themselves. These deaths are not random events; the evidence we heard points to increasing financial pressures on farmers all over India as a result of some or all of the following policies, such as: reduced subsidies from the Center and states, higher prices for poor farmers for irrigation water, electric power, and seeds; reduced subsidies for agricultural inputs, reduced access to low interest loans for the poor, and opening up of the Indian economy to an uneven playing field in international trade in agricultural commodities. India’s farmers must now compete with imports from the heavily subsidized farms of the European Union and North America, at the same time when even the most meager state assistance for the poorest farmers is reduced. India was once self-sufficient in food production; its food security is now dependent on imports. It is clear to us that major World Bank Economic Restructuring, Structural Adjustment, and Sector Loans have directly promoted and helped to finance these economic policy changes which are a disaster for much of India’s more than 700 million rural inhabitants, and most disastrous of all for poor farmers.

Other World Bank loans have promoted the institution of user fees in the health and education sectors, as well as partial privatization in these sectors. Whatever the justification for these policies, we heard how in practice, they have further disadvantaged the poor. The Bank is promoting legal and regulatory changes the main focus of which appears to lessen the social and environmental compliance burdens for industry and investors, rather than protect the vulnerable livelihoods and environments of India’s poor majority. The net effect of many Bank prescribed policy “reforms” appears to be the reorientation of the Indian State priorities from striving to secure a safety net for the poor and vulnerable to providing a safety net for large domestic and international corporations and investors.

We heard witnesses from the poorest Dalit and Adivasi communities describe the deterioration for their communities from poverty to destitution because of forced displacement caused by World Bank financed projects. A number of these projects are notorious and communities have sought redress for years: the Bank’s massive loans for thermal power development in Singrauli in the 1980s displaced many tens of thousands of poor, who have sought economic rehabilitation and improvement of toxic environmental conditions, with no redress from the Bank or its Indian government borrower, NTPC. We heard of the plight of hundreds of families impoverished by displacement in the Bank financed Coal Sector Rehabilitation Project, despite the claims of a separate Bank Coal Sector Environmental and Social Mitigation Project. Although the Bank’s own Independent Inspection Panel found in 2002 that Bank management violated its own environmental and resettlement policies on 37 counts, Bank management has taken no effective measures to ameliorate the condition of these families. These examples are only a small sample of a massive pattern of forcible displacement of India’s poorest and most vulnerable populations for large scale natural resources extraction, infrastructure and urban projects, a number of which have been directly financed by the Bank. The Bank has announced its intention to increase its financing of large scale projects while at the same time there is disturbing evidence of its widespread failure to implement its environmental and social safeguards, as well as indications of intentions to even dilute the effective rigor of these safeguards.

One of the disturbing impressions we gathered from the presentations is that the bank seems to have developed the art of making policies whose safeguards are only on paper. It has devopled a language game in which words like empowerment actually mean disempowerment, sustainable means unsustainable, public-private partnesrship means using the public to promote the interests of the private.

It is impossible to do justice in our short preliminary statement to the volume, scope and intensity of the scores of depositions, expert presentations, and eye witness accounts we have heard over the past four days. The Tribunal will be publishing more detailed accounts, and we will submit a more detailed set of findings and recommendations in future weeks. What emerges is a picture of an institution whose influence on the economic and social policies of the Indian government is much greater than the amount of its lending might indicate. The Indian Government, of course, shares at the very least equal responsibility for all of the abuses we have witnessed, indeed a significant number of officials in key ministries such as finance and planning have either worked at the Bank or IMF, or share their assumptions and biases. Together all bear considerable responsibility for wide reaching policies and specific investments which in the name of growth and development have had the cruelest impact on the most vulnerable groups in our society.

We hold the Indian government accountable and call for changes in these policies. India and the international community must join to hold the World Bank accountable for policies and projects that in practice directly contradict its mandate of alleviating poverty for the poorest.

