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Direction of

Development
Direction of
Development Dedication
To those who work hard but they don’t know
who is playing with there life’s

Author
YOGESH BANDHU
IN ASSOCIATION WITH CCSR Team

Published by :

Center for contemporary studies & Research


2/205, Vivek Khand, Gomti Nagar, Lucknow (India) Pin code - 226010
Phone: +91 522 4005040, +91 9935736877
e-mail: ccslucknow@gmail.com

Supported by :
SUGGESTED CONTRIBUTION Rs. - 100
Global Green Grants Fund
& Insaf ( Indian Social Action forum)
My words
We are running in the second phase of
economic reforms, in other ways I would like to
say it “the world bank regime” and I have very
solid reasons to justify this title. Those who
closely watching the post liberalization develop-
ment scenario, must be agree that most of the
developmental projects are ether funded by The
world bank or have a influence of the world bank
approach.
Last 2 decades are witness of the increas-
ing disparity among reach and poor and here I
would like to refer a book titled “confessions of
an economic hit man” written by John Parkinson
which is an eye opener for many people. This
book educates us how the conspiracy of capi-
talist countries are trying to destroy the economy
of developing countries and how the global fi-
nancial institutions are being instrumental in this
process.
We are very happy to come out with this
book which is a result of a half year hard work of
our colleague Dr. Yogesh Bandhu Arya. He is a
very hardworking young economist of our time.
We are Grateful to Mr. Anil Chaudhary and Mr.
Wilfred D’casta for their contribution in terms of
developing our mind towards a pro people ap-
proach and facilitation of resources for this study.
We are also thankful to INSAF (Indian Social
Action Forum) for channelizing resources of Glo-
bal Green Grants Funds .
Lost but not the least, my special thanks
to Mr. R.P.Shahi and Rajesh Verma of CCSR,
for their supports in smooth processing of this
study.

Utkarsh Kumar Sinha


Winters, 2010
Managing Trustee
Preface the WB is dictating each and every aspect of economic activates,
directly through lending condition and indirectly through policy sug-
gestions. Infrastructure, water, education, health and agriculture
The World Bank - a financial institution designed to cater to are some major targets of the bank for promoting corporate inter-
the needs of the international community, which provides techni- est through privatization and/or public private partnership.
cal assistance within the highly volatile fiscal world, to enable de- Changes in Inland Waterways Authority of India Act - 1985,
veloping countries to address important infrastructural require- Foreign Exchange Regulation Act-1973, The Companies Act -1956,
ments. World Bank funds target development programs to reduce Monopolies Restricted Trade Practices Act, Industrial Disputes Act,
poverty. It is the largest public development institution in the world, Indian Trade Unions Act - 1926, Bank Companies Act – 1970, Sick
lending around US$ 25 billion a year to developing countries. In Industrial Companies Act – 1985, Employees Provident Fund Act
existence for over 60 years, the Bank has expanded from a single are few to name, where the bank has suggested and succeeded
institution-the International Bank for Reconstruction and Develop- to make favourable changes.
ment (IBRD)—to five institutions, each dealing with a particular An extreme example is agricultural sector, which contrib-
area of operations. These include financing and other supports for utes 21% of India’s GDP, its importance in the country’s economic,
relief and rehabilitation, physical and institutional infrastructure in social, and political fabric goes well beyond this indicator. The ru-
sectors such as energy, transportation, extractive industry and tele- ral areas are still home to some 72 percent of the India’s 1.1 billion
communications, restructuring of key sectors such as health, edu- people, a large number of whom are poor, but Government of In-
cation, water and agriculture to make them private sector and mar- dia has substantially changes a number of related polices like,
ket friendly, private sector development, and mitigating investment- gradual abolition of input subsidies on fertilizers, irrigation, elec-
associated risks for private companies. Corporate influence is mani- tricity, credit etc, removal of trade restrictions on agricultural com-
fested in and through the Bank in several ways. Most obvious are modities, unification of prices so that the current system of dual
the supports extended to private corporations through three of its markets in food grains and other agricultural commodities disap-
specialised institutions: the International Finance Corporation (IFC), pears, a drastic curtailment of food subsidy confining the Public
Multilateral Investment Guarantee Agency (MIGA) and International Distribution System(PDS) only to the deserving poor, freedom of
Centre for the Settlement of Investment Disputes (ICSID). Every operations for agri-business corporations, abolition of land ceiling
year, the World Bank (Bank) channels more than US$ 25 billion to laws (APMC Act), future trading in agricultural commodities etc.
developing countries in the form of loans and grants with the os-
tensible aim of reducing poverty and promoting economic growth. The scale of influence is oblivious as agriculture in India is
A significant amount goes directly to the private sector, especially the Bank’s largest portfolio in any country. More than 130 agricul-
large corporations, in the form of loans, technical assistance and tural projects have received $10.2 billion Bank financing so far in
mitigation of investment risks. India. The current portfolio of about 30 projects under implemen-
tation in India includes agriculture and allied (diary, rubber, sericul-
India was among the 17 original participants of the 1944 ture, fish and shrimp cultivation) sector.
Bretton Woods conference which conceived the idea of the Inter-
national Bank for Reconstruction and Development (IBRD)—more There is a woeful lack of serious discussion and debate
commonly known today as the “World Bank”. In fact, it was the among the policy-makers on the adverse impact of liberalization
India delegation which first suggested the name IBRD. The Bank’s and globalisation policies routed by bank’s lending and assistance
New Delhi office, established in 1957, is the oldest continuously program. In this context preset work is an effort to bring these
functioning World Bank country office. important issues in public domain for discussion and further ac-
tion.
The Bank lending to India started in 1949, when the first
loan of $34 million was sanctioned for Indian Railway that roses to I am thankful to Global Green Fund, INSAF and CCSR for
2.9 billion in 2005. Currently India is largest lender of the WB. How- conveying this work to me. The present work is a combined effort
ever it is minuscule amount accounting less than 2 percent of India’s of these organizations and their team.
GDP, but cost of this lending is highly prized. With this little amount Yogesh Bandhu
Table of Content Page No
Introduction 11
The Bretton Wood Institutions 13
The Idea of World Bank (IBRD) 18
IMF and World Bank 25
The World Bank in India 26
India’s Debt Obligation and the Cost of Borrowing 31
Agriculture Development in Uttar PradeshThe World 44
Bank Proposal
Shaping Indian Agriculture 44
The Bank’s Prescriptions 45
Land Use Pattern in Uttar Pradesh 55
UP SODIC LANDS (RECLAMATION PROJECT SODIC-I) 58
Outcome of the Project 59
UP Sodic Lands Reclamation Project (Sodic-II) 60
UP Sodic Land Reclamation Project-III 61
Some other Land Related Projects 62
Ravine Rehabilation Project 63
Uttar Pradesh Diversified Agricultural SupportProject 63
(UPDASP-I &II)
Some Critical Facts 66
Direction of Development 77
The World Bank and Corporate sector 81
World Bank and Education Sector 85
The World Bank and Education Sector in Uttar Pradesh 87
Health in India : Current Scenario & Future Directions 92
Why is the World Bank in Need of Reform? 101
1

Introduction
The World Bank is a financial institution designed to cater
to the needs of the international community. It provides technical
assistance within the highly volatile fiscal world, to enable
developing countries to address important infrastructural
requirements. World Bank funds target development programs to
Direction of development

11 Direction of development
reduce poverty.
W orld Bank comprises the International Bank for
Reconstruction and Development or IBRD and the International
Development Association or IDA. It is also responsible for the
working of the International Finance Corporation, Multilateral
Investment Guarantee Agency and the International Center for
Settlement of Investment Disputes. The primary role of the World
Bank is the unbiased distribution of funds for economic upliftment
of the international community. It bears the responsibility of ensuring
aid to settle investment disputes and facilitate fiscal and
infrastructural reconstruction, world wide.
The World Bank specifies- A bank with a mission to aid bonds. Interest rates on World Bank loans are revised every six
developing and under-developed nations of the world to: months and typically, the Bank charges borrowers a rate of interest
 Reduce poverty. 0.5 per cent above its own cost of borrowing on the international
 Develop an investment-environment. market, the proceeds going towards paying the Bank’s operating
 Increase job opportunities. costs and to add to reserves. Loans were originally supposed to
 Work towards sustainable economic growth. be given only to “specific projects”—usually infrastructural projects,
 Promote socio-economic growth through investment. such as the construction of highways, dams, and
 Strengthen governments with education. telecommunications facilities, and social welfare projects, such as
 Empower the development of legal and judicial systems, those in the health and education sector.
business opportunities and protection of individual rights. In 1980, the Bank introduced adjustment lending under its
 Benefit from micro credit as well as large corporate structural adjustment programme (SAP) to provide financing to
undertakings. countries experiencing balance of payments problems while
 Combat corruption. stabilisation measures took effect. These loans are provided to
 Promote research and training opportunities. countries for social, structural and sectoral reforms, for example
The World Bank is the largest public development institution for the development of national financial and judicial institutions.
in the world, lending around US$ 25 billion a year to developing The World Bank attaches conditions to its loans with the stated
countries. The main purposes of the Bank, as outlined in Article aims of ensuring the country’s economy is structured towards loan
One of its Articles of Agreement, are: “to assist in the reconstruction repayment.
and development of territories of members by facilitating the The Bretton Wood Institutions:
investment of capital for productive purposes” and “to promote the
After World War I, during the inter-war period, it was difficult
long-range balanced growth of international trade and the
for the European countries to return to the pre-1914 economic
maintenance of equilibrium in balances of payments by encouraging
world because of the war debts they owed to each other and to the
international investment ... thereby assisting in raising the
United States. The Allies had depleted their reserves during the
productivity, the standard of living and conditions of labour in their
war due to imports of food and wartime supplies. After the war,
territories”.
reserves were further depleted in order to service wartime debts.
The Bank aims to achieve these goals through the provision Because their reserves were low, their currencies were worth less.
of long-term loans to governments for the financing of development Consequently, European nations could not maintain the gold
projects and economic reform. Voting power on the Bank’s board standard after the end of World War I. Although several countries
is based on the members’ capital subscriptions which means the returned to the gold standard in the mid-twenties, the system
members with the greatest financial contributions have the greatest
12 Direction of development

13 Direction of development
ultimately fell apart permanently in 1931.
say in the Bank’s decision-making process. The US government
During the same period, commodity prices had soared due
holds 20 per cent of the vote and is represented by a single
to speculation. However, the market could not maintain the inflated
Executive Director. The 47 sub-saharan African countries, in
prices of the oversupplied commodities indefinitely. Eventually
contrast, have two Executive Directors and hold only seven per
commodity prices plummeted and the U.S. stock market crashed
cent of votes between them.
in 1929. The ensuing Great Depression intensified the demand for
Each member of the Bank contributes two per cent of its gold. Since commodity prices had sharply declined, export income
subscription in gold or US dollars and 18 per cent in its national had also declined. In order to protect reserves, countries began to
currency. Members pay in 20 per cent of the capital while the “hoard” gold and reserve currencies such as the dollar. This caused
remaining 80 per cent is kept “callable” (to be paid in the event of a shortage of gold and dollars.
a default). This guarantee allows the Bank to raise money for its
To make matters worse, country after country began to
lending purposes on international capital markets by the sale of its
devalue their currencies (i.e., reduce the currency’s value vis-a-
vis other currencies) in order to make exports cheaper to foreign In 1944 an international conference took place in Bretton
buyers. A country’s goods become cheaper when it devalues its Woods, New Hampshire (USA). 44 countries attended this
currency because another country buying these goods can buy conference in order to restructure international finance and currency
more of the exporting nation’s money with its own money. Since relationships. The participants of this conference created the
the goods are to be paid with the exporting country’s currency and International Monetary Fund (IMF) and the International Bank for
the price of the goods remains the same as before the devaluation, Reconstruction and Development (IBRD/World Bank). Additionally,
the goods are cheaper. they agreed on implementing a system of fixed exchange rates
The problem was that other countries also began to use this with the U.S. dollar as the key currency. The plans for the system
technique to avoid losing buyers for their goods. There was really of Bretton Woods were developed by two important economists of
no advantage to these “competitive devaluations.” In fact, countries these days, the American minister of state in the U.S. treasury,
around the world, including the United States, implemented Harry Dexter White, and the British economist John Maynard
measures restricting trade and payments in order to reduce imports Keynes who stated: “ We, the delegates of this Conference, Mr
and protect their domestic economies. All of this led to a severe President, have been trying to accomplish something very difficult
drop in global economic activity and, in Germany, contributed to to accomplish.[...] It has been our task to find a common measure,
the rise of Hitler. a common standard, a common rule acceptable to each and not
irksome to any.”1 This statement outlines the difficulty of creating
It was immediate after World War I most countries wanted a system that every nation could accept. The ideas of John Maynard
to return to the old financial security and stable situation of pre-war Keynes and Harry Dexter White have been described as very
times as soon as possible. Discussions about a return to the gold different from each other on several occasions but in fact there
standard began and by 1926 all leading economies had re- are extraordinary similarities. According to the White plan, a Bank
established the system, according to which every nation’s circulating for Reconstruction (today the World Bank) and an International
money had to be backed by reserves of gold and foreign currencies Stabilisation Fund should be established. The Keynes plan called
to a certain extent. But several mistakes in implementing the gold for the same. The only difference was that Keynes wanted to vest
standard (mainly that a weakened Great Britain had to take the the IMF with possibilities to create money (a fact that can easily be
leading part and that a number of main currencies where over- or understood in the background of Great Britain’s suffering from the
undervalued) led to a collapse of the economic and financial deflation policies in the Inter-War period) and with the authority to
relations, peaking in the Great Depression in 1929. Every single take actions on a much larger scale. In case of balance of payments
country tried to increase the competitiveness of its export products imbalances John Maynard Keynes recommended that both sides,
in order to reduce its payment balance deficit by deflating its debtors and creditors, should change their policies. Countries with
currency. payment surpluses should increase their imports from the deficit
This strategy only led to success as long as a country was
14 Direction of development

15 Direction of development
countries and thereby create foreign trade equilibrium. Harry Dexter
deflating faster and more strongly than all other nations. This fact White, on the other hand, saw an imbalance as a problem only of
resulted in an international deflation competition that caused mass the deficit country. Economists today agree that White was mistaken
unemployment, bankruptcy of enterprises, the failing of credit and Keynes was more farsighted.2 However, Keynes’ plan was
institutions, as well as hyper inflations in the countries concerned. never discussed seriously at Bretton Woods and the participants
In the 1930s several conferences dealing with the world agreed on the White plan. The United States defined the value of
monetary problems caused by the its dollar in terms of gold, so that one ounce of gold was equal to $
Great Depression had ended in failure. But after World War 35. All other members had to define the value of their money
II the need for a stabilizing system that avoided the mistakes, which
had been made earlier, became evident. Plans were made for an 1
Moggridge, Donald (1980). Activities 1941 - 1946 : shaping the post-war world, Bretton
innovative monetary system and a supervising institution to monitor Woods and reparations. London: Macmillan
2
Bradford Delong, J. (2000, December 10th). www.j-bradford-delong.net/Econ_Articles
all actions. First negotiations took place under wartime conditions. Reviews/skidelsky3.html
according to what was called the “par value system” in terms of operate, a subject that required much debate and analysis of
U.S. dollars or gold. technical issues relating to international monetary affairs.
The U.S. Britain and other industrial countries were very The U.S. and the Britain agreed that some sort of mechanism
worried that after World War II the events of the inter-war period would have to be created to supply countries experiencing balance-
would repeat themselves. They sought to prevent this reoccurrence of-payments deficits with temporary loans (“liquidity”), the two
by setting up a system that would provide monetary order as well countries had serious disagreements over how resources would
as facilitate investment in economies where little private capital be made available. Keynes, representing a deficit country (the U.K.),
was expected to flow, namely the European economies, which laid wanted to create a system that would provide deficit countries with
the foundation of Bretton Wood Institutions (BWIs). They also plenty of credit upon request. He therefore proposed an
hoped economic prosperity—starting with reconstruction of war- International Clearing Union (ICU) that would issue a new form of
ravaged Europe—would promote peaceful relations. Given the international money called “bancor” and monitor lending from one
inter-war experience, economic policymakers of the time viewed country to another. Keynes wanted the ICU to issue about $26
floating exchange rates—that is, rates mandated by market billion worth of the new money.
forces—as destabilizing. They believed floating exchange rates The United States, represented by Harry Dexter White,
produced speculation and large shifts in the value of the exchange objected to Keynes’ proposal because it would amount to a huge
rate. They also wanted to avoid competitive devaluations and the loan from the United States to the rest of the world. In contrast to
ensuing trade restrictions, which had brought trade to a virtual the Keynes plan, the White plan reflected the agenda of creditor
standstill. nations, or more specifically the only expected creditor nation, the
In this sequence, the gold standard provided the stability United States. The U.S. had the highest level of gold reserves, its
policymakers wanted to pursue at the end of World War II. One of infrastructure was not damaged by the war, and neither was its
the principal founders of BWIs, Lord John Maynard Keynes of economy. So it was probably going to be the main contributor to
Britain, was especially critical of the standard. Thus, the founders the liquidity mechanism.
favored a fixed exchange rate system tied to gold that would This prospect worried the U.S. negotiators. They wanted to
promote important domestic goals such as full employment and avoid putting too many dollars into foreign hands, mainly because
price stability. They also wanted a system that would allow countries the U.S. Treasury and the U.S. Congress would probably not agree
to maintain sound external economic relations (healthy and to such an outcome. Consequently, it was important for White to
balanced international trade and foreign investment— balance of limit the extent to which the United States would be liable for
payments equilibrium) without having to impose trade restrictions financing the post-war adjustments of other countries. The United
to, say, reduce imports. States also wanted the international institution to have the power
These objectives were seems promising and there were no to require deficit countries to adopt policies that would restore
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17 Direction of development
harm in doing so, but there were a large number of intricacies balance of payments equilibrium.
behind the functions and objectives of such institution. It can be These concerns were reflected in White’s proposal for an
understood by looking back in history and circumstances of international organization called the Stabilization Fund (SF). To
establishment of World Bank and other BWIs. address the liability concern, the SF plan, unlike the ICU proposal,
Although the conference’s objectives formally mentioned required members to contribute their own currencies and gold to
“development,” relatively little time was devoted to discussing the the Fund.
plight of “developing countries.” Instead, the participants—the Rather than borrowing directly from other countries (the ICU
United States and the United Kingdom in particular—focused on plan), deficit countries would have to obtain the currencies they
promoting currency stability, devising a system of international needed from a fund established and operated by the SF.
payments, and organizing the economic reconstruction of Europe.
Each member country’s contribution would reflect their
Most of the discussions related to figuring out how the IMF would
relative economic strength. The U.S. contribution would be limited
to just under $3.5 billion, far less than its liability under Keynes’ not their primary concern. Preparations for creating the IMF had
proposal. been underway for close to five years. There had been preliminary
The United States’ other main concern—requiring countries drafts for the World Bank charter, but they had not been subject to
to adopt sound economic policies—was reflected in a proposed extensive discussion. In June 1944, just prior to the Bretton Woods
rule that would require countries to comply with conditions set forth conference, a number of countries met in Atlantic City, U.S.A., to
by the SF in exchange for accessing the pool of currencies. This prepare an agenda for the conference. There, the United Kingdom
conditionality approach was intended to create longer-term stability submitted the “boat draft”—the document was drafted on the Queen
by promulgating economic and monetary policies that would help Mary—which became the basis for discussion at the Bretton Woods
prevent future crises. conference.
It was obvious to everyone the IMF would not be created At the conference the main point of contention was whether
without the approval of the United States and the United Kingdom. “development” or reconstruction would be the World Bank’s priority.
Both countries faced major challenges at home. The U.S. The European nations were particularly interested in World Bank
negotiators knew the U.S. Congress would not vote in favor of the assistance for post-war reconstruction. The Soviet delegation
ICU plan because elements of the plan were so unfamiliar to them, emphasized, for example, that the main purpose of the World Bank
and because of their perception that the United States, as creditor, was to assist in the reconstruction of infrastructure and the
would be at a disadvantage. revitalization of European economies destroyed by the war The
delegations from developing countries were more interested in the
On the U.K. side, the British Parliament and public were not
formation of the World Bank than the IMF. Mexico proposed
prepared to accept a plan based on a fixed exchange rate system
language for the W orld Bank’s charter that would make
that would completely deprive the nation of its sovereign right to
development a priority. The proposal, not surprisingly, failed.
control its monetary policy in order to protect its domestic economy.
However, developing nations did succeed in introducing the
They wanted the power to change the exchange rate; they wanted
language found in Art. III, Section 1(a) which states the Bank’s
to be able to manage the domestic economy because they feared
facilities would be used with “equitable consideration to projects
the sterling was going to be very weak and require the government’s
for development and projects for reconstruction alike.”
protection.
The USA has been and still is the dominating power of the
A series of compromises led to the creation of an international
Bretton Woods system. After World War II the United States was
organization, the International Monetary Fund, which closely
the country with the biggest economic potential. The U.S. dollar
resembled the White plan. Given the U.K.’s concerns, the exchange
was the currency with the most purchasing power and it was the
rate system allowed countries to make a ten percent modification
only currency that was backed by gold. Additionally, all European
of the exchange rate. A larger change required IMF approval,
nations that had been involved in World War II were highly in debt
18 Direction of development

19 Direction of development
although if the change was to correct a “fundamental
and transferred large amounts of gold into the United States, a
disequilibrium,” then the IMF had to approve. In addition, White’s
fact that contributed to the supremacy of the USA. Thus, the U.S.
proposal to tie lending to economic policy reform was dropped in
dollar was strongly appreciated in the rest of the world and therefore
the compromise.
became the key currency of the Bretton Woods system. The
However, White’s approach was ultimately vindicated when headquarters of the two main institutions (the IMF and the World
the IMF adopted the conditionality practice in the 1950’s.(Footnotes) Bank) are situated in Washington D.C. The dominant role of the
The Idea of World Bank (IBRD): USA already became apparent when the American ideas of the
Today the World Bank is at the center of many conversations Bretton Woods system gained more acceptance than those of
regarding international finance and development. But at the Bretton Great Britain. The plans of the British economist John Maynard
Woods Conference, creating the World Bank was an afterthought— Keynes were rejected and the model of the American economist
and even when the participants did focus on it, “development” was White was favoured. Despite “Keynes’s part in constructing the
Bretton Woods system, [...] his vain struggle, over five wartime In order to build the economies of the developing nations,
missions to Washington, to preserve Britain’s financial the World Bank engaged in project lending. The aim of the early
independence from the United States”1 the Bretton Woods system projects was to increase the nations’ abilities to sustain economic
is dominated by the USA. development through generating income from projects. The only
Those who attended the Bretton Woods Conference in New way to do this was to build up the resources necessary for economic
Hampshire wanted to establish a monetary system that would growth. Early World Bank lending to developing nations stressed
prevent the repetition of the chaos during the interwar period (1918- the development of infrastructure, industry, and agriculture. For
1939), which was marked by high inflation, restrictions on instance, it was important to develop electric power plants and
international trade and payments, speculation in the foreign roads before manufacturing factories could open and before light
exchange market, sharp movements in central banks’ foreign and heavy industry could be developed. None of these economic
reserves, wildly fluctuating exchange rate movements, gold activities could develop without electric power. Without good roads,
shortages, and sharp drops in economic activity (deflation). To no investor would want to do
accomplish stability and economic growth, the founders of the IMF business with a country because
there was no way to transport Unfortunately, many of the ex-
agreed upon a “gold exchange standard.” The reference to gold is
products. Thus, the World Bank colonies had been used by the
important, so let’s review a bit of history before we explain the
project lending was intended to colonial powers as sources of raw
Bretton Woods System in more detail. The system agreed upon at
foster a welcoming environment materials and as markets for
Bretton Woods was related to the gold standard period between
for the factors that lead to industrial and manufactured
1870 and 1914. Many hoped the BWIs would restore the perceived
economic growth. The post- goods. Few of these new
order of the gold-standard system, minus the standard’s problems.
colonial push to develop did countries, therefore, had the
That international monetary system required that each unit of a
result in higher rates of growth. infrastructure and industrial
country’s currency represent a certain weight of gold—i.e., central
Many developing countries power that would sustain
banks were required to keep an “official parity” between the
witnessed increases in per capita economic development.
country’s currency and gold. Maintaining the official parity required
central banks to keep adequate stocks of gold as “reserves.”2 income (total income in a country
divided by the number of people) and gross national product (the
It was quite obvious during the early days of the World Bank
value of goods and services produced and sold in a given time
that the reconstruction of Europe would take priority over
period), but most of the increases in income were concentrated in
development. But, in actuality, the World Bank made only a few
sectors directly involved in what became a state-led process of
loans to Europe. This was due to the U.S. Marshall Plan, which
economic development. Typically, the government sector, those
took over most of the financing for the reconstruction of Europe.
employed in industries, and those who otherwise had special ties
With one of its two main responsibilities gone, the World Bank
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21 Direction of development
to the government or to foreign investors benefited the most.
made many loans to developing countries early on. Within the next
few decades, the number of developing nations grew. In the 1960s Many other people—those not connected to the key
and 1970s, more countries joined the ranks of developing nations sectors—did not benefit from this type of development. The push
as newly independent states emerged out of the grips of to develop led to great migrations of people from rural areas to big
colonialism. cities, where many could not find jobs. In addition, development
projects tended to favor industrialization over agricultural
At first, these new nations focused on obtaining and
development, which led to increased poverty in rural areas.
strengthening their sovereignty. Their main focus was the right to
self-determination and recognition of their sovereignty. Many Some policymakers thought that the gap between the rich
countries expected that once this was established, their economies and the poor would eventually shrink with increased economic
would flourish and “development” would follow. growth. They believed that if government policy favored the sectors
1
The Economist, November 25th ,2000
that appeared to be thriving, the whole country would be better off.
2
Sandra Blanco & Enrique Carrasco, The Functions of the IMF & the World Bank
In other words, the increased wealth generated from development BOX-1
would “trickle down” to the poorer sectors of society.1
The World Bank
Initially, till 1968 the World Bank mainly lent money, following The World Bank provides over $24 billion in assistance to
fiscal conservatism. Loan applications were very carefully developing and transition countries every year. The Bank’s projects
screened. The plan of action followed at the onset was to establish and policies affect the lives and livelihoods of billions of people
the World Bank as an institution that was designed for investment worldwide - sometimes for the better, but very often in controversial
as well as providing loans. Under the chairmanship of John McCloy, and problematic ways.
France was the first country to receive World Bank aid, over the The World Bank was originally established to support
rejection of Chile and Poland. The $250 million dollar loan was reconstruction in Europe after World War II, but has since reframed
forwarded under strict repayment conditions. In time, the emphasis its mission and expanded its operations both geographically and
for suitability was shifted and a number of non-European countries substantively. Today, the Bank’s mission is to reduce poverty. It has
were forwarded aid, on presumption and calculation that the over 184 member countries and provides over $24 billion annually for
borrowing nation had the capacity to repay the loan in good time. activities ranging from agriculture to trade policy, from health and
Loans were forwarded to under-developed and developing nations education to energy and mining. The World Bank provides funding
to fund development of transportation systems and power plants. for bricks-and-mortar projects, as well to promote economic and policy
prescriptions it believes will promote economic growth. For example,
Later on, the focus shifted on poverty alleviation and enabling part of the over $300 million the Bank is currently providing the West
nations to help their people benefit from access to basic needs. African country of Niger funds health programs addressing HIV/AIDS
The loan amount and number of loans increased as the funds were and irrigation. However, the Bank also promotes more controversial
made available to also address infrastructural requirements and projects in the country, like privatization of state enterprises.
social services. Robert McNamara, the World Bank president in The World Bank is not a bank in the common sense of the
1968 is credited with the implementation of a new technocratic word. A single person cannot open an account or ask for a loan. Rather,
management of funds. McNamara made World Bank funds the Bank provides loans, grants and technical assistance to countries
available for building utilities and schools, hospitals, agricultural and the private sector to reduce poverty in developing and transition
reforms and to improve literacy rates. Investigations prior to the countries.
loan sanctions not only enabled the loan amounts to be forwarded The World Bank Group is actually comprised of five separate
quickly, but also increased loan volume. The bond market was arms. Two of those arms - the International Bank for Reconstruction
used to increase capital. Through the 1980s, the World Bank focus and Development (IBRD) and the International Development
was on structural adjustment and streamlining the economies of Association (IDA) work primarily with governments and together are
commonly known as “the World Bank”. Two other branches - the
several developing countries.
International Finance Corporation (IFC) and Multilateral Investment
Today, the World Bank integrates its lending practices to
22 Direction of development

23 Direction of development
Guarantee Agency (MIGA) - directly support private businesses
meet environmental and infrastructural requirements, the world investing in developing countries. The fifth arm is the International
over. The new ‘green’ focus has made capital available to a number Center for Settlement of Investment Disputes (ICSID), which arbitrates
of developing and under-developed nations to improve exports, disagreements between foreign investors and governments. This
attain economic equanimity and at the same time guarantee citizens webpage outlines key features of the two arms that are now collectively
upgraded utilities and services. referred to as the World Bank: IBRD and IDA
Conceived during World War II at Bretton Woods, New
Hampshire, the World Bank initially helped rebuild Europe after emergencies, and post conflict rehabilitation needs that affect
the war. Its first loan of $250 million was to France in 1947 for developing and transition economies.
post-war reconstruction. Reconstruction has remained an important Today’s Bank, however, has sharpened its focus on poverty
focus of the Bank’s work, given the natural disasters, humanitarian reduction as the overarching goal of all its work. It once had a
Sandra Blanco The 1960s and 1970s: The World Bank Attacks Poverty; Developing Coun- homogeneous staff of engineers and financial analysts, based
1

tries Attack the IMF


solely in Washington, D.C. Today, it has a multidisciplinary and replenish the lent funds every three years. The replenishments
diverse staff including economists, public policy experts, sectoral are dependent on timely loan repayment. In case of any upsets in
experts, and social scientists. 40 percent of staff are now based in this arena, automatically the future lending capacity of the Bank is
country offices. affected.
The Bank itself is bigger, broader, and far more complex. It IMF and World Bank:
has become a Group, encompassing five closely associated
The World Bank and the IMF or International Monetary Fund
development institutions: the International Bank for Reconstruction
are both inter-governmental support systems that are dedicated to
and Development (IBRD), the International Development
the improvement of the world’s financial order. Both are directed
Association (IDA), the International Finance Corporation (IFC),
by the member nation governments. Both, the IMF and the World
the Multilateral Investment Guarantee Agency (MIGA), and
Bank have their headquarters in Washington, D.C. The difference
the International Centre for Settlement of Investm ent
lies in the fact that the World Bank is a development institution,
Disputes (ICSID).
while the IMF functions as a cooperative institution. While the former
During the 1980s, the Bank was pushed in many directions: looks into loan requisites by under-developed and developing
early in the decade, the Bank was brought face to face with nations, the latter handles payments, repayments and receipts.
macroeconomic and debt rescheduling issues; later in the decade,
World Bank offers two types of loans: investment and
social and environmental issues assumed center stage, and an
development policy. While investment loans are those that are
increasingly vocal civil society accused the Bank of not observing
forwarded to support economic and social development,
its own policies in some high profile projects. To address concerns
development policy loans are offered as quick finance to support
about the quality of Bank operations, the Wapenhans Report was
institutional reforms to reduce third world debt. The Bank provides
released and soon after, steps toward reform were taken, including
analytical services for economic and social infrastructural
the creation of an Inspection Panel to investigate claims against
improvements. It also encourages innovation and cooperation
the Bank. However, criticism increased, reaching a peak in 1994
between local stakeholders to generate:
at the Annual Meetings in Madrid.
 Debt relief in the case of very poor countries.
Since then, the Bank Group has made much progress. All
 Development of sanitation and water supply.
five institutions have been working - separately and in collaboration
- to improve internal efficiency and external effectiveness. Clients  Support immunization programs during epidemics.

report to be broadly pleased with the changes they see in Bank  Create ‘green’ initiatives.
Group service levels, commitment, deliveries, and quality. More The World Bank mainly lends to governments, although
than ever before, the Bank is playing an important role in the global certain Bank facilities can also provide direct support to private
policy arena. It has effectively engaged with partners and clients in
24 Direction of development

25 Direction of development
businesses and to non-profit organisations. Middle-income
complex emergencies from post-conflict work in Bosnia to post- countries (usually countries with per capita incomes of between
crisis assistance in East Asia to post-hurricane clean-up in central US$1,506 and US$5,445) and poorer countries termed as
America to post-earthquake support in Turkey and in Kosovo and “creditworthy” borrow from the IBRD, while the poorest countries
East Timor. Notwithstanding these considerable progress, the Bank (with per capita incomes of less than US$1095) borrow from
Group’s agenda is not yet complete, nor can it ever be, while the the IDA. Loans granted by IDA are interest-free but borrowers are
challenges of development continue to grow. required to pay a fee of less than one per cent of the loan to cover
The World Bank maintains funds or capital from investments administrative costs. The IFC provides project financing for private
made by in various operations by subsequent investment in the sector projects in developing countries through loans and equity
world financial market. This subjects the investment made to finance by mobilising capital in international financial markets. Forty
fluctuations and restrain on lending activities. Majority of the World per cent of the IFC’s investments are in the financial sector.
Bank funds are got from forty donor countries. These nations MIGA provides political risk insurance or guarantees to private
investors and lenders to encourage foreign direct investment (FDI) bilateral and multilateral donor organizations, nongovernmental
into developing countries. organizations (NGOs) and the most important the private sector.
The World Bank in India: The Bank’s method of operation is not to implement “World Bank
projects,” but to provide financing and advice for projects. The World
India was among the 17 original participants of the 1944 Bank has developed an action plan known as the India
Bretton Woods conference which conceived the idea of the Country Strategy (CAS) which describes what kind of support and
International Bank for Reconstruction and Development (IBRD)— how much could be provided to the country over a period of
more commonly known today as the “World Bank”. In fact, it was around four years. The CAS directly supports the government’s
the India delegation which first suggested the name IBRD. The five-year plan and focuses on strengthening the enabling
Bank’s New Delhi office, established in 1957, is the oldest environment for development and sustainable growth and
continuously functioning World Bank country office. supporting critical interventions of special benefit to the poor and
The World Bank does not operate alone. In India, the Bank disadvantaged. The World Bank also produces studies and reports
works with multiple development partners: the government, other based upon its own analysis of a given issue. Topics of research
come from the Bank’s Country Strategy. Additional studies include
BOX-2 reviews of economic policies (Country Economic Memoranda),
The IFC, MIGA and ICSID Help Mobilize the Private Sector. fiscal spending (Public Expenditure Review), environmental
The International Finance Corporation (IFC), formed in 1956, reviews (Environmental Action Plan), and other specific topics.
promotes private sector investment in poor countries that would India receives roughly half of its World Bank loans interest
otherwise not easily attract private investment. It does this by providing free for other loans and credits it has to pay regular interest rates
long-term market-priced loans and equity financing for private sector of W B. These are provided by the Bank’s International
projects. The IFC’s participation in a project acts as a seal of approval, Development Association. Even grants, credits and loans provided
encouraging other private investors to become involved.
at zero interest have costs with a 0.75 percent finance charge. The
Established in 1988, the Multilateral Investment Guarantee remaining half of World Bank loans to India are provided by the
Agency (MIGA) is the most recent addition to the World Bank Group. International Bank for Reconstruction and Development, another
MIGA is an investment insurance agency that encourages foreign direct
W orld Bank agency which provides loans at low interest
investment in developing nations. It does this by providing guarantees
against political (noncommercial) risks. In this way, investors are more
rates. Countries that borrow from the IBRD have more time to
willing to invest in countries that may not be politically stable. repay than if they borrowed from a commercial bank—15 to 20
years with a three-to-five-year grace period before the repayment
The International Center for Settlement of Investment Disputes
(ICSID) was established by treaty in 1966 in order to provide a forum of principal begins, but low interest rates has other cost e.g. strong
for arbitration or mediation of disputes between foreign investors and policy interferences.
26 Direction of development

27 Direction of development
their host countries. Its purpose is to promote increased flows of Since 1991, the so called inception of liberalization period
international investment by providing a forum outside the host state India is blindly following every policy direction in all spheres of
for settlement of investment disputes. Parties cannot be forced to use economic activities. Gradually it remains the Bank’s largest single
ICSID conciliation and arbitration services. But once they have borrower. WBs lending to the India touched $2.9 billion in FY 2005
consented to arbitration under the ICSID Convention, neither can – more than double the amount lent a year earlier.
withdraw unilaterally.
Interestingly, the bulk of new lending has gone to
The work of the World Bank Group is intended to facilitate
foreign private investment in one form or another. Such investment is infrastructure and human development projects, reflecting the
frequently critical to the economies of host countries. However, many potential for corporate interests. Another symbol of the wasted
people and organizations believe the benefits of investment fail to interest is India’s HIV/AIDS control programme of which WB is the
benefit the society as whole. In fact, many believe foreign investment largest financers of India’s National Aids Control Program (NACP)
frequently increases the gap between the poor and the rich. with US$275 million credits, ignoring other major health sector
requirements of nation.
Gradually the WB is encroaching India’s sovereignty as exchange rate) from the International Development Association
nation state and direct extending its credit to state governments. A (IDA).
key focus of its credit to state government has been fiscal reforms It is said that the strategy is closely aligned with the
of state governments. There are many other number of examples Government of India’s own development priorities expressed in
where WB dictates its agenda e.g. for more than 50 years, World the Eleventh Five Year Plan i.e. ensuring participation of private
Bank assistance to India’s energy sector has covered oil and gas, sector. Under the strategy, the Bank will use lending, dialogue,
coal, power projects and alternative sources of energy, because analytical work, all with engagement of the private sector to achieve
American corporate has deep interest in this sector. its goals.
The World Bank’s Country Strategy (CAS) for India for 2009- World Bank suggests that for India’s rapid and sustained
2012 focuses on fast-track development of infrastructure. The growth, major investments in power, transport, water, and urban
strategy envisages a total proposed lending program of US$14 development are important. Inadequate power supply remains a
billion, for the next three years, of which US$9.6 billion is from the critical constraint to growth; while GDP grew at an average of about
International Bank for Reconstruction and Development (IBRD) 8% a year over the past five years, electricity generation only grew
and US$4.4 billion (SDR 2.982 billion equivalents at the current at an average of 4.9% per year. The national and state highway
networks have not kept pace with the tremendous growth in demand
for road transport: only about 30% of state highways are two-lane
BOX-3 The Bank-India Relations
and more than 50% are in poor condition. Inadequate urban
India’s involvement with the World Bank dates back to its
infrastructure is hampering the expansion of growth centers. While
earliest days. India was one of the 17 countries which met in Atlantic
the Eleventh Plan foresees a major role for private sector
City, USA in June 1944 to prepare the agenda for the Bretton Woods
conference, and one of the 44 countries which signed the final involvement in infrastructure development through PPPs, these
Agreement that established the Bank. In fact, the name “International may not materialize to the extent hoped for in the aftermath of the
Bank for Reconstruction and Development” [IBRD] was first global financial crisis, therefore the World Bank specially focuses
suggested by India to the drafting committee. The Indian delegation on infrastructure investment in its new strategy, including on
was led by Sir Jeremy Raisman, Finance Member of the Government strengthening the capacity of government agencies to design and
of India and included Sir C. D. Deshmukh (Governor of the Reserve manage public-private partnerships (PPPs). In other words only
Bank of India, later to become India’s Finance Minister), Sir Theodore public-private partnerships (PPPs) are the answer of all
Gregory (the first Economic Advisor to the Government of India), Sir development troubles.
R.K. Shanmukhan Chetty (later independent India’s first Finance
Minister), Mr. A.D. Shroff (one of the architects of the Bombay Plan) Agriculture is another sector having vast potential for this
and Mr B.K. Madan (later India’s Executive Director in IMF).The Bank PPP model. Low agricultural productivity is keeping some 60
percent of India’s population behind. Shortages of basic rural
28 Direction of development