THE REVOLVING DOOR OF THE WORLD BANK By Prashant Bhushan

Suborning policy and decision makers by its pocketbook

Joseph Stiglitz, the Nobel laureate and former Chief Economist of the World Bank in his frank critique of the World Bank and IMF, “Globalisation and its discontents”, notes that “The institutions are dominated not just by the wealthiest industrial countries but also by commercial and financial interests in those countries, and the policies of the institutions naturally reflect this”. This, he says, happens because the World Bank and other Multi-lateral financial institutions are controlled by the wealthy countries. For the WB/IMF, these countries are represented by their Finance Ministers and Central Bank Governors. He goes on to say, “The Finance Ministers and Central Bank governors typically have close ties with the financial community; they come from financial firms, and after their period in government service, that is where they return. These individuals naturally see the world through the eyes of the financial community. The decisions of any institution naturally reflect the perspectives and interests of those who make the decisions; not surprisingly, the policies of the international financial institutions are all too often closely aligned with the commercial and financial interests of those in the advanced industrial countries.”

Though an insider with impeccable credentials and credibility like Stiglitz has laid bare this fact which was known by most people much earlier, yet it is obvious that the government of India’s policies regarding the revolving door between the government and the World Bank/IMF are totally oblivious to this. How else would one explain the fact that for much of the last 20 years, and particularly since 1991, many if not most of the top economic policy makers including members of the planning commission, secretaries of the Finance Ministry and Governors of the Reserve Bank have been staffers of the World Bank/IMF. They have moved smoothly and seamlessly between the World Bank/IMF and the government of India, as if the government of India were just a division of the World Bank/IMF.

Since the mid 80s it has become common to find World Bank staffers occupying key policy making positions in the Government of India. Starting with Montek Singh Ahluwalia, and Bimal Jalan, the vast majority of the key officials of the Finance Ministry and the Reserve Bank have moved seamlessly back and forth between the World Bank/IMF and the Government of India. They include such influential policy makers and Finance Secretaries such as Shankar Acharya, who like Montek started with the World Bank in the 70s and then again like him joined the government as Economic advisor in 1985. In 1990 he was back at the World Bank as Chief of the Public Economic Division till 1993, when he was appointed Chief Economic Advisor to the Government of India. He was thereafter appointed to the Board of SEBI, the EXIM Bank and various other policy making bodies.

We then have Rakesh Mohan who also initially worked with the World Bank (1976-80, 1983-86) and later became Economic Advisor to the Ministry of Industry, Government of India. He then served in top positions of many policy making bodies of the government including Deputy governor of the Reserve Bank, Secretary of the Department of Economic affairs etc.

We have Parthasarthy Shome who worked at the IMF for most of the time between 1983 and 2004. In between he was called in as Chairman, Advisory group on Taxation for the 9th 5 year plan, then as Chairman of the Advisory group on Tax policy, and most recently as Special advisor to the Finance Minister (2004-2007).

We also have other persons like Ashok Lahiri, who worked for many years in the IMF before being brought in to the government as Chief Economic Advisor and then sent to the ADB as Executive Director in 2007. These are only some examples of persons who started their careers with the Bank/IMF and were brought into influential policy making positions of the Government, then allowed to move back and forth between the bank and the government as if the Government of India were just a division of the Bank/IMF). Such examples could be multiplied endlessly.

This revolving door with the Bank/IMF and the filling of most economic policy making positions of the government by these Bank staffers has allowed the bank to impose its ideology and policies on India. It has not only ensured that these policy makers are schooled in the World Bank school of economics, by allowing them to move back and forth but also ensured that the Bank/IMF retains a complete stronghold on these persons wherein they step out of line only at the cost of losing their lucrative jobs/assignments with the Bank/IMF.

In fact, key officials of the Finance Ministry and other important Ministries dealing with World Bank proposals and projects have been freely allowed to negotiate and take up jobs at the World Bank while in service and immediately after retirement. Many of them are deputed by the Government of India. These deputations also work through the network of Old boys of the World Bank occupying key positions in the government of India. Apart from deputations, there are hosts of other jobs, consultancies, assignments, even travel grants and huge honoraria paid for attending meetings of the World Bank and associated agencies. Thus, R.A. Mashelkar as DG CSIR went on at least 50 trips abroad during his tenure which were paid for by the Bank or the World Intellectual Property Organisation. For most of these trips, he was paid an honorarium of around 500 British pounds a day. As a result of this, he got more as honoraria for these trips than he got as salary from the Government of India. As DG CSIR, he presided over several policy-making committees and advised the government to (for example) amend the Patents Act in line with the needs of multinational corporations of the West. He says that he honestly believes that it is in the best interest of India as well. But, when one knows that juicy junkets, honoraria and assignments depend on whether he falls in line with the Bank and similar agencies, it is easy to convince yourself of the righteousness of the course that is likely to land you with these juicy assignments.