29 Direction of development
lending to India started in 1949, when the first loan of $34 million
was approved for the Indian Railways. The first decade of the Bank’s infrastructure - from roads to electrification - are hindering the
lending to India (1949 - 1959) saw just about 20 loans for a total growth of off-farm activities. No doubt, agricultural growth has been
amount of $611 million. During the years 1960-69, overall lending to faster over the past five years (4.7% per year)- facilitated by very
India from the Bank rose to $1.8 billion, about three times the level good monsoons, greater production of high-value fruits, vegetables,
in the previous decade. Between 1970-79, there was a large increase and dairy products, an increase in the minimum support price for
in the absolute volume of IDA lending and the IDA share in total grains, and the sudden increase in global prices for agricultural
Bank assistance reached a high of 80% in this decade. However, in
products. According to bank, sustaining this level of performance
the 1980s, India’s share in total IDA lending declined to 25% and
over the longer term will be difficult without addressing several
was updated by the more expensive WB lending. The volume of the
WB lending rose to $14.7 billion during 1980-89, almost 10 times policy and structural constraints, including a myriad of restrictions,
the level of $1.5 billion in the previous decade. (Source: http:// subsidies, support prices, sector governance issues, as well as
www.ieo.org/world-c2-p1.html) the tiny size of landholdings and years of underinvestment. In this
radiance the World Bank to places special emphasis on agricultural India’s Debt Obligation and the Cost of Borrowing:
development in its new strategy. The WDR of 2008 is evident of The W orld Bank’s two closely affiliated entities—
their intension. This practice is extending to other natural resources. the International Bank for Reconstruction and Development
The WB suggest that India is highly vulnerable to climate change; (IBRD) and theInternational Development Association (IDA)—
cyclones, floods and droughts are happening with increasing provide low interest loans (credits) and grants to countries that
frequency, and the Himalayan glaciers that feed India’s largest rivers have unfavorable or no access to international credit markets. The
show clear signs of retreat. Further, most environmental indicators IBRD is market-based, and uses their credit rating to pass the low
suggest that growth is extracting an increasing toll on the country’s interest it pay for money on to borrowers—developing countries.
natural resources - water, land, forests, soils and biodiversity - and
IBRD lending to developing countries is primarily financed
leaving a larger pollution footprint. Indeed, climate change will
by selling AAA-rated bonds in the world’s financial markets. While
impact India first and foremost through its water resources.
IBRD earns a small margin
Therefore, India will need to better manage these resources
on this lending, the greater The The World Bank and IFC are
(particularly water). No Indian city provides water 24/7, only half
proportion of its income collaborating to bring India cutting-edge
the population has access to safe drinking water, and less than a
comes from lending out its expertise to deal with emerging issues in
third has access to sanitation. Public services fall short largely
own capital. This capital Public-Private Partnerships (PPPs),
because they have little or no accountability to the ultimate client,
consists of reserves built up tailored to India’s needs. While this work
and outdated management systems are unable to provide the
over the years and money has so far been the strongest in
information needed for decision-making. These issues are infrastructure - power transmission,
paid in from the Bank’s 185
particularly acute in centrally sponsored schemes which are roads, irrigation and rural infrastructure,
member country
designed and funded by the central government but implemented urban development - it will now be
shareholders. IBRD’s
by the states and lower echelons of government. Given the extended to agribusiness, health and
income also pays for World
importance of these schemes, systemic improvements in design education, and renewable energy. The
Bank operating expenses
and governance are crucial to get results from public spending. Bank and IFC are also working together
and has contributed to IDA on long-term finance: through the
Therefore The Bank is focusing on increasing accountability to
and debt relief. IDA is the proposed India Infrastructure Finance Co.
citizens (read corporatization of essential services), decentralizing
world’s largest source of Ltd. Project (IIFCL). Undoubtly this
responsibilities, and enhancing private sector participation in the
interest-free loans and assistance are on purely professional
delivery of these services.
grant assistance to the conditions like a commercial bank lends
India’s seven low-income states - Bihar, Chhattisgarh, poorest countries. IDA’s to its clients
Jharkhand, Madhya Pradesh, Orissa, Rajasthan, and Uttar Pradesh funds are replenished
- which are home to more than half of India’s population, are softest every three years by 40 donor countries. Additional funds are
30 Direction of development

31 Direction of development
target of WB reform policies. The new strategy devotes more regenerated through repayments of loan principal on 35-to-40-year,
resources (read more guided credit and loans) to engaging in these no-interest loans, which are then available for re-lending. IDA
states. Intensive technical assistance will be provided to help these accounts for more than 40% of our lending.
states develop their administrative capacity. Technical and advisory
Through the IBRD and IDA, the WB offer two basic types of
services are the major part of bank lending to these states.
loans and credits: investment operations and development policy
The assistance to other states such as Andhra Pradesh, operations. Countries use investment operations for goods, works
Karnataka, Punjab, Tamil Nadu, Haryana, Gujarat, and Maharashtra and services in support of economic and social development
is costlier, where bank is helping to forge the institutions needed in projects in a broad range of economic and social sectors.
these middle income states. Lending to these states are in the form Development policy operations (formerly known as adjustment
of comparatively high priced IBRD loans, with the International Fi- loans) provide quick-disbursing financing to support a country’s
nance Corporation (IFC) – the Bank’s private sector arm – provid- policy and institutional reforms. Each borrower’s project proposal
ing support for private sector clients.
is assessed to ensure that the project is economically, financially,  Combat the HIV/AIDS pandemic
socially and environmentally sound. During loan negotiations,  Support civil society organizations
the Bank and borrower agree on the development objectives,  Create initiatives to cut the emission of greenhouse gases
outputs, performance indicators and implementation plan, as well
Interestingly and incidentally these are the areas where
as a loan disbursement schedule. While we supervise the
private corporate has strong interests.
implementation of each loan and evaluate its results, the borrower
implements the project or program according to the agreed terms. India is one of the major clients of WB. The World Bank
As more than 30% of our staff is based in over 100 country offices offers two basic types of loans: investment loans for goods, work
worldwide, three-fourths of outstanding loans are managed by and services to support economic and social development projects
country directors located away from the World Bank offices in in a broad range of sectors; and adjustment loans to support policy
Washington. and institutional reforms. During loan negotiations, the World Bank
agrees with the borrowing country on the development objective
IDA long term loans (credits) are interest free but do carry
of the project or program, outputs, performance indicators (to
a small service charge of 0.75 percent on funds paid out. IDA
measure the impact and success of the project) and a plan to put
commitment fees range from zero to 0.5 percent on undisbursed
it all into practice. Once a loan is approved and becomes effective,
credit balances. For FY09 commitment fees have been set at
the borrower puts the project or program into practice according to
0.0 percent. For complete information about IBRD financial
the terms agreed with the World Bank. The World Bank supervises
products, services, lending rates and charges, please visit
how each loan is used and evaluate the results. All loans are
the World Bank Treasury. Treasury is at the heart of IBRD’s
governed by operational policies, which make sure that operations
borrowing and lending operations and also performs treasury
are economically, financially, socially and environmentally sound.
functions for other members of the World Bank Group.
In 2005, India’s annual borrowing from the World Bank for
Donor governments and a broad array of private and public
new projects was 0.45% of GDP. Total outstanding debt is around
institutions make deposits in Trust funds that are housed at the
$30 per capita. Both the level and the composition (IBRD &. IDA)
World Bank. These donor resources are leveraged for a broad
of India’s debt to World Bank have remained largely unchanged
range of development initiatives. The initiatives vary significantly
between 1995 and 2005. However, as a percentage of GDP, the
in size and complexity, ranging from multibillion dollar
level of debt has declined significantly.
arrangements—such as Carbon Finance; the Global Environment
Facility; the Heavily Indebted Poor Countries Initiative; and the
TABLE-1 India’s Current Debt Obligation
Global Fund to Fight AIDS, Tuberculosis, and Malaria—to much
smaller and simpler freestanding ones. The Bank also mobilizes Year India’s World Total Debt IBRD IDA
external resources for IDA concessionary financing and grants, Annual Bank’s Outstanding (In US (In US
32 Direction of development

33 Direction of development
as well as funds for non-lending technical assistance and advisory Public Annual to World $ bill) $ bill)
activities to meet the special needs of developing countries, and Expenditure Lending Bank
for co-financing of projects and programs. Direct World to India
Bank grants to civil society organizations emphasize broad-based (US$ bill.) (US $ bill.) (In US $ bill)
stakeholder participation in development, and aim to strengthen 1995 85.1 2.1 29 5.5 23
the voice and influence of poor and marginalized groups in the
development process. IDA grants—which are either funded 2005 215.1 2.9 30 6.0 24
directly or managed through partnerships—have been used to:
Note: A comprehensive list of India’s debt obligation can be seen in
 Relieve the debt burden of heavily indebted poor countries Annexure-1
 Improve sanitation and water supplies The said advantage of borrowing from the World Bank is
 Support vaccination and immunization programs to reduce the low cost and stable financing it provides with longer maturity
the incidence of communicable diseases like malaria
periods that better match a country like India’s investment needs. to increase their development spending on basic social services
Financing through the International Development Association (IDA), such as education and health, safety nets for the poor, as well as
the Bank’s concessional lending arm, is provided for 0.75% p.a., for building critical investments in basic infrastructure. Lend to states
repayable over a period of 35 years, inclusive of a 10 year grace in India that are relatively poor or otherwise disadvantaged. These
period. When combined with IDA financing, the cost of borrowing states often have large fiscal burdens and need to create greater
on commercial terms from the more market-based IBRD works fiscal space for more effective spending on development
out some costlier for India. Broadly, IDA credits support projects programs. To be eligible for DPL financing, state governments
and programs in lower income countries to improve health and need to have effective policies and programs in place to meet their
education, as well as the development of rural infrastructure and development priorities. They must also demonstrate their ability to
livelihoods. In India, World Bank projects often have a blend of address issues of inclusive growth by improving their basic systems
IBRD and IDA funding. For example, in FY08, out of new Bank of governance with greater transparency and accountability to their
lending of US$ 2.7 billion, US$ 1.4 billion was from IDA, and US$ people. DPLs support state governments in India to generate
1.3 billion from the IBRD. For the Government of India, the cost of greater employment opportunities for their people. State
borrowing from the World Bank is: governments frequently find that the biggest obstacle to generating
new jobs is the regulatory burden imposed on private enterprises
TABLE-2
which hinders new investment. These regulations mostly end up
Cost of Borrowing from World Bank for India1 hurting small businesses and farmers and implicitly supporting
Cost of Borrowing Cost of Average combined larger businesses that can cope more easily with the costs of such
from IDA Borrowing cost of borrowing burdensome regulations. DPLs therefore support state
(in SDR #) from IBRD(in US$) from IBRD and IDA governments in their efforts to encourage more open and
(35-year maturity (20-year maturity competitive environments and polices, such as those that remove
including 10 year including 5 year local monopolistic practices which hurt farmers and small
grace period) grace period) producers.
0.80% p.a.* Libor flat or 1.63% p.a. * Where relevant, DPLs support state governments in the
3.41% p.a.*i development of policies and programs that encourage greater
inclusion and protect the environment. State governments may
*: Assuming 5-year disbursement profile and based on seek to address these issues in different ways, such as through
Forward London Inter-Bank Offer Rate (LIBOR) as of January 5, regulations that: strengthen indigenous peoples’ rights, conserve
2009. IBRD cost is based on variable spread for rate-setting from forestry resources, provide for more equitable property rights, and
July 1, 2008 to December 31, 2008. those that strengthen environmental protection and benefits to local
34 Direction of development

35 Direction of development
# : Special Drawing Rights. 1 SDR = 1.519 USD as residents affected by mining, hydropower or other issues. DPLs
on January 5, 2009. More details on IDA financial terms follow the guidelines of the Government of India, especially to
@: Assuming borrowing in the proportion of 40% from IBRD ensure that state governments’ policies and programs are able to
and 60% from IDA return them to a path of medium-term fiscal sustainability.
i: Interesting fact here is that in most of developed and But in fact, the DPL reduce government spending on
developing countries the commercial rate of interest for business development programs and priorities. Advocate or support any form
purposes to corporate is less than 3 percent. Whereas, the IBRD of forced privatizations and lay-offs of public sector employees,
charges 3.41 % p.a. from India and other developing countries for since these are counter-productive. Instead, they support programs
development assistance. and policies that arrive at ways of protecting workers and jobs,
A large amount of loan to India is granted as Development and those that generate more jobs by promoting new avenues of
Program Landings (DPL). DPL lending is aimed at helping states growth in the rural, agricultural and urban sectors.
1
For more details on IBRD products, see: http://treasury.worldbank.org/index.html.
DPLs to state governments in India do not involve interest In the past several years, the Bank’s lending practices have
rate issues, since state governments do not have purview over made a marked shift from conditionality-based lending to country’s
such broader financial sector matters. They do however support policy and program priorities however these program and polices
state governments where they wish to put state rural credit and itself are based on WB polices. Today, World Bank lending is
cooperative institutions on a sound footing so that farmers can governed by a set of terms and operational guidelines called the
access credit more easily. Similarly, DPLs to state governments Safeguard Policies ensuring that Bank projects success. Among
do not involve import tariff, foreign ownership, or export orientation other issues, these Safeguard Policies cover the protection of the
issues, as they do not have purview over these matters. environment, cultural property, natural habitats, forests, indigenous
peoples, dam safety, and international waterways, and promote
BOX-4
the fair and equitable rehabilitation of people if Bank projects affect
IFC and MIGA: Supporting the private sector them, which can be done only on bank’s guideline. The World Bank
While the World Bank (IBRD and IDA) provides credit and also lays down various procurement and financial management
non-lending assistance to governments, the IFC provides loans norms to ensure accountability (to whom??) in the procurement of
and equity financing, advice and technical services to the private goods and services under a project.
sector. Its stated mission is “to promote sustainable private sector
The W orld Bank clearly state that it believes that
investment in developing countries, helping to reduce poverty and
improve people’s lives.” Although the IFC is a public entity, its development needs and priorities vary widely between countries
clientele consists of transnational, national and local companies. depending on a variety of factors, and that there is no one-size-
The operations of these pri-vate enterprises often privilege fits-all model of development. Privatization is only best options
profitability over sustainability and “business confidentiality” over available. India today, like many developing countries, is facing a
the public’s right to know. As a result, it is frequently difficult for the large and growing shortfall in the provision of electricity, water,
public to measure or influence the development impacts of the transportation, schools, hospitals, etc. To meet the rapidly growing
IFC’s activities.
needs of the people, the World Bank believes that the private
The IFC is more influential than numbers alone suggest. sectors have important roles to play.
Through its lending and advisory activities, it mobilizes funds from
other lenders. In recent years, the IFC has also exerted an Apparently The World Bank’s program in India is guided by
increasing influence on the lending standards followed by other the country’s own development agenda, however country’s
international financiers (such as private banks), particularly when development agenda itself is govern by W orld Bank’s
they operate in countries without strong standards. agenda. Within this broad agenda, the World Bank focuses on
MIGA’s stated goal is to help developing countries attract areas where it (read their associate corporate) can contribute the
and retain private investment by providing companies with insur- most. These include primary schooling, healthcare, basic
ance against loss of their assets due to war, expropriation or other infrastructure, rural livelihoods, water supply and sanitation.
36 Direction of development

37 Direction of development
political instability. In addition to offering insurance to private
companies, MIGA mobilizes guarantees from other sources for The World Bank believes that there is no single approach
investors and assists host governments with legal services and that can improve basic services as varied as water, power, health,
strategic advice about investment. MIGA has been criticized for and education. However for these services to improve, especially
not ensuring that local populations and the environment are for the poor, we do believe that greater accountability of service
protected against the risks that investments may pose to them. It providers – whether public or private - is a key element. On its
is active in many “risky” postconflict countries, for example helping part, the government invests a great deal of money and effort to
investors profit in contexts where local populations may not be in
provide basic services to the people. However, in the face of growing
a position to defend their own interests.
demand for services of good quality and the often weak
performance of government service providers, the private sector
Source: Bank Information Center, www.bicusa.org/toolkit pp 2.4. has often stepped in to fill the gap. This has led to the de-facto
privatization of many services. Many times this has taken place in
an ad hoc, unregulated, and inefficient manner, leaving the poor to In case of electricity, the World Bank believes that it is neither
bear the brunt of both poor public and private services. Solutions desirable nor possible to have a single solution for improving the
that are suitable for each sector therefore need to be found to delivery of electricity services. Countries will need to leverage skills,
better assure the provision of basic services to the people. Given financial resources and techniques which are available in the public
the large role already played by non-government service providers, and private sectors, and indeed in communities themselves, to
Bank believe that it makes sense to consider how these meet the growing demand for electricity services. As is already
providers could contribute, but with careful consideration of happening, optimal delivery of electricity services will need to be
coverage, cost, quality, and the capacity of government to develop tailored to the existing circumstances and will require a suitable,
and manage different strategies and evolving, form of public, private and community partnership.
Same like India’s needs for investments in infrastructure are Urban Water Supply is another case to privatise for corporate
huge. Government estimates show that an investment of $475 interests; however the World Bank apparently denied to directly
billion is needed to meet the country’s current shortfall. The public recommending the privatization of water supply services in India.
sector alone cannot meet these enorm ous But it suggests that ”in fact, the reality on the ground is that provision
requirements. Therefore, banks suggests like many other of drinking water supply services in India has undergone a de-facto
countries, India too have to turn to the private sector to supplement privatization. Urban residents make their own private provision for
what the public sector can do. The private sector has already shown water by digging tube-wells, adding storage tanks and infrastructure
that it can make a major contribution in areas such as for pumping and purifying water in their homes, as well as buying
telecommunications, ports and roads. bottled drinking water and water from tanker trucks. Residents
In case of education the World Bank does not believe that are paying a high price to augment unreliable, inefficient and unsafe
primary schooling should be privatized, because it may be a huge water as it is currently supplied, and it is the poor who suffer most
burden on private sector to reach in rural areas. Therefore it from the current state of affairs”. Matter of fact is that in absence
suggests that “at the secondary level (Grades 9-12) where the of assured water supply, making self provisions for drinking water
financing and provision of schooling for all children is not the and privatization of water services are completely different things.
government’s sole responsibility, the Bank is of the view that both As it does for other urban services, the World Bank
the public and private sectors need to expand to absorb the recommends that water supply utilities be run in a professional
increasing numbers of students, and improve the access, equity manner, are financially sustainable, and ensure affordable supply
and quality of education provided. The same is true for vocational for those who cannot pay. It recognizes that the public sector must
and higher education”. retain primary responsibility for ensuring reliable, affordable and
In Health Care services the bank’s report suggests that given safe water supply to India’s citizens. For this reason, the World
the already large private sector service delivery taking place in India Bank recommends that the government retains ownership of water
38 Direction of development

39 Direction of development
(quacks etc), the World Bank believes that well designed policies supply infrastructure and regulates water resources. The
to selectively engage private providers can expand the coverage government has a long history of contracting with private sector
and quality of basic health services for the people, especially the firms to design and construct water systems and to provide goods
poor because public financing has been shown be an essential and services (only World Bank expert know this fact??). Hence
element in providing health care to the poor. But governments (?), direct engagement by the government of the private sector to
across the world are often constrained in reaching widely dispersed help improve efficiency, reliability and quality of water supply
poor populations with good quality health services. As a services would be much more effective and affordable than the de
result,India’s health sector is already highly privatized; most health facto privatization that is now the norm in Indian cities.
care services are delivered by private providers, and more than 3/ The World Bank’s support for rural services in India has gone
4 of all health expenditure comes from private sources. Most of through an important evolution over the last decade. Gradually the
this spending goes to private providers. WB is directly interfering in all sphere of economic activities.
While implementing these projects in India and elsewhere, the resettlement (livelihood restoration), and for citizen participation.
Bank has increasingly recognized that local governments play a In the preparation of Bank financed projects, assessments are
critical role in scaling-up and sustaining the delivery of services. made of the borrower’s policies, and measures are put in place to
Drawing on these lessons, the Bank has increasingly focused on fill gaps between the Bank’s policy requirements and the borrower’s
the linkages between service delivery and Panchayati Raj policies. Specific implementation plans as well as institutional and
Institutions (PRIs). For example, in the rural water and sanitation monitoring arrangements are put in place based on these policy
sector, the Bank has adopted a set of rules for sectoral investments frameworks. The policy frameworks and specific implementation
that strengthen ties with PRIs. The design of the plans (e.g. a Resettlement Plan or an Tribal Peoples’ Development
Karnataka, Maharashtra and Kerala rural water supply projects has Plan) are legally binding on the borrower who is responsible for
given Panchayats greater decisions over investments and operating the preparation, implementation, and monitoring of specific
systems under a participatory process. Similarly, in the plans. The Bank’s role is that of reviewing policy frameworks and
Chhattisgarh Rural Poverty project, the infrastructure component plans to ensure that they conform with the Bank’s Safeguard
is being implemented by Panchayats. Policies.
The World Bank’s current Country Strategy goes a step World Bank projects are designed to ensure that Indigenous
further and proposes direct support to Panchayats rather than Peoples receive social and economic benefits that are culturally
relying on indirect links through sectoral delivery systems. If appropriate, and gender and intergenerationally inclusive. In the
livelihood projects can strengthen the ability of communities to Indian context, a Tribal Peoples’ Development Plan is prepared in
organize themselves around the delivery of private goods, the direct consultation with the scheduled tribes inhabiting the project area
strengthening of local governments increases PRI’s capacity to in accordance with the requirements of the Indigenous Peoples’
respond to the demand by communities for local public goods. It policy. Tribal and other vulnerable communities are engaged in
also strengthens the ability of PRIs to support existing sectoral micro-level planning along with other members of the village.
programs in water and sanitation, rural roads, health and Specific Tribal Peoples’ Development Plans are prepared to
education. The predicament in this idea is that direct involvement address the specific needs of tribals and other vulnerable groups.
with PRIs makes them unaccountable to state government of which These are costed and monitored separately. But in practice merely
W B itself a proactive advocate. The Karnataka Panchayat there are any example in which case banks has followed these
Strengthening Project is the first of this new generation of projects policies to avoid the distress of indigenous peoples.
that directly focuses on strengthening the PRI system. The Bank The World Bank, which is one of the world’s largest sources
is now looking at adopting this approach in other States. of funding and knowledge to support governments of member
Another important aspects of WB projects are displacement countries in their efforts to invest in schools and health
of peoples. In principle World Bank projects have social safeguard centers, provide water and electricity, fight disease, and protect the
40 Direction of development

41 Direction of development
policies on Involuntary Resettlement and on Indigenous Peoples. environment. Principally, the World Bank is not a “bank” in the
The first lays down principles and processes to safeguard the common sense. The World Bank is an international organization
interests of those adversely affected by land acquisition and owned by the 184 countries both developed and developing that
displacement on account of Bank projects. The second requires are its members. Since it was set up in 1944 as the International
free, prior, and informed consultation with tribal populations to Bank for Reconstruction and Development. The number of member
ensure that Bank projects deliver social and economic benefits countries increased sharply in the 1950s and 1960s, when many
that are culturally appropriate and inclusive. It also ensures that countries became independent nations. As membership grew and
potentially adverse impacts are either avoided, or when avoidance their needs changed, the World Bank expanded and is currently
is not feasible, that such effects are minimized and mitigated. made up of five different agencies. All support to a borrowing
The Bank’s social safeguard policies define higher standards countries is guided by a single strategy (in the case of Afghanistan
than those found in most countries, including India, in terms of it is the “Transitional Support Strategy”) that the country itself
compensation for land acquisition (at replacement value) and
designs with help from the World Bank and many other donors,
aid groups, and civil society organizations.
While it lends and even manages funds much like a regular
bank, the World Bank is different in many important ways. It is
owned by 184 countries. The financial support and advice the World
Bank provides its member countries are designed to help them fight
poverty. And unlike commercial banks, the World Bank often lends
at little or no interest to countries that are unable to raise money
for development anywhere else.
Countries that borrow from the World Bank also have a much
longer period to repay their loans than commercial banks allow. In
2
some cases, they don’t have to start repaying for ten years.
Basically, the World Bank borrows the money it lends. It has good
credit because if has large, well-managed financial reserves. This
means it can borrow money at low interest rates from capital
markets all over the world and channel it to developing countries,
often at much lower rates of interest than what markets would
charge these countries. Nevertheless, in terms of lending for
development projects, the W B is not different from other
commercial banks. In terms of its policy influence it is more
precarious for any sovereign country.


42 Direction of development

43 Direction of development
Agriculture Development in Uttar Pradesh  A drastic curtail-ment of food subsidy confining the Public
The World Bank Proposal Distribution System(PDS) only to the deserving poor.
Agriculture contributes 21% of India’s GDP, its importance
 The removal of all restrictions on the choice of what to
produce, where to sell etc.
in the country’s economic, social, and political fabric goes well
beyond this indicator. The rural areas are still home to some 72  Freedom of operations for agri-business corporations.
percent of the India’s 1.1 billion people, a large number of whom  Abolition of land ceiling laws.
are poor. Most of the rural poor depend on rain-fed agriculture and The World Bank views on agriculture can be found in two
fragile forests for their livelihoods. The sharp rise in foodgrain recent documents. The World Development Report (WDR) 1986,
production during India’s Green Revolution of the 1970s enabled deals with the general issue of Trade and Pricing in World
the country to achieve self-sufficiency in foodgrains and stave off agriculture. The second volume of the World Bank’s 1991 Country
the threat of famine. Agricultural intensification in the 1970s to 1980s Economic Memorandum for India, sub-titled ’Agriculture-
saw an increased demand for rural labor that raised rural wages Challenges and Opportunities’, is the latest bank document
and, together with declining food prices, reduced rural poverty. specifically dealing with Indian agriculture1.
Sustained, although much slower, agricultural growth in the The document of WDR avers that government interventions
1990s reduced rural poverty to 26.3 percent by 1999/00. Since at all stages of production, consumption and marketing of
then, however, the slowdown in agricultural growth has become a agricultural products and inputs have resulted in greater
major cause for concern. India’s rice yields are one-third of China’s inefficiencies, lower output and incomes. This report is silent on
and about half of those in Vietnam and Indonesia. With the government’s role in providing agricultural infrastructure, reforms
exception of sugarcane, potato and tea, the same is true for most in tenancy or ownership structures. It ignores the glaring fact that
other agricultural commodities. The Government of India places during the colonial period prices were in fact ‘right’ but agricultural
high priority on reducing poverty by raising agricultural productivity. performance was abysmal. The WDR concludes by claiming that
However, bold action from policymakers will be required to shift getting prices right, cutting subsidies and liberalizing world
away from the existing subsidy-based regime that is no longer agricultural trade would make everyone happy and recommends
sustainable, to build a solid foundation for a highly productive, its own adjustment loans and Sectoral Adjustment Lendings
internationally competitive, and diversified agricultural sector. (SECALs).
Sapping Indian Agriculture So far, India has not taken any agricultural SECAL, and
There is a woeful lack of serious discussion and debate progress on the priorities identified by the Bank has also been
among the policy-makers on the adverse impact of liberalization slow. Nevertheless, food and fertilizer subsidies have been the
and globalisation policies on agriculture.The policies imposed by target of the government. The committee on reforming the financial
44 Direction of development

45 Direction of development
the World Bank-IMF have a component directly affecting the system (known as the Narasimham Committee) has recommended
agrarian economy. These policies have the following components: major reductions in the quantum of credit directed towards the
agricultural sector by the public sector banks. Mercifully enough,
 The gradual abolition of input subsidies on fertilizers, Government of India unlike the World Bank, is not touting these
irrigation, electricity, credit etc.
measures as ‘agricultural reform’ but exercises at reducing the
 The removal of trade restrictions on agricultural fiscal deficit and improving the profitability of the financial sector.
commodities so that the domestic prices are not out of
tune with world prices. The Bank’s Prescriptions:
 A unification of prices so that the current system of dual The Bank’s 1991 Country Memo-randum’s recommendations are
markets in food grains and other agricultural commodities as follows :
disappears.  Reducing agriculture subsidies.
1
http://www.ieo.org/world-c7-p1.html
 Regaining control of public expenditure. disincentive to agricultural investment is required, this would be
 Improving the safety net offered by food programs while provided by the implementation of the recommendation of the
restraining costs. Narsimham Committee that loan to priority sectors (including
agriculture) to cut to only 10% of total bank-lending from 40% at
 Initiating credit reforms to prevent the collapse of the
present.
agricultural credit system.
This move is totally ill- conceived. Instead of reducing the
 Ending coercive marketing and trade restrictions.
subsidy element in the raised interest rates, it seeks to cut the
The agricultural SECALs consists of these short term volume of agricultural lending and reduce the reach and coverage
priorities, along with reduced coverage of PDS and the rural banking of the banking system in rural areas. All this will lead to further
network. decline in investments in agriculture as in the last decade1.
Capital spending by the Union government is being slashed Devaluation and partial convertibility of the rupee have made the
especially agriculture related investments. The effective decline in international prices of food much higher in rupee terms—almost
financial transfers to the States will affect their ability to increase 50% since June 1991.
or maintain investments in agriculture, a state subject. If any further
The performance of the agricultural sector is important for
BOX-5 the overall success of government’s economic strategy, since
The Symbiosis between the Bank and Corporats continues to be the largest employer. The boom sectors of the
The ‘symbiosis’ between the bank and corporations is well 80s—chemicals, consumer durables and high-tech services—have
demonstrated in the biotechnology and agrochemical industries. The very little linkages to agriculture. Agricultural raw materials play a
World Bank’s agriculture policies have been practically written by less significant role than industrial inputs. But the importance of
corporations such as Monsanto, Aventis, Novartis and Dow. Even agriculture cannot be wished away. The Government has yet to
as the bank expanded its rhetoric about environmental sustainability announce a national agricultural policy.
in the 1990s, its projects advocated increasing farmers’ access to
agro-chemicals and genetically modified seeds. During this time, The recent policy changes have affected the agricultural
the bank also entered into business partnerships with nearly all prices. The devaluation and partial convertibility of the rupee
leading pesticide and biotechnology companies through a staff (wherein food grain exports and imports are at market rates) have
exchange programme that involved 189 corporations, governments, made the international prices of food much higher in rupee terms
universities and international agencies6. A marketing analyst from (by almost 50% since June 1991), fueling expectations of rising
Aventis (now Bayer CropScience) spent nearly four years in IBRD domestic food prices. Domestic food prices increased by almost
to develop IBRD’s position on agricultural biotechnology and 50% between 1991-93.
strategies to leverage financing through IFC.
As almost all studies of poverty in India have shown a
Novartis’ (now Syngenta’s) head of public affairs spent a year
46 Direction of development

47 Direction of development
combination of rising food prices and decelerating growth is a sure
working on outreach strategies for the W orld Bank’s rural
development unit. Bank officials placed in Novartis and Rhone
prescription for increased poverty. And recent studies (e.g., by the
Poulenc Agro (now part of Bayer) in the late 1990s assisted them International Institute for Applied Systems and Analysis) have shows
with biotechnology regulatory issues and rural development that globalisation of agricultural trade will improve incomes of rich
partnerships. The bank thus adjusted its agricultural strategies to farmers and may increase exports. This not by increasing
satisfy leading biotechnology and agrochemical corporations, which production but prices and reduced consumption. The major
in turn gained access to public policy making in developing consequence will be increased poverty since those most affected
countries. Pro-corporate thinking is deeply embedded in the World adversely will be the poorest groups in the country—landless
Bank. Many of its presidents and senior staff come from the corporate agricultural laborers, marginal farmers and urban unorganized
sector and ‘market solutions’ feature prominently in the bank’s workers—whose main item of consumption is food. The real
strategies for addressing virtually any challenge whether victims, whether of neglecting agricultural investment or, of
deforestation, global warming or food and water scarcity.
1
http://www.ieo.org/world-c7-p1.html
globalisation of agricultural trade under GATT, will be those who tehsils, 823 development blocks, approximately 720 urban local
are already living on the very fringes of survival in India. bodies, 8814 Nayaya Panchayats, 51826 Gram Sabhas and 97134
Uttar Pradesh is the most populous state of India. According revenue villages. The State has a preponderance of small villages,
to the 2001 census, U.P.’s population was a little over 166 million which implies that a large spread of social & economic infrastructure
accounting for 16.4 percent of the country’s population, although requiring more resources. Uttar Pradesh ranks very low even in
the state accounts for only 7.5 percent of the country’s geographical terms of basic household amenities. Only 20 percent of households
area. Hence, U.P. has a very high population density – 689 persons in Uttar Pradesh have electricity connection, 15 percent have
per square kilometer - which is more than twice the national access to safe drinking water; 11 percent have toilet facility; and
average, of 324. U.P.’s population has increased almost three times the public distribution system for food grains reaches only 5 percent
since 1947, the year of India’s independence. It is increasing at of households.
the rate of 2.3 percent per year, up from 2.2 percent during 1981- U.P. is a landlocked state, mainly rural with an economy
91. That is, U.P. is now adding about 3.8 million people per year. that is primarily agrarian. The industrialisation pattern in the state
The number of females is 7.86 crores and that of males is 8.75 is highly skewed with the western region of the state accounting
crores. The male-female ratio is 1000:898. The urban population for most of the industries of the state. The main agricultural crops
is 3.45 crores while 13.15 crore population lives in the rural areas. in the state are wheat, rice, sugarcane, pulses and vegetables.
It is the fourth largest State in terms of geographical area covering The main industries in the state are cement, vegetable oils, textiles,
2.40 lakh sq. kms. and comprising 70 districts, 17 divisions, 298 cotton yarn, sugar, jute, and carpet. The sectoral break-up of the
state’s GSDP in 2002-03 was 32 percent from agriculture, 22
FIGURE 1: DISTRICTS OF UTTAR PRADESH percent from industry, of which merely 11 percent came from
manufacturing, and 41 percent from services. The Gross state
Domestic product (GSDP) of the state at current prices1 was Rs.
235678 Crore and the Gross state Domestic product (GSDP) at
constant price2 was Rs 127560 Crore. The Net State Domestic
Product (NSDP) of the state at Current Prices3 was Rs. 205249
Crore and the Net State Domestic Product at Constant Prices4 Rs.
109768 Crore Per Capita Income of the state at current prices5
stand at Rs.11477.
The net state domestic product of U.P. in 2001 was about 9
percent of India’s total NDP. Per capita NSDP was 5770 rupees,
roughly 40 percent below the average per capita NDP of 9508
48 Direction of development

49 Direction of development
rupees for the same year. In 1999-2000, 31 percent of U.P. residents
lived below poverty line. This poverty ratio was the same for both
rural and urban areas. U.P. is among the most backward states in
India with high levels of poverty and low levels of social and
economic development.
The structure of state income shows that the contribution of
primary sector has declined to 41 in 1991 to only 31.8 percent of

1
in 2004-2005 (as of Feb 2006)
2
ibid, base year are (1993-94)
3
In 2004-05
4
ibid
5
ibid
BOX-6
Broad Characteristics of Kifferent Economic Regions

Percentage of Uttar Pradesh

11.19
17.41

12.55

20.46

14.38

10.43
Total
Eastern Wide alluvial plains with dense rural population (776
Region persons per sqkm): higher proportion of cultivated
land.
Urban

17.44

10.81

18.42

14.36

8.48

5.41
Level riverine plane characterized by fertile alluvial
Central soil: dense population (658 persons per sqkm):
Region lower rural density compared to Eastern region.

Varies from riverine alluvial plain to generally

11.23
17.44

12.62

20.51

14.38

10.61
Rural

uniform and level with slight undulations towards


south: slops from north to south or south to east
Western with reference to alignment of major rivers:
Region economically developed and has larger urban
127312851

106775330

85416598

57329100

41896353

49446230
centres; population density of 765 persons per
Total

sqkm.

Northern part is plain: southern part has gentle


4344112

undulating surface: due to undulating and rugged


2593104

1940647

2622889

1721223
Bundel-
652457
Urban

surface, Bundelkhand plateau has lower population


India

khand
Region concentration (280 persons per sqkm) compared
to other regions.
124719747

102431218

54706211
83475851

41243896

47725007
the state income having 73 percent of the total working force. This
Rural

shows the continued pressure of working population in the primary


sector. The share of secondary sector, on the other hand, has gone
up to 20 percent of the total state income which now employ 9
13400911
22167562

17479887

8245599

4687675

5155312

percent of the total workers in the state. This percentage is the


Total
Uttar Pradesh

lowest among all the major Indian states except Bihar, Madhya
Pradesh and Orissa1. The share of tertiary sector has been more
50 Direction of development

51 Direction of development
impressive from 25 percent in 1970-71 to 37 percent in 1994-95
412762

469594

357440

376551

55323

93043
Urban

and 45.9 percent in 2007-08. It thus shows that the U.P.’s growth
has been more capital intensive than labour intensive, more urban
based than rural based and the shift income from primary to other
sectors is not accompanied by corresponding change in
21754799

12931317

17122444

7869048

4632352

5062269

employment pattern. The undivided Uttar Pradesh attained


Rural

respectable growth in gross state domestic product only during


the period of 1986-87 to 1990-91 with respect to all India
performance.2
Total / Urban /

and Marginal)

and Marginal)

and Marginal)
States/Uts

Labour (Main

Labour (Main

Labour (Main
Agricultural

Agricultural

Agricultural
States\Uts

Cultivators

Cultivators

Cultivators
(Main and

(Main and

(Main and
Marginal)

Marginal)

Marginal)
Female

Female
Rural

Male

Male

1
http://upgov.nic.in/upinfo/up_eco.html,as on November 2nd 2009.
2
Uttar Pradesh Development report, (2007), Vol-1, Macro Economic Analysis, pp 91.
Distinguishing feature of Uttar Pradesh’s economy is its Table-3
regional imbalances. In terms of economic indicators like Contribution of U.P. in Agriculture in Prodction of India
agricultural productivity, infrastructural facilities, industrial growth,
the Uttar Pradesh’s economy can be categories into four regions;
Western, Eastern, Central, and Bundelkhand. The Western Uttar
Pradesh is agriculturally prosperous. It is relatively industrialized Crops India U.P. Contribution* %
and has seen greater degree of urbanisation. At the other end is Total Food Grains 2120.30 441.87 20.84
Bundelkhand with Low agricultural growth, less number of industrial
units, lesser gross value of industrial products marks tout his region Rice 930.80 128.56 13.81
as the least developed in the state. Wheat 718.10 254.98 35.51
There are huge intrastate differences in UP in infrastructure, Jwar 77.90 3.09 3.97
production and productivity of different crops. UP has a land area Bajra 83.50 9.68 11.59
of 240,928 sq. km. after the carving out of Uttaranchal and is Maize 133.00 15.16 11.40
comprised of 72 districts1. Over two-thirds of the state falls in the
Gangetic Plain region, which can be subdivided into the western, Total Pulses 131.90 23.77 18.02
central and eastern areas, due to their differing histories and Gram 52.70 8.17 15.50
economic status2. In 2001, over three quarters of districts were Arhar 23.00 4.56 19.83
located in Eastern and Western U.P. Western U.P. and eastern Lentil 9.30 5.00 53.76
U.P.’s land areas are roughly the same, at 89,589 square km and
Total Oil Seeds 208.00 11.10 5.34
87,294 square km, respectively, and the regions have similar
population sizes as well, with about 58.5 million western residents Ground Nut 72.10 0.90 1.25
and 65.3 million eastern resident. Uttar Pradesh also ranks low Rape & Mustard 50.40 9.18 18.21
on most of the social development indicator inspite of being the Sugar Cane 3001.00 1179.82 39.31
most populous state in the country.
Potato 240.80 95.83 39.80
Uttar Pradesh has widespread poverty and extreme
dependence on agriculture. It is rich in natural resources (land and *: as per total production in 2001-02
water) but has a high population density and declining soil fertility.
It is the third poorest state in India with a per capita income of
US$200. The rural poverty rate is 21.5% representing a total of million hectares geographical area of the state 16.8 million hect-
28.3 million people or 15% of all poor in India. About 80 percent of ares area is actually cultivated. The unirrigated area is 3.98 million
52 Direction of development