The officials are selected eventually by the Bank and their salaries and honoraria are decided by them, depending on their level and “utility” to the Bank. However, in all cases they are several times, usually ten times or more than, the salaries they get in India. This creates an enormous incentive for the Officials to seek World Bank jobs, assignments, consultancies and even travel grants. Since it is obvious that one is more likely to get these if one toes the World Bank line, it creates an enormous incentive for Officials to fall in line. This is particularly so for “honest” officials who see these jobs and assignments as the only legitimate way of doubling or trebling their savings in a very short while.

The Foreign Contribution Regulation Act which makes it an offence for a government official to accept any material contribution from a foreign agency also exempts the World Bank and other “United Nations agencies”. This has further smoothened the path of those seeking World Bank/IMF/ADB jobs, assignments and travel grants.

This is why there is no critical evaluation of World Bank policies and projects at the government level and they are all virtually accepted uncritically and pushed through. All this has had an enormously deforming effect on policy making, particularly economic policy making in the Government of India. It would not be incorrect to say that it is the World Bank which runs the Reserve Bank, the Finance Ministry and other economic policy making bodies of this country.

World Bank on trial

On September 21, 2007, hundreds of people will assemble in New Delhi to put the World Bank Group on trial. In four days of parallel sessions in front of more than a dozen judges, people from all walks of life will air their grievances against one of the world's most powerful institutions. In convening an Independent People's Tribunal on the World Bank Group in India, they are attempting to do more than simply chalk up another protest against injustice. The People's Tribunal is also a shrewd political strategy, aimed at renewing a silenced debate over neo-liberalism and economic policy. But most profoundly, it is a direct assault on one of the Bank's (and the elites') most powerful tools: the monopoly of knowledge. By bringing into the limelight the testimony and personal experiences of the poor, adivasis, Dalits, women, and other marginalised people, it is in direct conflict with the World Bank's own means of understanding economic and social policy. That challenge is not one the World Bank can afford to ignore.

World Bank in India
Since 1949, India has been one of the World Bank's favourite clients. Historically, it has borrowed more money from the World Bank than any other country. Currently, it ranks in the top four, along with China, Russia, and Indonesia. Unlike many borrowing countries, India has also been faithful in paying off its loans -- thus providing the World Bank with an assured, steady return of funds. Without a few reliable clients such as India, the World Bank would be hard pressed to continue its operations.

In its early decades, the World Bank emphasised infrastructure projects. It lent money for Dams, canals, railways, highways and other large construction projects. These generally required foreign expertise, so the loan money was largely used to hire foreign multinational firms to build infrastructure. In India, the most infamous of these projects are the Sardar Sarovar dams on the Narmada; these eventually became such a political liability that the World Bank jettisoned them. However, it continues to finance infrastructure -- in fact, it has recently recommitted itself to 'high risk, high reward' projects in the vein of Narmada. But in recent years, a far greater share of its lending goes towards policy change.

For decades, the World Bank and its sister institution, the International Monetary Fund (IMF), have pressured borrowing countries to adopt policies that they believed would foster economic growth. These neo-liberal policies were a standard package that varied little from country to country; they are also known as the 'liberalisation, privatisation, and globalisation' approach. In essence, they push countries to privatise public assets, reduce regulation and state controls on multinational corporations, re-orient their economies away from self-sufficiency and towards exports; weaken labour and environmental standards, and do away with other barriers to concentrations of wealth.
While India accepted large quantities of money for projects, it generally avoided large-scale policy changes until the 1990s. By then, it was heavily dependent on oil imports, when the first Gulf War caused oil prices to spike, India found itself short of foreign reserves to continue importing oil. It turned to the IMF for help, and got it — but with strings attached. Bowing to external pressure as well as a restive, upwardly mobile, middle class, India began adopting wholesale neo-liberal policies.