53 Direction of development
the people in UP live in the rural areas; and 66% are dependent on hectare. The cropping intensity is 151.36 percent. The state is geo-
agriculture for their livelihood. Agriculture accounts for 38% of graphically located in the most fertile tract of indo-gangetic plains
GSDP3. and has good soils and water availability through rainfall and river
Uttar Pradesh is among important states for the national flow. Consequently, despite of a number of adverse factors the
economy and primarily agrarian in nature. Thus the agriculture state’s agriculture productivity is not very much comparable to the
sector is critical for the state, which contributes about 40 percent all India level.
to the state gross domestic production as against 25 percent at Uttar Pradesh has varied topography as is distinctly demon-
the national level. Agriculture sector engages about 70percent of strated through the 9 agro ecological zones-Tarai, Western Plains,
the population and 65 percent work force in the state. Out of 24.2 Mid-Wester Plains, South-Western Semi-Dry Plains, Bundelkhand,
1
Including recently created Mahamaya Nagar
North-Eastern Plains and Vindhya, witch have significant varia-
2
Sharma, Rita (2002) “Reforms in Agricultural Extension: New Policy Framework,” tions in terms of soil conditions, rain fall, temperature etc. Besides
Economic and Political Weekly, vol. 37, no. 30, pp. 3124-31, July 27.
3
In 2001-02.
the above, the State is divided into 4 economic regions-Eastern, Even after such depressing condition the state has about 16 million
Western, Central and Bundelkhand. These specific regions deter- tonne of surplus foodgrains after meeting its requirements.
mine the state’s potential as well exhibit the spatial characteristics Land Use Pattern in Uttar Pradesh:
and produce a colourful panorama of its wealth and resources.
The land-use pattern of a country at any particular time is
There are perceptible differences in the agricultural re-
determined by the physical, economic & institutional framework
sources, climatic conditions, land use pattern, and development
taken together. In other words, the existing land-use pattern in
of infrastructure, non-agricultural activates and consequently in-
different regions in India has been evolved as the result of the
comes among these regions. Almost all the available arable land
Table-4
has already been brought under cultivation, it is now recognized
Land Use Pattern in Uttar Pradesh
that future growth would largely come from improvements in pro-
ductivity and diversification into the production of high value com- Land use Area (in 000' hectares) Percentage of Reported Area
modities in the farming systems linked to regional specialization
categories 1980-81 1990-91 1999-00 2006-07 1980-81 1990-91 1999-00 2006-07
and sustainable management of resources, especially land and
water. Reported Area 23999 24437 24418 24170 100 100 100 100
Uttar Pradesh is largest producer of wheat in the country Forest 1683 1739 1759 1657 7 7.1 7.2 6.9
contributing about 36 percent of the all India production whereas
UP is second largest producer of rice in contributing about 15 Barren Land 838 726 630 506 3.5 3 2.6 2.1
percent to the national production. The area under these crops is Land under 2195 2333 2446 2729 9.1 9.5 10 11.3
predominantly less than the contribution in terms of production. Non-
Although the state’s contribution in pulses production is second in Agricultural
Use
the country but due to population the state is still deficit. About 45
percent production of lentil in the country is from the U.P. Similarly, Culturable 824 709 565 2729 3.4 2.9 2.3 11.3
in oilseed crops, state is contributing about 18 percent production Waste

of rapeseed mustard. State also contributes about 45 percent Permanent 80 406 403 643 0.3 1.7 1.7 2.7
sugarcane production in the country. The state is largest producer Pasture &
Miscellaneous
of potato about 40 percent and while the contribution of mango
and guava is about 40 and 46 percent respectively, as the state Other Fallow 703 823 671 542 2.9 3.4 2.7 2.2
produces about 10 million tonnes of fruits and 17 million tonnes of
Current Fallow 1128 1110 1027 1284 4.7 4.5 4.2 5.3
vegetables. On the other hand the production of other oilseeds,
fiber crops like cotton, jute and mesta are not of any significance. Net Cropped
54 Direction of development

55 Direction of development
16548 16592 16917 16573 69 67.9 69.3 68.6
Area
The agriculture sector in UP is experiencing problems of
worsening land-man ratio, land degradation and declining soil Cropping 137 141 144 153 - - - -
fertility, water stress, stagnant yields, traditional cropping pattern Intensity
and subsistence-oriented production decision. Public extension
activities at the ground-level are negligible with little consequent action & interaction of various factors, such as the physical
acquisition of new technology or practices by farmers. Post-harvest characteristics of land, the institutional framework, the structure of
processing and management activities are largely absent. other available productive resources (capital, labour, infrastructure
Marketing infrastructure is organized around a few cereal crops, etc.).. Therefore, the present land use pattern can, be considered
pulses and sugarcane and does not cater to perishable and non- to be in some sort of static harmony & adjustment with the other
traditional products, which, nevertheless, hold out substantial main characteristics of the economy of the region. In the dynamic
promise for both income expansion and employment generation. context, keeping in view the natural endowments & the advances
in technology, the overall interests of a country may dictate a certain
BOX-7
modification of or a land increased sharply from 824 thousand ha (3.4 percent) to 2729
change in the existing thousand ha (11.3 percent) another negative indication is estimates
Land Degradation in Uttar Pradesh (UP)
land-use pattern of a of land under non-agricultural uses, which was 2195 thousand ha
UP has about 17 million hectares region. A close study of (9.1 percent) has increased to 2729 thousand ha (11.3 percent).
under cultivation and accounts for 10 per- the land-use patterns of These changes in land use pattern suggest that land related
cent of India’s net sown area and 25 per- the last decade that in policies have affected adversely to land use pattern for agricultural
cent of the total irrigated area. It produces Uttar Pradesh land uses. It also indicates about two major observations that; first, a
nearly 20 percent of India’s foodgrains. A distribution is departing large chunk of land is transferred for real estate, road and other
major concern in the state is the declining away from the industrial projects and second, program which were implemented
productivity of foodgrains, especially of rice agricultural uses. for agricultural development (e.g. Sodic Land Reclamation Project,
and wheat. This is mainly due to water-
The area, for Diversified Agricultural Support Program etc.) with massive invest-
induced land degradation (salinization,
which data on the land- ment has not yielded desired outcomes.
sodification, groundwater depletion) and
use classification are Table-5
loss of soil fertility with removal of nutri-
available, is known as U.P. Sodic Lands Reclamation Project-I
ents associated with more intensive crop-
the ‘reporting
ping and inappropriate use of nitrogenous Name of the project U.P. Sodic Lands Reclamation
area’. Uttar Pradesh has
fertilizers. The average annual rate of Project-I (Cr.2510 IN)
a geographic area of
growth of crop yields between the periods
29440 thousand ha Selected Districts (10) Aligarh, Allahabad, Etah,
1980-90 and 1990-95 has declined, for
which is about 9% of the Etawah(Auriya), Fatehpur,
wheat from 2.4 percent to 1.6 percent and
land area of country. The Mainpuri, Pratapgarh, Raebareli,
for rice from 5.2 percent to 1 percent. More
land-use statistics are Sultanpur, Harodi.
than 1.2 million hectares of sodic waste-
available for roughly 80 Project Period June 1993 to March 2001.
lands-10 percent of a total cultivable area
percent of the total area.
in the state and about 17 percent of the Physical Target 45,000 hq. Revised- 68,800 hq.
Reported area in Uttar
salt-affected lands in the country-are in UP. Project Cost (Crore Rs)
Pradesh has increased
from 23,999 thousand Name of the project Original Revised(MTR)
ha. in 1980-81 to 24170 in 2006-07. However there were some State Share 51.24 51.24
fluctuations in reported area for the state.
World Bank (IDA) Loan 213.96 213.96
During 1980-81 the arable land (the net area sown plus the
Sub Total 265.20 265.20
current & fallow lands) was estimated at 18379 thousand ha. or
56 Direction of development

57 Direction of development
76.58 percent of the total reporting area. Around 1683 thousand Farmer Share 48.50 129.96
hectares or 7.1 percent of the total area was under forests. Land Total Cost 313.71 395.17
put to non-agricultural uses was estimated at 21965 thousand ha
hectares (9.1 percent of the total) & the barren & culturable waste Over the past decade, Uttar Pradesh has been faced with
land was at 824 thousand ha hectares or 3.4 percent of the reporting declining agricultural output, primarily due to severe agricultural land
area. This land use pattern has been changed with the advent of degradation, with much of this land affected by sodic soils. Sodic
time due to various factors. Area under forest has slightly declined soils are salt affected lands dominated by the electro-chemical bond-
over the time from 1980-81 to 2006-07. Among other major shifts ing of sodium on to clay. This results in the dispersal of the finer soil
in land use pattern, which has been noticed is that, net cropped particle, blocking of water and air movement, and the creation of
area has declined from 16548 thousand ha (69 percent) to 16573 highly alkaline conditions which makes them unsuitable for crop
thousand ha (68.6 percent). In the same period culturable waste cultivation.
BOX-8 Uttar Pradesh talist agriculture. From 1977 onwards the Bank introduced training
Agriculture is the Bank’s largest Sodic Land Reclama- and visit management systems for extension purposes to improve
portfolio in any country. 130 agricultural tion Project (UPSLRP) the adoption of new technologies imported from western countries.
projects have received $10.2 billion Bank was designed and de- WB supported agricultural extension services in 17 states of India.
financing so far in India. The current port- veloped on experiences Agriculture is the Bank’s largest portfolio in any country. 130
folio of about 30 projects under implemen- gained through execu- agricultural projects have received $10.2 billion Bank financing in
tation in India includes diary, rubber, seri- tion of several projects India.
culture, fish and shrimp cultivation. operated earlier, with an
The first phase of the project was implemented between
The Bank funding to Indian agricul- aim to develop a repli-
1993-200 with enormous fund of 2510 crore Rs. In 10 districts on a
ture began in the 1950s but was limited till cable model. Thus
pilot project basis. The stated objective of the project was to to
the 1966 foreign exchange crisis. Then the project design allowed
reverse the decline of productivity through sustainable reclamation
Bank started supporting agricultural changes based on
of sodic lands and second, to prevent additional increases in sodicity
projects viz., fertilizer industry, ground- implementation experi-
through strengthening local institutions and enabling effective man-
water exploitation through pumpsets, in- ences and farmers par-
agement of such programs with beneficiary participation and non-
troduction of high yielding variety seeds, ticipation.
governmental organization (NGO) support.
and setting up of banking institutions to There was need
finance capitalist agriculture. From 1977 Outcome of the Project:
of such an agency
onwards the Bank introduced training and which could easily The project was implemented in ten districts with major fi-
visit management systems for extension amend and innovate nancial support from the World Bank. At the end of the project it
purposes to improve the adoption of new implementation proce- was stated that 68,414 ha. land had been reclaimed of which 36,026
technologies imported from western coun- dures, according to the ha. area brought under cultivation for the first time, however the
tries. WB supported agricultural extension need of the project. ground reality does not suggests so (see annexure-2) Cropping
services in 17 states of India. Therefore, UP Bhumi intensity increased from 37% to 230%. Rs. loan sanctioned of hefty
Agriculture is the Bank’s largest Sudhar Nigam was pre- amount of loans (208.59 lakh .) and disbursed for pump set, Up-
portfolio in any country. 130 agricultural cisely chosen to imple- ward revision of wage rate, Increase in farm income (up to 96%)
projects have received $10.2 billion Bank ment this project. The were among other claimed successes . 46890 ha. additional irriga-
financing in India. UP Bhumi Sudhar tion potential created through large number of tube wells and pump
Nigam already has set installations.
presence at village level. it was a plus point to spread the network To mobilize money from the participants 15949 WUG and
of the project in limited time and resources. 2166 WSHG were formed, which has contributed Rs 155.54 lakhs
58 Direction of development

59 Direction of development
UP SODIC LANDS (RECLAMATION PROJECT SODIC-I) and Rs. 476.54 lakhs by Inter loaning respectively. Cash Credit
Limit of Rs. 358.45lakhs also were allotted and availed to 1618
Agriculture is the Bank’s largest portfolio in any country. 130
WSHGs through banks.
agricultural projects have received $10.2 billion Bank financing so
far in India. The current portfolio of about 30 projects under imple- Farmers participation was a key element of this project. The
mentation in India includes diary, rubber, sericulture, fish and shrimp project builds on the experience of the pilot project which estab-
cultivation. lished water user groups consisting of 10-15 farmers. Water User
Groups are responsible for deciding on sites of boring, procuring
The Bank funding to Indian agriculture began in the 1950s
pumpsets, sharing and distributing water, and constructing and main-
but was limited till the 1966 foreign exchange crisis. Then the Bank
taining link drains. In addition, women were mobilized to form self-
started supporting agricultural projects viz., fertilizer industry, ground-
help groups and support farm households with supplementary sav-
water exploitation through pumpsets, introduction of high yielding
ings and income. The self-help groups was establish their own mini-
variety seeds, and setting up of banking institutions to finance capi-
banks, which in due course entitle them to loans from cooperative
and commercial banks. These self-help groups not only assist in and small farmers – the said targets beneficiaries of the project. In
credit management during the project period but also in ensuring this phase land reclamation and on-farm development has been
that the project is self-sustaining after the project closes. done on 1,50,000 ha. land. Increase in crop intensity in reclaimed
As the key inferences from that project, which World Bank area upto 200%, Increase in market value of land, Improvement in
has advised for further action were commercialization of agricul- drainage network, were the main stated achievements.
ture and private sector involvement as necessary action to pro- UP Sodic Land Reclamation Project-III :
duce sustained increases rural incomes. Lack of adequate market First and second phase of the project has not yielded any
linkages and farmer skills/ capacity to produce for the market (choice significant outcome for marginal and small farmers. However earlier
of appropriate varieties, post-harvest handling and quality control two phase of UP Sodic Lands Reclamation Project has booster for
etc) was find as the biggest challenges to sustaining productivity private sector. The development objective of the third phase of the
enhancement and income diversification. project was to increase agricultural productivity in selected areas
of degraded lands in UP. The objective of the third phase was
UP Sodic Lands Reclamation Project (Sodic-II):
reversal of water-induced land degradation, enhancement of soil
The second phase of the project was implemented in the 18 fertility and improved provision of agricultural support services. It
districts of the state with budget of Rs.1296.51 crores of which World was expected to have favorable impacts on the income of farmers
Bank’s share was Rs. 856.84 crores. Keeping in the experiences and improve the profitability of farm production; which has not
of the pilot project several changes were introduced during imple- documented in earlier phases. It was proposed to achieve by
mentation. Some main of those were, cost sharing by participating enhancing local-level capacities for production as per the market
farmers, privatization of services quality control through external demand and provide post-production support for value-adding
agencies. In fact these were the measures which are predominant
and essential part of every World Bank funded projects. Besides
Table-13
reclamation of sodic land, this phase has stretch to some other
UP Sodic Land Reclamation Project-III :
component, which were not directly related to welfare of marginal
Selected Allahabad, Aligarh, Auraiya, Azamgarh,
Table-12 Districts (18) Barabanki, Etah, Etawah, Farukkhabad,
UP SODIC LANDS RECLAMATION PROJECT SODIC-II Fatehpur, Firozabad, Ghazipur, Hardoi,
Jaunpur, Kannauj, Kanpur Dehat, Kanpur
Name of the project U.P. Sodic Lands Reclamation Project-II (Cr.3152 IN
Nagar, Kaushambi, Lucknow, Mainpuri,
Funding Agency IDA Pratapgarh, Raebareli, Sant Ravidas Nagar,
Selected Aligarh, Allahabad, Azamgarh, Auriya, Bulandshar, Sitapur, Sultanpur and Unnao districts.
Districts (18) Etah, Etawah, Fatehpur, Harodi, Hathras, Jaunpur,
Kanpur, Kanpur Dehat, Mainpuri, Pratapgarh, Project Components Cost
60 Direction of development

61 Direction of development
Raebareli, Sultanpur , Unnao, On-Farm Development and US$ 170.7
Project Period April 1999 to September 2007 Land Treatment including million
Physical Target 1,50,000 ha (B+ 30,000, B 45,000 & C 75,000) Ravine Land Reclamation
as a Pilot
Project Cost (Crore Rs)
Improvement of Drainage US$ 39.2
Subject Original as PAD MTR Cost Revised Cost
Systems million
State Share 230.19 205.43 243.26
Agricultural Support Services US$ 9.4 million
World Bank (IDA) Loan 989.14 856.84 920.71
Institutional Strengthening US$ 9.7 million
Sub Total 1219.33 1062.27 1163.97
and Capacity Building for
Farmer Share 250.13 234.24 283.62
Improved Market Access
Total Cost 1469.46 1296.51 1447.59
Project Management US$ 22.9 million
activities to enable producers to access non-tradition.al markets. EU Assisted Project For Reclamation &
The project will also help towards closing the “productivity gap” in Development of Alkali Land
agriculture in the state by improving extension to promote new
agricultural technologies and agronomic practices. The project was Name of the project EEC
implemented in 25 districts
The total project cost was US$ 197 million. Maximum Selected Districts (5) Jaunpur, Kanpur Dehat, Unnao,
benefits of would be small & marginal farmers, Women, landless Azamgarh & BulandShahar
labourer and village artisans through SHGs was among the main Project Period September , 1993 to March 2001.
target. Physical Target 16075 HQ. (revised 27675 HQ.)
Some other Land Related Projects: Project Cost 90.10 Crore.
Keeping in view the outcome of the different phases of the
UPSLRP, the World Bank and some other investors has shown Ravine Rehabilation Project :
their interest in some other projects these were more or less This project started in 2000 in 6 districts of yamuna belt.In
similar to UPSLRP. Apparent objective of these projects were to february 2003. This project was transferred to UPBSN which has
improve the income level of small & marginal farmers by reclaiming been implemented by December 2004 in 75 villages with a total
potentially fertile alkine lands and to test and demonstrate to farmers cost of 41.58 crores
the technology involved in the reclamation and management of
Uttar Pradesh Diversified Agricultural Support
calcareous saline sodic soils and the associated improvement on
farm water management and cropping practices. Project (UPDASP-I &II):
Some noticeable of these are: Diversification of the agriculture constitutes a major plank of
agricultural strategy in state. Agriculture in the state is gradually
SWA Shakti Project diversifying in response to price signals. Growth rate in food grains
Name of the project SWA Shakti has been slowed down during the 1990s, while those of the
Selected Districts (10) Aligarh, Allahabad, Etah, commercial crops have gradually risen1.
Etawah(Auriya), Fatehpur,
Mainpuri, Pratapgarh, Raebareli,
Sultanpur & Harodi.
Project Period 1 Oct. 1998 to March 2004.
Physical Target 4,000 self help groups.
62 Direction of development