The World Bank has approved this wholeheartedly. India's once-meagre foreign exchange reserves are now second only to China's. Economic growth rates are around 8 or 9 per cent per year. The stock exchange is booming, and Indian corporations are becoming global players. For the World Bank, it is the long-awaited vindication of their neo-liberal faith (Latin America, Africa, Eastern Europe, Russia and Southeast Asia having all produced spectacular failures with the same policies).
Invisible Debate
There is another set of facts that present a less rosy picture. The availability of foodgrains has fallen to its lowest level since 1973, malnutrition is correspondingly on the increase. Pollution of industrial areas is growing steadily worse. Slum clearance and urban renewal projects are displacing tens of thousands of the poorest urban dwellers. Personal indebtedness is skyrocketing -- farmer suicides being the most obvious symptom. Landlessness, always a problem, is growing. The new economy's voracious appetite for natural resources has set it on an increasingly violent collision course with Adivasis and other rural peoples; increasing numbers are joining the Naxalites or other armed resistance movements. While neo-liberalism has generally done well for the wealthy and the urban middle classes, it has also entailed huge costs. But those costs are generally borne by the marginalised and the disenfranchised, particularly the poor, and so they quite simply are not recognised.

When India embarked on its neo-liberalisation project in the 1990s, it occasioned a good deal of furious debate: in the press, in Parliament, in academia and in chai shops. The pros and cons, the winners and losers, were toted up, argued back and forth. Now, that debate has fallen silent. It is as if the debate were settled, no longer worth arguing; or even as if neo-liberalism were simply a historical inevitability. Indeed, this is exactly what Margaret Thatcher claimed when she coined her infamous acronym, TINA: There Is No Alternative. It was a transparent attempt to close off debate about this most controversial set of economic policies. At the same time, in the US, Reagan's advisers attempted to do the same thing more subtly by claiming that neo-liberal policies were not 'political' issues; they were simply 'good management.' Nothing to debate here, move along, move along.

The World Bank has all along had its own means of closing off debate: it has attempted to monopolise the conversation about how poor countries should develop. Its staff and consultants publish hundreds of articles and reports annually, it funds even more studies by outside researchers. It has a well-oiled public relations machine, it runs a mini-university, the Economic Development Institute, and it encourages staff exchanges to spread its gospel to other institutions. Perhaps most importantly, it employs some 10,000-development experts —by far the largest, best-paid and most-prestigious positions in the field of development economics. But unlike a university, the World Bank does not tolerate diversity of opinion within its ranks. Its publications are not peer-reviewed, it suffers no external audits. In recent years, it has attempted to formalise this dominance of the debate by enthroning itself as 'the Knowledge Bank' -- the single source for all information, knowledge, and theory on developing countries' economies.

What this means in practice is that alternatives to the Bank's neo-liberal agenda are not merely rejected. They are never even considered. When New Delhi took a World Bank loan to design improvements in its municipal water supply system, there was no debate about what the priorities should be or which of the various models should be employed. The entire design of the project was handed over to PriceWaterhouseCoopers, an international consulting firm and one of the World Bank's pet contractors. PWC, unsurprisingly, returned a blueprint for privatisation, without any mention of alternatives. Not content to dominate the consulting firms and borrowing governments, the knowledge bank is reaching further upstream, into universities, to ensure that its ideology is taught as fact throughout the field of economics.

What you won't find anywhere in the Knowledge Bank are the voices of India's poor and marginalised. You will have to come to New Delhi to hear them. They will tell you of World Bank policies that have robbed them of farmlands, forests, and homes; emptied their savings, ruined their health, broken up their families; stripped them of their access to clean drinking water, health care, and education; and brought them into conflict with the local moneylender or multinational corporations. Their stories, individually and collectively, are another reality, in direct conflict with the sunny assessments that the World Bank likes to tout. In New Delhi, the spotlight will be on them: the poor, in whose name all this development happens. They will raise their voice against World Bank-led growth model that has been taking its toll upon poor.

(To find out more about the Independent People's Tribunal on World Bank in India, visit: http://www.worldbanktribunal.org and http://worldbankout.blogspot.com/)