63 Direction of development
Project Cost Rs. 62 Crore
Funding Agencies World Bank and IFAD

Ravine Stabilization Project U.P

Name of the project Ravine Stabilization Project U.P


Selected Districts (6) Banda, Fatehpur, Firozabad,
Hamirpur, Jalaun, Kanpur Dehat
Project Period Jan 2000 to Dec 2004
Project Cost 41.50 Crore. 1
Uttar Pradesh Development Report, 2007 Chapter-2, pp55.
However, it is contentious but some academician and policy development and greater use of information technology. The third
makers claim that Studies have shown that Green Revolution supports increased private sector involvement and public/private
technologies, combined with State intervention for development of partnerships in agri-business development. The fourth supports
rural infrastructure and policies on price support have led to rapid rural infrastructure development by improving rural roads in the
and sustained agricultural growth in several parts of the country. project districts, rural markets, and market information collection
The Diversified Agricultural Support Project (DASP) was and dissemination systems. The fifth supports a project
proposes to assist Government of Uttar Pradesh by World Bank in management and enhanced capacity for economic policy analysis
its effort to accelerate diversified agricultural growth in the State in while the sixth supports a project preparation facility.
line with regional advantage of different agro-ecological zones. UP’s Table-6
agricultural policy was in consonance with the strategy to be Uttar Pradesh Diversified Agricultural Support
pursued under the project. The said objectives of the project were Project (UPDASP-I &II)
to; (a) strengthen the delivery of agricultural services to exploit
First Phase 30-JUN-1998
market-led opportunities for growth in horticulture and livestock
production and agro-processing in a way that alleviate poverty and Second Phase 30-JUN-2004
support environmentally sustainable development. Project Cost - First Phase1 US$ 160 million
(b) Integrate project investments with policies and legislative/ Project Cost - Second Phase US$ 145.54 million
regulatory frame work that facilitates rationalization of public and
private sector roles in the diversification process and creates
One of the main components of the project was to increase
Table-7
enabling environment for greater private investment in this sector;
participation
CHANGESofINthe private
AREA UNDERsector in the
BARREN supply of key agricultural
AND UN CULTURABLE LAND
(c) Support the expansion and rehabilitation of rural inputs, such as improved planting material, fertilizers, and breeding
infrastructure and Barren and Un Culturable Land
UPSLRP-I UPSLRP-II UPSLRP-III Percentage Percentage
(d) Foster Panchayat Raj institutions, NGOs, and beneficiary Changes Changes
District
participation for devolution of responsibility for sustainable in UPSLRP in UPSLRP
-I Period -II Period
management of rural assets.
1998-99 2001-02 2005-06
The principal objectives of the project was to increase ALIGARH 47507 44530 45673 93.73 102.57
agricultural productivity through support for UP’s diversified ALLAHABAD 76578 90326 94618 117.95 104.75
agricultural productions systems, promote private sector AURAIYA — 24821 27065 0.00 109.04
development, and improve rural infrastructure thus promoting AZAMGARH 59203 63379 66241 107.05 104.52
sustainable agricultural livelihoods. BARABANKI 53472 58760 65183 109.89 110.93
64 Direction of development

65 Direction of development
ETAH 45568 44977 50427 98.70 112.12
There were six project components. The first, support for ETAWAH 51879 32463 34538 62.57 106.39
technology development, enhances capacity for research FARRUKHABAD 32536 32230 31210 99.06 96.84
coordination; establishes a competitive agricultural research FATEHPUR 57641 57704 58736 100.11 101.79
program (CARP) to support time bound adaptive research on FEROZABAD 26689 28884 31241 108.22 108.16
priority constraints, increases productivity of the smallholder GHAZIPUR 44300 48961 51698 110.52 105.59
agriculture; and strengthens research support for technology HARDOI 63004 63614 66191 100.97 104.05
dissemination activities. The second establishes a demand-driven JAUNPUR 51217 51290 52421 100.14 102.21
technology dissemination system through rationalizing, reorienting, KANNAUJ 29265 28359 24603 96.90 86.76
and strengthening line departments; increases participation by the
private sector in input supply and support services; increases
1
Total project costs was US$160.5 million. The US$130 million assistance package includes a
US$80 million single currency, LIBOR-based IBRD loan and a US$50 million credit from the
participation by the farming communities mobilized with the help International Development Association, the World Banks concessionary lending affiliate. The
of nongovernmental organizations; and supports human resource Government of Uttar Pradesh also contributed US$30.5 million to the project costs.
services. To encourage introduction of improved breeds and In contrast to claims of reclamation of sodic land, increase
varieties through private sector firms, the project supported training in irrigation facility and increase in net sown area and gross sown
and other support to veterinarians, small- and medium-sized area both indicators has declined in project districts. In the first
nursery owners, seed companies, and breeders who wish to phase in Aligarh, Allahabad, Etah, Etawa, Fatehpur, Hardoi,
establish small businesses to provide inputs and related services Sultanpur districts there was net decline in NSA. In the second
to farmers. To support increased private sector involvement and phase NSA has declined in Allahabad, Etah, Jaunpur, Pratapgarh
public-private partnerships in agri-business, the project helped to and Raebarli districts (See Table).
mobilize and facilitate access to credit for subsistence farmers, Same was the case for gross sown area GSA. The GSA
landless and unemployed, and rural women. It also ensures that has declined in 7 out of 10 districts, except in Mainpuri, Pratapgarg
rural financing institutions are more responsive to meeting the credit and Raebareli. In the second phase of the project, Allahabd, Etah,
needs of the rural poor, the project will finance orientation and Fatehpur, Kanpur- Sahar and Pratapgarh districts has registered
gender sensitization training and strengthen linkages with farmers a negative change in GSA (See Table). These are the results of 15
groups. year’s effort and investment of millions of rupees. In fact this project
Some Critical Facts: has ensured only one thing i.e. reduction in role of government
and increasing participation of private sector in agriculture.
The project reclamation technology will be similar to what
The world bank is a major advocate of rational use so f
has been tested in the pilot project. The project provides for
natural water resources but in this project 10930 Tubewell
chemical amendments to reclaim the sodic soils and shallow
developed and Pump Sets added on these new boring and already
tubewells needed to leach salts, and supports on-farm
existing borings without pumpsets, which lead to sharp decline in
development, drainage, and inputs needed to cultivate the land.
water level in project districts in first phase only. The practice was
Close look of the changes in the land use pattern of the project
repeated in second and third phases and the outcome is over
areas and the claims about project outcome by state government
extraction of ground water in five out of ten project implementation
and propagated by the World Bank has sharp contradiction, for
districts. Excess use of chemicals for reclamation of land also has
example
yielded negative results. A large of districts has reported
Out of 10 districts, which were part of the UPSLRP-I barren contamination in drinking and ground water (see Annexure-3).
and uncultivable land in has increased in 5 districts Allahabd,
The other major venture of the World Bank - Uttar Pradesh
Fatehpur, Hardoi, Raebareli and Sultanpur (See Table). Whereas,
Agricultural Diversification Project This environmental assessment
it again has repeated for 11 district out of 17 (See Table).
for India’s Second Uttar Pradesh Agricultural Diversification Project
However Cultivable waste land has declined in most of the assesses environmental impacts and possible environmental and
projects districts, but it was on rise in Allahabd, Hardoi and Sultanpur social risks in activities aiming to increase areas and yields of
66 Direction of development

67 Direction of development
after implementation of the first phase. Again it was on rise in diversified field and tree crop, livestock, and fish products, and
Auraiya, Etawa and Jaunpur after second phase. Beside that in increase the proportion marketed and processed. It was proposes
more than 5 district change was almost insignificant (See Table- good environmental practices to integrate into project activities to
5). Same was the situation for area under fallow land. There was promote sustainable natural resource management. A long list of
an increase in Aligarh, Allahabad, Mainpuri and Pratapgarh and in environmental concerns and risks include using a poor quality of
other 4 districts namely, Etah,Fathepur, Raebareli, Hardoi and bio-pesticides and increasing level of fertilizer and pesticide use
Sultanpur the change was insignificant (less than one percent) (See generally, poor storage and handling of seeds that are themselves
Table-6). In the second phase out of 18 districts, it was on rise in of poor quality, decline in crop yields and loss of soil fertility,
Aaligrh, Allahabd, Etah, Hardoi Kanpur (Sahar),Kanpur (Dehat) increased use of bio-agents, higher demand for irrigation water for
Mainpuri and Sultanpur. In another 8 districts - Azamgarh, Fatehpur, vegetables and increased water demand, more electricity
Etawa, Hardoi, Unnao, Pratapgarh, Raebareli and Jaunpur there consumption and disposal of polyethylene sheets, waste generation
was insignificant change (See Table). at source causing water pollution, methane gas generation,
intercropping leading to increased chemical use to control pests,

Table continued....
Percentage Changes Percentage Changes
in UPSLRP-I Period in UPSLRP-II Period
introduction of genetically modified varieties, crates adding to
pollution, methane emissions, milk contamination, exotic species
intrusion and fish contamination, and construction debris has been
seen during the project implementation.

104.24

104.45

105.67

141.06
61.81
92.55

78.08
71.01
80.24

55.79
99.84

72.87
88.63

94.71
In result the World Bank had recommended mitigation
measures like, strictly monitoring of the quality of bio-pesticides,
action plan to store and handle seeds, creating database of seed
certifying agencies, simplify seed certification process, and involve
nongovernmental organizations in seed testing, testing of pH of
farmers’ soil, application of improved technology to composting

CHANGES IN AREA UNDER CULTURABLE WASTE LAND


and water saving and harvesting for certain crops. These measures
unlock and insure private sector participation in agriculture, because

116.58

101.10
100.56
96.29

91.29
91.74
98.76
43.67
70.47
94.05
78.47

86.14
97.58
all these measure cannot be done without hefty investment, in which
state government is narrowing its hand. Same was the prescription
for post harvest management like keeping crop output in cold
storage and improvement marketing system.
In fact the World Bank policies on agriculture do nothing to
address the root problems of food insecurity, including the collapse

UPSLRP-III
of many agricultural sectors due to structural adjustment, declining

2005-06
terms of trade, asymmetrical trade rules and financialisation of

25359

14283
17084

15242

25468
20508
food commodities. There of number of already revealed reasons

5765

5781
7902

5001
4150

7496
3616

7174
for which agrarian situation in Uttar Pradesh is facing downfall.
The agrarian performance of the state is too dismal during the

UPSLRP-II
past two decade. The state is bestowed with rich natural resources,

Culturable Waste Land

2001-02
but the available resources are mismanaged and injudiciously used

27401

10120
20115
21291

15266

28734
14539
due to number of reasons including single surface growth oriented

9327

5546

4788
7438

7094
4962

7575
policies. Public investment in agriculture is rapidly declining.
Average size of land holdings are tiny, fragmented and showing
symptoms of degradation1. Lack of credit, absence of quality inputs
68 Direction of development

69 Direction of development
UPSLRP-I
and poor post harvest infrastructure are the main bottleneck.

1998-99
Agriculture in U.P. needs to gradually intensify by removing supply

23505

11086
21927
21559
10965
10555
16232

28574
16878
9686

9040
4908

7763
side bottleneck, through well knitted institutional policy reform. An
integrated approach through appropriate policies, improved
institutional arrangement, and better infrastructure will improve
agricultural performance in Uttar Pradesh, but before summing

FARRUKHABAD
up, the caution is policies must enabling for marginal and small

FEROZABAD
ALLAHABAD

BARABANKI
AZAMGARH
farmers and in contrast to World Bank approach, public sector still

FATEHPUR

GHAZIPUR

JAUNPUR
KANNAUJ
ALIGARH

AURAIYA

ETAWAH
has the key and always important for agricultural growth.

HARDOI
District

ETAH
Table-8
70 Direction of development

KANPUR (D) 16002 15765 15306 98.52 97.09


KANPUR (S) 10723 9040 6712 84.30 74.25
KOSHAMBHI 7767 6793 4878 87.46 71.81
LUCKNOW 17159 14164 21461 82.55 151.52
MAINPURI 22103 19261 16507 87.14 85.70
PRATAPGARH 16426 14492 13411 88.23 92.54
RAEBARELI 27542 27255 25538 98.96 93.70
S.RAVI DAS NGR 3666 4677 4274 127.58 91.38
SITAPUR 12515 12735 12031 101.76 94.47
SULTANPUR 19117 19665 18973 102.87 96.48
UNNAO 31231 33493 26626 107.24 79.50

Table-9 CHANGES IN AREA UNDER FALLOW LAND

District Fallow Land


UPSLRP-I UPSLRP-II UPSLRP-III Percentage Changes Percentage Changes
in UPSLRP-I Period in UPSLRP-II Period
1998-99 2001-02 2005-06
ALIGARH 309890 314197 315552 101.39 100.43
Table continued....

ALLAHABAD 408913 415662 417103 101.65 100.35


AURAIYA 160237 161707 100.92
AZAMGARH 348402 344485 343186 98.88 99.62
BARABANKI 300411 298738 350102 99.44 117.19
ETAH 360584 360065 361452 99.86 100.39
ETAWAH 321135 167836 166733 52.26 99.34
FARRUKHABAD 171579 178373 175828 103.96 98.57
FATEHPUR 340454 338760 338553 99.50 99.94
FEROZABAD 194465 196947 196618 101.28 99.83
GHAZIPUR 280105 276280 273596 98.63 99.03
HARDOI 485351 484583 491668 99.84 101.46
JAUNPUR 333380 334486 333074 100.33 99.58
KANNAUJ 160079 162049 164716 101.23 101.65
KANPUR (D) 246508 254787 255721 103.36 100.37
KANPUR (S) 223613 222894 223346 99.68 100.20
KOSHAMBHI 163364 148734 145758 91.04 98.00
LUCKNOW 191116 180673 174546 94.54 96.61
MAINPURI 220747 221320 224947 100.26 101.64
PRATAPGARH 288217 288483 288271 100.09 99.93

71 Direction of development
72 Direction of development

RAEBARELI 335843 333852 331967 99.41 99.44


S.RAVI DAS NGR 81634 81837 82446 100.25 100.74
SITAPUR 487432 485837 486368 99.67 100.11
SULTANPUR 350453 349432 350477 99.71 100.30
UNNAO 363932 361822 360046 99.42 99.51

Table- 10 PERCENTAGE CHANGE IN NET SOWN AREA UPSLRP DISTRICTS


Net Sown Area
Districts 1998-99 2001-02 2004-05 Percentage Changes Percentage Changes
in UPSLRP-I Period in UPSLRP-II Period
ALIGARH 36573 30272 31592 82.77 104.36
ALLAHABAD 161221 126890 118219 78.71 93.17
AURAIYA 48379 54084 111.79
AZAMGARH 43261 48633 54282 112.42 111.62
BARABANKI 80746 70259 81278 87.01 115.68
BULLANDSHAHR 36515 35394 25102 96.93 70.92
ETAH 48041 46944 33884 97.72 72.18
ETAWAH 131989 59223 60855 44.87 102.76

Table continued....

FARRUKHABAD 4805 3288 2532 68.43 77.01


FATEHPUR 49452 42255 46574 85.45 110.22
FEROZABAD 19002 22840 16884 120.20 73.92
GHAZIPUR 54882 48288 48264 87.99 99.95
HARDOI 56731 55052 67057 97.04 121.81
JAUNPUR 58240 72864 67112 125.11 92.11
KANNAUJ 14713 12840 15515 87.27 120.83
KANPUR (D) 84966 66936 66992 78.78 100.08
KANPUR (S) 57211 35537 31472 62.12 88.56
KOSHAMBHI 13513 13644 15192 100.97 111.35
LUCKNOW 30781 27767 27916 90.21 100.54
MAINPURI 42944 45595 51048 106.17 111.96
PRATAPGARH 76005 86732 81810 114.11 94.33
RAEBARELI 111075 111737 109474 100.60 97.97
S.RAVI DAS NGR 8939 10786 10190 120.66 94.47
SITAPUR 33587 27480 25165 81.82 91.58
SULTANPUR 75456 57850 65092 76.67 112.52
UNNAO 91843 61146 76255 66.58 124.71

73 Direction of development
74 Direction of development

Table- 11 PERCENTAGE CHANGE IN NET SOWN AREA UPSLRP DISTRICTS


Grass Sown Area
Districts 1998-99 2001-02‘ 2004-05 Percentage Changes Percentage Changes
in UPSLRP-I Period in UPSLRP-II Period
ALIGARH 58184 54133 54911 93.04 101.44
ALLAHABAD 252529 214041 174789 84.76 81.66
AURAIYA 90662 92663 102.21
AZAMGARH 58103 75272 91877 129.55 122.06
BARABANKI 144710 128743 149626 88.97 116.22
BULLANDSHAHR 58978 51378 49346 87.11 96.04
ETAH 81707 61619 58810 75.41 95.44
ETAWAH 206295 100281 103056 48.61 102.77
FARRUKHABAD 7545 6016 5325 79.73 88.51
FATEHPUR 85710 73706 73119 85.99 99.20
FEROZABAD 28169 28273 27535 100.37 97.39
GHAZIPUR 84293 77669 81036 92.14 104.34
HARDOI 91769 91437 108259 99.64 118.40
JAUNPUR 106065 107517 111281 101.37 103.50
KANNAUJ 24451 21048 24153 86.08 114.75
Table continued....

KANPUR (D) 106488 88092 92544 82.72 105.05


KANPUR (S) 71306 59448 47948 83.37 80.66
KOSHAMBHI 18189 17735 19744 97.50 111.33
LUCKNOW 49689 44674 46749 89.91 104.64
MAINPURI 86807 75250 84767 86.69 112.65
PRATAPGARH 123402 136056 121084 110.25 89.00
RAEBARELI 174678 168534 182127 96.48 108.07
S.RAVI DAS NGR 12528 14762 12664 117.83 85.79
SITAPUR 48852 46407 42132 95.00 90.79
SULTANPUR 98911 80729 109446 81.62 135.57
UNNAO 137322 261433 274727 190.38 105.09

75 Direction of development
Direction of Development
The ostensible goal
of the W orld Bank’s BOX-9 The Poor Versus the
‘development finance’ is to Environment: A False Trade-Off
alleviate poverty, increase
The World Bank often says,
employment and raise living
Social and environmental “safeguard”

3
standards by stimulating
policies are a costly drag on
economic growth, its
development, but in reality the notion
(bank’s) projects and
that safeguards hinder development
programmes deliver greater
is premised on a false assumption —
benefits to private
that there is a tradeoff between
corporations, contractors
improving economic wellbeing and
and consulting firms than to
protecting the environment and
the poor. The bank’s efforts
society. Far from being at odds with
for trade liberalisation
development, social and
coupled with the removal of
environmental protections are integral
government support for
to sustainable growth and poverty
domestic producers and
reduction. Projects that are selected
enterprises provides foreign
and designed without consideration of
corporations an unrestricted
social and environmental standards
access to developing
actually create risks and costs not only
country markets in crucial
for affected populations and
sectors such as agriculture,
ecosystems, but for the Bank itself.
services and industry.
Source: 1 Bank Information Center,
There are concerns
www.bicusa.org/toolkit pp, 2.15
about the types of
development projects
funded by the World Bank group especially by IBRD and the IDA.
Many infrastructural projects financed by the World Bank Group
have social and environmental implications on peoples in the areas
76 Direction of development

77 Direction of development
covered under projects e.g., World Bank-funded construction of
hydroelectric dams in various countries have resulted in the
displacement of indigenous peoples of the area another concerns
is that the World Bank working in partnership with the private sector
may undermine the role of the state as the primary provider of
essential goods and services, such as healthcare and education,
resulting in the shortfall of such services in countries2.
Criticism of the World Bank encompasses a whole range of
issues generally centre around concern about the approaches
adopted by the World Bank in formulating their policies. This
1
http://www.brettonwoodsproject.org/item.shtml?x=320869
includes social and economic impacts of these policies on the BOX-11
people of those countries, which receive financial assistance from Playing Weak: Selectively Downplaying
these institutions; because conditionalities imposed on borrower the Bank’s Power
countries has several hidden costs. These conditionalities includes
The World Bank often says, we don’t have any leverage
liberalization of domestic market, investment and the financial
if we are not involved in the project. But in reality, the World
sector—, deregulation, privatisation of nationalised industries and
Bank Group remains an extremely powerful institution, with
free trade. Most of these conditionalities are attached without due
strong influence over member governments. While financing
regard for the borrower countries’ individual circumstances and
a project provides one vehicle through which the Bank Group
the prescriptive recommendations by the World Bank fail to resolve
exercises its leverage, it is by no means the only channel of
concrete economic problems within the countries.
influence available to the institution. The Bank’s ability to
These institutions are also condition its overall lending to a country and its public and
BOX-10 shaping the development discourse private communications can also significantly impact decisions
We hear the refain, through their research, training and taken by a Government. Moreover, if the Bank
“a rising tide floats all publishing activities. As the World Bank
boats.” But for those who Group is financing a project in order to have a say over
is regarded as experts in the field of
don’t own boats or have how it is done, then the Bank’s leverage is strongest before it
financial regulation and economic
leaky boats, a rising tide disburses its funds. Thus, if social, environmental and
development, their views and
means greater inequality transparency problems are not remedied before funding is
prescriptions may undermine and/or
between them and the distributed, the Bank is far less able to ensure that they will be
eliminate alternative perspectives on
more fortunate. resolved later.
development.
Source: Bank Information Center, www.bicusa.org/toolkit pp, 2.15
In result, in today’s world, the
richest 20 percent of the world’s population receives 83% of the
governments to remove barriers to the cross-border flows
world’s income, while the poorest 60% of the world’s people receive
commodities and capital.
just 5.6% of the world’s income. The richest 20% of the world’s
population in northern industrial countries uses 70% of the world’s From its inception, the World Bank continue to keep
energy, 75% of the world’s metals, 85% of the world’s wood, 60% reassuring the developing world that high economic growth rates
of the world’s food, and produces about 75% of the world’s will solved the problems of poverty, hunger and inequality. The
environmental pollution. This globalization of market forces has data of world trade from 1960 to 1989 shows that during a period
greatly increased inequality. Just 150 years ago there was not great of significant growth in world trade global inequality got significantly
inequality between the standards of living of people across the worse: the ratio between the richest 20% and poorest 20% of the
78 Direction of development

79 Direction of development
world. world population went from 30 to 1 to 59 to 1.
in fact, it is out of capacity rich peoples, capitalists and In fact, it can be said that the World Bank is not to promote
corporates to generate wealth in such extent. A closure look of the “development” but rather to integrate the ruling elites of third world
world economic advancement clearly suggests that these so called countries into the global system of rewards and punishments. That’s
development organization and international financial institutions, why inequality within developing countries is on rise, especially in
especially the World Bank has created a conducive environment recent past.
for private sector to accumulate wealth. It is evident that, the Since, direct colonial control on the modern world is no longer
globalization of market forces, vigorously promoted by the World tolerated, therefore corporate elite seeks an indirect way to control
Bank, creates greater inequality. Over the past 30 years the policies implemented by developing world governments and the
globalization of the economy-led by prescriptions of the World Bank, World Bank can effectively do this with their policies. India, for
the International Monetary Fund and transnational corporations- example, remains poor despite receiving $28.8 billion since 1961.
has proceeded at a faster pace. These institutions have pressured
That money did nothing to make India open its economy, which and too much to expensive rescue operations. Its system of short-
remains “mostly unfree” according to same global Index. term crisis management is too costly, its responses too slow, its
An examination of the record of World Bank and IMF advice often incorrect, and its efforts to influence policy and practice
performance in developing countries shows that, far from being too intrusive.
the solution to global economic instability and poverty, these two The World Bank and Corporate sector
international institutions are a major problem. For one thing, their
In its existence for over more than 60 years, the World Bank
lending practice deters growth because the money they loan
has expanded from a single institution — the International Bank
removes incentives for governments to advance economic
for Reconstruction and Development (IBRD) — to five institutions,
freedom, and breeds corruption. For these reasons, the vast
each dealing with a particular area of operation. These include
majority of recipient countries have been unable to develop fully
financing and support for relief and rehabilitation, physical and
after depending on these institutions for over 40 years1.
institutional infrastructure in sectors such as energy, transportation,
Evidence from many countries shows that the policies extractive industry and telecommunication, restructuring of key
promoted by the World Bank are disastrous. The “free market” sectors such as health, education, water and agriculture,
economic model being pushed on developing world is not the same development of private sector, and mitigating investment associated
as industrial countries used to develop themselves. All the wealthy risks for private companies. Despite a number of scandals, the
countries-the USA, Japan, Germany, England, France and the World Bank remains powerful. In most of its client countries, it is
recent success stories such as Taiwan and South Korea-used a the only doorway to international trade, development finance and
heavily protectionists, state-interventionist model that had private investment capital. It derives its power and policy agendas
government play a strong role in directing investment, managing from its wealthy shareholders — governments that comprise the
trade and subsidizing chosen sectors of the economy. The United G-7 countires, which routinely use the bank to secure lucrative
States was in many ways the “mother country” of protectionism, trade and investment deals for their respective transnational
showing other wealthy countries how to do it. corporations (TNCs) in developing countries. Corporate influence
The debate on the ability of international financial institutions is manifested in and through the World Bank in several ways. Most
to influence reform in other countries had its peak about five years obvious is the support extended to private corporations through
ago, when the U.S. Congress created the IFIAC. The IFIAC three of the bank’s specialised institutions: the International Finance
assessed the role and effectiveness of the World Bank, the Corporation (IFC), Multilateral Investment Guarantee Association
International Monetary Fund, the regional development banks, the (MIGA) and International Centre for the Settlement of Investment
Bank of International Settlements, and the W orld Trade Disputes (ICSID).
Organization. Regarding the IMF and the World Bank, the IFIAC Interestingly the World Bank channels about US $18-20
concluded that the work of these institutions left much to be desired.
80 Direction of development

81 Direction of development
billion to developing countries in form of loans and grants with the
High cost and low effectiveness characterize many development ostensible aim of reducing poverty and promoting economic growth.
bank operations as well. The World Bank’s evaluation of its own The bank always acts in tandem with its sibling agency, the
performance in Africa found a 73% failure rate.... In reducing poverty International Monetary Fund, even in countries that no longer
and promoting the creation and development of markets and borrow from the fund. However, all finances from the bank do not
institutional structures that facilitate development, the record of go to the governments. A private sector, especially large
the World Bank and the regional development banks leaves much corporations get a significant amount of this loan/aid/assistance
room for improvement2.Specifically, The IMF has given too little through directly channel, in the form of loans,
attention to improving financial structures in developing countries
The IFC, which is the bank’s private sector arm and the
1
IMF and World Bank Intervention: A Problem, Not a Solution, Published on September 17, world’s largest multilateral source of equity and loan financing for
2003 by Ana Eiras private enterprises in developing countries, claims to support
2
The full International Financial Institutions Advisory Commission (IFIAC) report is available in economic development, employment and poverty reduction by
English at www.house.gov/jec/imf/meltzer.ht.
BOX-12 promoting open, competitive and efficient markets and supporting
Bringing in the private sector: the IFC and
private companies in developing countries. IFC mainly supports
MIGA in your country
large, well-funded corporations and not small-scale, local
The IFC and MIGA provide financing directly to transnational, entrepreneurs. Through the IFC, corporations get access to large,
national, and local private sector companies investing in developing
government-sponsored infrastructure, service delivery projects and
and transition countries, often building off of policy reforms supported
by the World Bank Group’s lending and advice to governments. investment opportunities that are relatively risk free. On the other
Increasing private sector investment, and particularly foreign direct hand, local communities have little say and no benefits in these
investment, is a central tenet of the development model promoted investments as social and environmental safeguards are
by the World Bank Group. increasingly overridden by corporate demands for profits.
The emphasis on foreign direct investment has been The IFC has developed a range of financial tools and
challenged by evidence from the field, which does not prove a services to enable private companies to manage investment risks
correlation between increased FDI and public welfare. One recent
and broaden their access to capital and developing company
study conducted by the United Nation’s own Commission on Trade
and Development (UNCTAD), found that FDI is not the unqualified markets. The bank and IFC have also established the ‘Rapid
good that World Bank Group advice and analysis sometimes make response knowledge initiative’, which specialises in policy advice
it out to be. Their activities are supposed to be consistent with the on business environment reforms and privatisation policy in
priorities identified in the Bank’s CAS (or equivalent strategy) for a developing countries. The initiative maintains a cyber-service called
given country. But because neither the IFCnor MIGA publishes its ‘Private sector blog — a market approach to development thinking’
own formal strategy for its interventions in a country, it is difficult to to promote its pro-market, pro-corporate ideology.
know how they select which sectors they engage in or specific
projects they pursue. Similar to the task teams in charge of World Another constituent of the World Bank- MIGA provides some
Bank projects, there are teams of IFC and MIGA staff responsible of the most important services to private corporations by mitigating
for the loans, investments and guarantees they provide to private the political risks of private investment in high risk, low income
companies. These teams, headed by investment officers at the IFC and conflict-ridden nations. MIGA’s forte is political or sovereign
and underwriters at MIGA, are typically smaller than those working risk, which includes governmental actions that jeopardise corporate
on Bank projects.
revenues. MIGA risk guarantees protect corporate investors against
IFC and MIGA project cycles are more opaque and losses resulting from government expropriation of assets and
considerably shorter than those of the World Bank. Claiming that
breach of contract, war and civil disturbances including insurrection,
they are constrained by business confidentiality requirements, the
IFC and MIGA don’t publicly disclose much information about how coups d’état, revolution, sabotage, and terrorism. MIGA prides itself
projects are identified, designed or implemented. Neither institution as a leader in the political risk insurance industry and collaborates
publicly reports on the development impacts of the projects it with private and public insurers to “encourage private sector
supports, making it difficult to assess how well the institutions are insurers into transactions they would not have otherwise
82 Direction of development

83 Direction of development
contributing to poverty reduction and sustainable development. undertaken”1. MIGA’s beneficiaries are generally TNCs in sectors
With virtually no advance notice and little information about such as water, energy, oil and gas, telecommunications,
their private sector operations, as well as shorter project timelines, automobiles, agribusiness and luxury hospitality. MIGA also
the opportunities for the public to influence IFC and MIGA operations provides “dispute mediation” services and in this, it is
are limited. At the time of writing, the IFC still refuses to report on
the impacts each one of its projects has on the poor. Instead, it
complemented by ICSID, which serves as a private, almost secret
provides aggregate or summary information on the social, court to settle disputes between states and private investors2.
environmental and economic impacts of its operations. However, The World Bank routinely assists host governments and
civil society has succeeded in forcing the IFC and MIGA to modify private contractors in project preparation and mobilising project
or even abandon problematic projects by exploiting their sensitivity
to reputational risk. The IFC is particularly attuned to its reputation. 1
ibid
2
ICSID has been in the spotlight recently because of a US $50 million lawsuit brought against
Source: Source: Bank Information Center, www.bicusa.org/toolkit the Bolivian government by Bechtel and Aguas Del Tunari for cancellation of a water privatization
contract in the Bolivian town of Cochabamba.
BOX-13 Privatisation includes a range of measures: from unbundling
The Multilateral Investment Guarantee Agency (MIGA) (breaking up) operations in public enterprises and outsourcing the
unbundled operations to eventual sale of public enterprises either
The Multilateral Investment Guarantee Agency (MIGA)
whole or in parts. Included in the package are private contracts for
is the political risk insurance arm of the World Bank Group7.
high-end ‘technical assistance’ and procurement of ancillary goods
Established in 1988 to help developing countries attract and
and services. Although the World Bank insists that procurement
retain private investment, it furnishes private enterprises
and contracting are the responsibilities of the implementing agency
investing in developing countries with non-commercial risk
(usually a government department), privatised assets and
insurance and provides developing country members with
construction, consultancy and procurement contracts generally go
technical assistance regarding investment promotion. MIGA
to large corporations, contractors and consulting firms that are well
guarantees protected investors against loss resulting from
versed with the bank’s rules for bidding and procurement.
expropriation, breach of contract, war and civil disturbance
including insurrection, coups d’état, revolution, sabotage and The bank’s development vision is a capitalist one in which
terrorism. In addition to offering insurance to private companies, the role of the government is to create an ‘enabling environment’
MIGA mobilizes additional guarantees for investors and assists for the private (corporate) sector to flourish and for the market to
host governments with legal services and strategic advice sort out crucial issues of access and distribution. The World Bank
regarding investment. By September 2008, MIGA had is proud of its support for corporations and private investors and it
issued 922 guarantees for over 96 developing countries is clearly expressed on the MIGA’s website.
cumulatively worth over $19.5 billion since 1990. Further it mentions, “Our presence in a potential investment
can literally transform a “no-go” into a “go”. We act as a deterrent
against government actions that may adversely affect investments
finance: it hires private consulting firms to work alongside and even if disputes do arise, our leverage with host governments
government departments to design projects and implement frequently enables us to resolve differences to the mutual
arrangements, mobilises project financing (through IFC) and satisfaction of all parties”.
underwrites loans (through MIGA or other partnering risk
guarantors). The costs of environmental and social mitigation are In fact from its commencement, the World Bank is using
left to the government and society, and the terms of project financing development and poverty reduction programmes as smokescreens
and guarantee generally favour private companies. to further corporate interests. It uses its position as a preferred
creditor and aid coordinator in developing countries to create
The World Bank insists borrowing countries to shrink labour opportunities for private corporations, contractors and consultants
and environmental regulations and establish corporate friendly to profit from structural needs and crises in developing countries.
taxation and property regimes, the World Bank virtually assures Clearly, dismantling corporate power over our public goods,
84 Direction of development

85 Direction of development
private investors a free ride at the cost of local communities, services and commons will also require dismantling the World Bank.
workers and the environment. The bank’s almost religious belief
in commercialisation and privatisation has served corporations well. World Bank and Education Sector:
Regardless of the problem or sector (water, electricity, agricultural Education is a precondition for economic development of a
marketing, health, education, etc.) the bank demands that the country. Countries like India having a large population with fiscal
governments step back and the markets step in. limitation have been a thrust area for other than government
Same as structural adjustment programmes (SAPs) now institutions. Therefore, there is a wide scope for private sector
renamed as ‘poverty reduction strategies’, the reform packages participation to capture the unnerved/underserved market. Hence
are designed to open up the markets and economies of borrowing the World Bank has immense interest in education sector of
countries to foreign investors through trade and investment developing countries. In India, the World Bank has provided huge
liberalisation, privatisation of public utilities, state marketing boards loans for large number of educational projects e.g. only since 2000,
and state enterprises, and financial deregulation. the World Bank has committed over $2 billion to education in India.
It also provides technical support to design education development and in this process privatization is main agenda. Interestingly but
directives to central and state governments. not incidentally, it is also the agenda of Indo-US Knowledge
Integrated Child Development Services –the one of the Initiative.
largest programme of such kind, which comprise decentralized The World Bank and Education Sector in Uttar Pradesh:
and integrated approaches to early childhood development. World Bank Development Policy Credits in a few states
Through this programme the World Bank is doing research to support state level education reforms through policy dialogue and
explore improvements in service delivery using micro-planning and research. The World Bank is currently also engaged in Andhra
finding synergies among various social programs for children. Pradesh, Bihar, Himachal Pradesh and Orissa with Uttar Pradesh.
Currently third phase of this prohramme is being implemented in Lending to this program include recruitment of additional teachers,
various states. establishment of teacher management information systems,
Another leading program is Sarva Shiksha Abhiyan being capacity-building for school-based mass de-worming programs for
implemented by the World Bank along with development partners improved student health, evaluations of teacher training programs,
(UK’s DFID and the European Union) to support. In the first Phase and research into the most cost-effective interventions to improve
(2003-2007) of this program the Bank invested $ 500 million to student learning and never to miss exceeding private sector
expand facilities and improve infrastructure. In the second Phase participation. According to policy document of the World Bank
(2007-2012) the Bank has provided a total of $ 1.35 billion. The public-private partnerships (PPPs) as a key way to deliver
bank believes that only private sector can help to overcome the education.
gaps. In contrast to this UNESCO’s Education for All Global
Rashtriya Madhyamik Shiksha Abhiyan (RMSA) is another Monitoring Report, finds that: “public-private partnerships have a
World Bank supported program for secondary education. The World mixed and modest record on learning achievements and equity.
Bank has provided estimated $ 650 million for this program. This And low-fee private schools are a symptom of failure in public
is largely based on the analytical work of the World Bank focusing provision, not a solution to the problem. The lesson: transferring
on strategies to improve access, equity, management and quality responsibility to communities, parents and private providers is not
through expanded public private partnerships at the secondary a substitute for fixing public-sector education systems.”
level. In Uttar Pradesh, the two major World Bank sponsored
BOX-14 The bank is also educational projects were implemented. Brief of these projects are
Pressure to Lend funding Vocational education as follows-
Structural imperatives and training program with a  Uttar Pradesh Basic Education Project (UPBEP I; Credit 2509)
within the Bank drive lending in $280 million project to for US$165 million, which was approved in FY93 and
ways that may detract from
86 Direction of development

87 Direction of development
upgrade 400 Industrial compelled on schedule on September 30, 2000;
poverty alleviation goals. For training institutes (ITIs)
instance, the Bank finances its  Second Uttar Pradesh Basic Education Project (UPBEP II;
administrative budget from profits as centers of excellence.
Further a $300 million project Credit 3013) for US$59.4 million, which was approved in FY98
derived from its finance and
is operational to improve as a complement to UPBEP I, and completed on schedule
lending operations. Internally,
Bank staff is promoted largely on India’s technical/engineering together with UPBEP I on September 30, 2000;
the volume of funds they process education -TEQUIP II by the  District Primary Education Project (DPEP I; Credit 2661) for
not on the effectiveness of Bank US$206.3 million, which was approved FY95 and completed
operations — contributing further W orld Bank. Hence the
to the pressure to lend. World Bank is in position to after a 15 mo. extension on June 30, 2003;
Source: Bank Information Center, control overall education  District Primary Education Project (DPEP II; Credit 2876) for
www.bicusa.org/toolkit, pp1.4 system of the country US$425.2 million, which was approval FY96 as complement
through various programs
to DPEP I and was completed on time, together with DPEP I, covered (from 6 to 9). These four primary education projects were
on June 30, 2003. eventually followed by four additional Bank-supported DPEP
The Uttar Pradesh Basic Education Projects and the District projects in other states, two state-based education adjustment
Primary Education Projects were prepared in the early 1990s in projects, and finally, the country-wide 2004 Elementary Education
the context of a major Indian reform movement in basic education. Project (SSA), using a sector-wide, which brought DPEP to scale
In 1986 the government of India enacted New Education Policy in the entire country.
(NEP), to improve primary education. In 1992 the nation’s Central The Uttar Pradesh Basic Education Program (UPBEP-I &
Advisory Board on Education revised the NPE and added a II) Projects had the same main, given that the UPBEP-II was
Program of Action, which included a decentralized approach to designed as a way to expanding resources for the earlier1. The
the planning and execution of Education for All. UPBEP, however, did not include the objective of strengthening
In 1992 the balance of payments crisis in India provided institutional capacity at the state and district levels2.
background to the government to reduce expenditures for social DPEP I and DPEP II had basically the same objectives,
services, prompting the World Bank to provide a US$500 million added “children with disabilities” to the list of disadvantaged groups
Social Safety Net Adjustment Credit, which included planning for a to be served by the project and it explicitly included the sub-district
large “centrally sponsored scheme” called the District Primary level in its capacity building agenda (but this was implicit in DPEP
Education Program (DPEP), eventually, which becomes the focal I’s goal to build block and cluster resource centers and village
point of expanded external financial support. education committees) 3. Also, DPEP I/II were different from UPBEP
Prior to the District Primary Education Program (DPEP) the I/II in their objective to build capacity at the national level, given the
World Bank had not provided any financial support to Basic fact that they included more than one state. Also, the DPEP projects
Education in India. In 1992 the Bank agreed to a Social Safety Net included enhancing community participation among their objectives
Adjustment Credit to India to recover from a balance of payment while the UPBEP projects did not, but again this goal was included
crisis which had forced reductions in government expenditures on in the projects’ performance indicators. Finally, while UPBEP
social services. The credit included planning for a “centrally covered both lower and upper primary education, DPEP covered
sponsored (subsidized) scheme” that was eventually called the only lower primary education4. The design features of the DPEP
District Primary Education Program (DPEP). The scheme was to and UPBEP model were similar. Their objectives included:
channel funding and technical assistance to state and district  improving access to primary education;
governments. Increases in external financial support for primary  improving school retention (or, in other words, reducing
education also began at this time, with the provision that it all be dropout);
coordinated by the GOI under the DPEP program.
88 Direction of development

89 Direction of development
Uttar Pradesh was the first state to receive such bank- 1
Given the fact that the UPBEP-I was planned, including projections of future student
support. The Uttar Pradesh Basic Education Project (UPBEP I; enrollments and beneficiary assessments of demand, it is curious that enrolment increases
were seriously underestimated. This must be considered a design flaw. However, the strategy
IDA credit of US$165 million) was launched in 1993 and was taken to overcome this flaw appears reasonable: since UPBEP I was already at its limit of
followed in 1997 by a companion project (UPBEP II), which added proportion of funds to be allocated for infrastructure and new personnel, the creation of a
expansion project provided a way to add such resources. Not having done so would have
about US$60 in IDA credits to cover increased infrastructure, created much more overcrowding than actually occurred and would have seriously, undermined
teachers and textbooks in the original UPBEP I districts, given much the quality improvement objectives.
2
World Bank, Development Credit Agreement, Uttar Pradesh Basic Education Project (CR
higher than expected new enrollments there. Reassured by the 2509-IN), July 7, 1993.
viability of UPBEP I, in 1994the government launched District 3
This terminology can be confusing. In UPBEP I/II basic education is defined as lower and
upper primary education. Thus, the
Primary Education Project (DPEP I; IDA credit of US$260.4 million)
term primary education could also be used to refer to it. In DPEP, the use of the term primary
in another six states. In 1996, Phase II was launched (DPEP II; education referred only to the
IDA credit of US$425.2 million), which expanded both the number lower primary cycle (grades 1-4 or 1-5, depending on the state).
of districts in the original DPEP states but also the number of states 4
World Bank, Development Credit Agreement, Uttar Pradesh Basic Education Project (CR
2509-IN), July 7, 1993.
 improving student learning outcomes (achievement test DPEP achievement tests. As in UPBEP I/II there were no good
scores); outcomes measures to use in assessing the fulfillment of capacity
 improving institutional capacity to manage basic/primary building at the national, state, and district level, but a body of
education at the national (DPEP I/II only), state and district evidence exits to show that meaningful improvement was attained
levels; and at all levels. On community participation, most of districts activated
village education committees (in various formats), but as in UPBEP
 enhancing community participation in primary education. I/II but a large proportion of them could not be assessed as having
In all of the project aspects, the World Bank finds public become fully functional.
private partnership and privatization of educational services as only
A report prepared by IEGWB1 evaluated these projects.
solution. Attainment of project objectives were generally evaluated
Outcomes ratings for these projects are based on their efficacy
in relation to key performance indicators (where they existed), and
(see above), relevance and efficiency. Outcomes ratings for both
these varied across the two pairs of projects. Eventually both of
UPBEP and DPEP projects are find only moderately satisfactory,
these projects did not meet their objective and first and second
even though the pattern of achievement across the different sub-
phases. The World Bank evaluation report itself indicates that
objectives is different. Institutional development is rated substantial
UPBEP I/II aspired to improve access in terms of district for both pairs of projects. Bank and borrower performance are rated
capacity to enroll 100 percent of 6-10 year olds and 75 percent of only satisfactory for UPBEP and DPEP.
11-13 year olds, levels which were not quite reached, especially if
To conclude it can be said that even after a huge borrowing
net enrollment ratios – the appropriate measure in this case – are
from the World Bank on unfavorable conditions of privatization of
used. The goal for student retention was a 50 percent reduction in
services both DPEP and UPBEP has not yielded desired outcomes.
student dropout, which turned out to be difficult to assess, given
In fact, improving student learning outcomes needs more than just
limitations in data, but the best indicator (a real cohort analysis in a
setting goals and mobilizing inputs; it needs coherent changes in
sample of districts) revealed actual changes were closer to 35
intermediate outcomes at the classroom level. This implies opening
percent. Learning outcomes were to have been improved by 50
up the black box of learning improvement efforts and a focus on
percent over baseline levels, and although this was alleged in the
change at the classroom level. UPBEP/DPEP have created a
ICR to have been accomplished, the validity of the test was called
structure from lending for increased teacher professional
into question by the same ICR. Institutional capacity building did
development opportunities, but so far changes in classroom both
not have good outcome measures, but there was evidence of
quantitative and qualitative have been below expectations.
positive changes in a number of important management domains.
Privatization of the educational services is not a solution. One major
On community participation, the project activated village education
factor in this is the lack of coherence in the various parts of the
committees in most locations, but it was unclear how many became
system. Therefore state government must have to rethink its
90 Direction of development

91 Direction of development
“fully functional” or even what that meant.
strategy for universal primary education beyond the public private
In DPEP I/II improved access was assessed in terms of the participation and the World Bank’s purview.
reduction in enrollment gaps between girls and boys and
disadvantaged groups and the mainstream. Results show this was 1
The Independent Evaluation Group assesses the programs and activities of the World Bank
not accomplished in 6 of 10 in DPEP II. Enrollment of children of for two purposes: first, to ensure the integrity of the Bank’s self-evaluation process and to
verify that the Bank’s work is producing the expected results, and second, to help develop
scheduled castes and scheduled tribes remained underserved. improved directions, policies, and procedures through the dissemination of lessons drawn
Reducing dropout to below 10 percent was also not accomplished from experience. As part of this work, IEGWB annually assesses about 25 percent of the
Bank’s lending operations through field work. In selecting operations for assessment,
in most of districts of the DPEP-I; in DPEP II districts this was preference is given to those that are innovative, large, or complex; those that are relevant to
accomplished in only 16 percent of districts. The targets of upcoming studies or country evaluations; those for which Executive Directors or Bank
management have requested assessments; and those that are likely to generate important
improving learning outcomes have not been met in up to 39 percent lessons.To prepare a Project Performance Assessment Report (PPAR), IEGWB staff examine
of districts (depending on grade level and subject) and did not reach project files and other documents, interview operational staff, visit the borrowing country to
discuss the operation with the government, and other in-country stakeholders, and interview
the goal. Also there are serious questions about the validity of the Bank staff and other donor agency staff both at headquarters and in local offices as appropriate.
The series of policy measures launched by the Indian BOX-15
government are part of structural adjustment program in India.  Devaluation of rupee by 23%.
Government has taken up following measures to implement SAP :  New Industrial Policy allowing more foreign investments.
Health in India : Current Scenario & Future Directions  Opening up more areas for private domestic and foreign
The model of globalisation of health that is being pursued investment.
here in India is the American model, in consonance with all other  Part disinvestment of government equity in profitable public
aspects of the economy. The American health model, that is the sector enterprises.
least humane and the most inequitous, still pledges much more  Sick public sector units to be closed down.
public expenditure on health than the Indian policy-planner can  Reforms of the financial sector by allowing in private banks.
dream of in his worst nightmare. One can thus imagine the level of  Liberal import and export policy.
suffering and deprivation that is awaiting millions of people here  Cu? ts in social sector spending to reduce fiscal deficit.
as the process of globalising health gains momentum in the years
 Amendments to the existing laws and regulations to support
to come. For the majority of the working people and the lower reforms.
economic classes it would be a frightening denouement with the  Market-friendly approach and less government intervention.
health market being out of their reach and public sector health  Liberalization of the banking system.
services having been emasculated. The role of the PHCs, already
 Tax reforms leading to greater share of indirect taxes.
in a state of advanced decline, is continuing to being marginalised
All the above mentioned ingredients of SAP are based on
further. With rampant environmental degradation and thoughtless
the Anderson Memorandum titled “Trade Reforms in India” dated
decapitation of public health, hitherto unheard of epidemics will Nov. 30, 1990 submitted to Government of India by the World Bank.
rear their heads. It is interesting to note that this memorandum was not disclosed to
The present health situation in India is a sad story of depri- the then Prime Minister, Mr. Chandra Shekhar, the then Finance
vation. The blatantly paradoxical spectacle of buying and selling of Minister and the Cabinet Secretary by a group of senior officials in
health improvements as a consumer goods by the well-off minority the Finance Ministry. Incidentally, all these officials were ex-World
Bank and ex-IMF employees.
in the metros on the one hand and the denial of basic health facili-
ties to the vast majority of the population along the length and breadth Social and public infrastructure in Uttar Pradesh is not in a
of the country on the other hardly evokes any comment. The mor- good situation. Uttar Pradesh lags behind national mortality and
bidity and mortality levels in the country are still unconscionably fertility declines, according to the National Family Health Survey
high and that the still-unsatisfactory health indices are, in turn, an (NFHS). An Indian woman on average bears 2.7 children during
indication of the limited success of the public health system in meet- her lifetime, but the typical woman in Uttar Pradesh bears 3.8.
ing the preventive and curative requirements of the general popu- About 44 percent of married women in Uttar Pradesh use
92 Direction of development

93 Direction of development
lation, the data presented by the Government fails to indicate the contraceptives, compared to 56 percent of their counterparts
nature and extent of neglect and deprivation of health of the vast nationally. Infant mortality in the state is high at 73 deaths per 1,000
majority of the population. live births1. And most health indicators in Uttar Pradesh changed
Part of the story is evident from statistics showing very un- very little from the previous NFHS in 1998/99. There are around
even levels of attainment of health across the rural-urban divide as 3.5 or 4 million live births in Uttar Pradesh each year, since an
also across the geographical divide between the better-performing estimated 14% of the 26 million Indian births occur here (RGI,
and the poorly-performing states. It cannot be a matter of pure co- 2006).
incidence that all the better performing states (Kerala, Maharashtra,
and Tamil Nadu) are known to have better preserved public health Beyond that there are a number of unwanted pregnancies,
systems right down to the PHC level as opposed to the poorly per- miscarriages and still births or maternal deaths before birth. Based
forming ones, where even the physical infrastructure and the man- on SRSii estimates, the MMR of Uttar Pradesh was 517 in 2002-
power resources are grossly inadequate and frequently non-exis- 2003, which means roughly around 20,000 maternal deaths in a
tent. It can be seen in table below. year in this state alone. According to estimates, the proportion of
BOX-16
(SGPGI), 7 Government BOX-17
The World Bank’s Preemption Doctrine: and 4 Private Medical A recent paper on provision of anti-
A Misguided Mission colleges & Hospitals, 53 retroviral therapy (ART) in India has thrown fuel
The World Bank often says, If we don’t finance this project, District Hospitals, 13 on the flames of the debate over whether public
someone else would, and it would be worse. But in reality, the World Combined Hospitals, 388 or private provision is better. Dr Mead Over, a
senior economist at the US-based think tank
Bank is a public financial institution with limited resources. Its stated Comm unity Health Center for Global Development, found that low-
objective is to promote sustainable development and reduce poverty. Centres, 823 Block quality care has negative effects beyond just
It has neither the mandate nor the means to prevent all bad projects PHCs, 2817 Sub Block the patient receiving the care, and concludes
from taking place or to make all potentially harmful investments slightly
less damaging. Arguing that a project will be better if the Bank is PHCs apart from 20521 “public sector delivery of ART can be justified
involved is not sufficient or sound rationale for supporting it. Indeed, Sub Centres, yet only 9 not only because it protects poor AIDS patients
from catastrophic health expenditures, but also
this logic could justify Bank involvement in any operation, from a toxic percent of the State’s because it might differentially ‘crowd out’ the
chemical factory to a highway through a rainforest, in order to pre- population actually make cheapest (and therefore perhaps the worst) of
empt others from doing it more carelessly. In recent years, the Bank use of this facility for the private sector AIDS treatment. If this
has frequently held out the threat of Chinese financing as a justification
for its own, pre-emptive involvement in various high-impact projects.
treatment of ordinary crowding out slows or postpones the
Given its finite resources and the opportunity costs of activities it ailm ents and people development and spread of drug resistant HIV,
undertakes, the Bank should select projects on the basis of their mostly have to depend on this is an important reason for preferring public
to private sector delivery.”
likelihood to make a positive contribution to poverty reduction. private healthcare. In the
Development dodgeball: deflecting responsibility. Private sector, there are
Source: Bank Information Center, www.bicusa.org/toolkit pp, 2.15 four Medical colleges & Hospitals and 4913 Male/Female hospitals/
nursing homes at District level in the State. However, there is a
ill-health to maternal deaths is 20 times, giving a staggering total
large number of registered and non-registered medical practitioners
of women who are in need of maternal health care. This situation
in the State and they play an important role in providing medical
has been in evidence since the last few decades, warranting special
service to the rural population. Even though, the physical health
planning and provisions for ensuring service provision to all women
infrastructure in the State is still much below the country average.
to prevent deaths or ill-health. As India enters the twenty-first century
For instance, the population covered by a Sub-centre in the State
with a bang, it is relevant to ask why this has not happened. It is
is 7080 and the average distance is 3.4 km. while the country
neither for lack of state fundsiii nor for lack of donor interestiv.
average is 5109 and 1.3 km. It is estimated that 11% of people in
Using maternal health service provision in Uttar Pradesh as a case
Uttar Pradesh are not able to access medical care due to locational
study, I interrogate the service provision facilities for these health
reasons. Further, even when accessed, there is no guarantee of
needs of women and what are the public and private sector roles
sustained care. Several other deterrents such as bad roads, the
involved.
94 Direction of development

95 Direction of development
unreliability of finding the health provider, costs for transport and
In lack of proper and functional public health system an wages foregone, etc. make it cheaper for a villager to get some
overwhelming percentage of births occur in the private sphere in treatment from the local quack.
UP: according to the SRS figures, 89.9% of deliveries in Uttar
The Draft Uttar Pradesh Human Development Report
Pradesh occurred at home in 2001-2003 (a slow decline from the
mentions that combined losses due to premature death and
92.2% in 1997-98). Among the births surveyed during NFHS-3 of
disability from non-fatal illnesses (measured as Disability Adjusted
2005-2006v in Uttar Pradesh, around 88 % were handled at home
Life Years – DALYs) are very high in Uttar Pradesh. A World Bank
(the figure is 82.5% for rural UP). Around 70.8 % of the births in
Study of the year 2000 showed that the estimates of DALYs lost in
UP (76.2% in rural areas) appear to have been handled by non-
six States in India suggest that Uttar Pradesh at 273.2 DALYs, has
health personnel: perhaps including family members and
the highest loss rate among all the Indian States. A further analysis
neighbours as well as traditional birth attendants or TBAs.
of ailments by cause shows that the overwhelming cause of
Uttar Pradesh has a fairly large public sector health premature death and disability can be attributed to ‘Group 1’
infrastructure comprising of one Super Speciality Institution
diseases, namely communicable diseases, malnutrition and

BPL – Below Poverty Line; IMR – Infant Mortality Rate; NFHS-2 – 2nd National Family Health Survey; SD – Standard Deviation; MMR – Maternal Mortality Rate;
perinatal conditions, a disease pattern common among poor

year 2000 (in


Malaria +ve
populations.

cases in
In states like Uttar Pradesh1, the State Health Service is

’000s)
2200
currently serving no other purpose than administering the Pulse

138

483
132

528
5.1

56

53
99


Polio Programme. This is because either the physical infrastructure
(building etc.) is nonexistent or is too dilapidated or has been
acquired for some other purpose. In still more remote areas, even
population such service is unheard of. In fact, the State Health Service simply
Leprosy
Cases/
10000

11.83
does not exist for large parts of the population of these and other

7.05

3.88
3.7

0.9
3.1
4.7

0.8
4.3
states and the latter survive and die at the mercy of the private


sector health services (the commercial enterprises and the NGO
hospitals) — in other words, at the mercy of the market. As we all
MMR/lakh

know, markets are merciless.


% of children (Annual
Report
2000)

In Uttar Pradesh the World Bank has assisted Uttar Pradesh


408

135

498
707
607
707
498
87

79

Health system Development Project (UPHSDP) to gear up delivery


system of the existing health care infrastructure to provide high
quality, effective and responsive health services to the rural people.
Wt forage

Time frame of the project was July 2000 to Dec.2005 costing US$
(<2SD)
<3 yrs

109.65 million (“. 478.07 crores). This was implemented in 28


49.6
38.4

districts. The main objective of the project was to present the


47

27
50
37

54
54
51
52
55
medical and health sector into a modern responsive and
accountable system that will provide high quality, affordable and
(NFHS-2)

integrated services to the masses through structural and qualitative


<5 Mor

103.7

104.4
105.1
114.9
122.5
137.6
1000

94.9

63.1

18.8
58.1
63.3

changes that creates private sector involvement as a precondition.


tality

The said objective of the project was to establish a well


TN – Tamil Nadu; UP – Uttar Pradesh; MP – Madhya Pradesh.
managed (?) health system that delivers more effective services
(1999-SRS)
Live Births

through policy reforms, institutional development and investment


in health services. The contract document with bank and state
Differentials in Health Status

1000
IMR/

government clearly stated that project aims at covering all the


96 Direction of development

97 Direction of development
70
75
44

14
48
52

97
63
81
84
90

districts of the state for strengthening and management of health


services through public private partnership. The capacity building
Populations

Better Performing States

of government health facilities and infrastructural development have


Low Performing States
BPL(%)

been the thrust area of intervention (for public sector). The


27.09
23.62

12.72
Maharashtra 25.02
21.12

47.15
42.60
15.28
31.15
37.43
26.1

restructuring and redesigning of organizational structure of health


department by merging the family welfare department with
comprehensive human resource policy was one of the major steps
conceived by the project authorities. Two major Project component
Rajasthan

had direct implication towards privatization of health services in


Table-14

Sector

Kerala

Orissa
Urban

Uttar Pradesh first was Policy reform regarding reducing public


Rural

Bihar
India

MP
UP
TN

expenditure and second was private and public partnerships. Two


other were; strengthening and renovation of existing resources and were no highly satisfactory outcomes, and only about two-thirds of
skill development of human resources. projects had moderately satisfactory outcomes or better. Those
In fact, the total practice was only just to make way in for projects which meet their objectives were performing at
private sector for huge health market. Therefore, the importance substantially lower levels than their outcomes would suggest. For
of public private partnership has been effectively conceptualized example, an on-the-ground assessment of one Indian program
during the planning phase of the project. A close analysis of the showed that “more than half of the pieces of equipment procured
project logo itself recognizes the collaborative efforts of public and were not delivered or not installed,” while “‘severe construction
private sectors to improve and regulate the health sector and deficiencies’ were found on the Orissa Health Systems
regulate the health sector delivery. To fulfill this ultimate objective Development Project in buildings that [were] reported to be
of the project, an innovative scheme has been started in 2003. complete and performing according to specification.” The report
The scheme aim at providing limited curative and preventive health also found that pro-poor projects were only about half the total,
care services to the disadvantaged section of the society, especially and that only 13 percent of projects had a specific poverty-reduction
women, and the poor in remote areas which are identified which objective.
are served as un-served areas by the district health authorities. The Independent Evaluation Group (IEG) itself revealed that
The services include prenatal, natal, post natal care, immunization the IFC - a part of World Bank Group “supporting public-private
of children, health education and linkage with government /private partnerships through advisory services to government and industry
sector for its referral services, in order to reduce maternal and and through its investments, and expand investments in health
infant death rates. insurance.”
In principle the project aim at covering all the districts of UP, Privatisation of the health services is on top agenda of the
but for creating sub centre level health facilities in remote and in whole W orld Bank group agencies. As evident from the
accessible areas under “innovative Scheme” of the project,28 International Finance Corporation (IFC)- the World Bank’s private
backward districts1 have been selected in the first phase. Since, sector arm, which decided in early June to invest $20 million in
availability of health services vary across the region in the state, The Health in Africa Fund, a private equity fund that focuses on
which implies that the existing government facilities are not at easy private sector health insurance managed by Aureos Capital,
reach. Therefore, the project aim to provide only limited curative London1.
and preventive services at these un-served locations under such Recently national and internal policies/agencies are
innovative scheme through partnership with private / non pressurising low income states or low HDI ranked states to improve
government organizations. their health indicators for that they need huge extra resources which
A recent evaluation of the World Bank’s health work is cannot be possible at least in short run as these states have no
damning in its criticism of the lender’s approach. The World Bank capacity to generate extra resources .These poor states like Uttar
98 Direction of development

99 Direction of development
is continuing to push privatization in public services such as health Pradesh have developed a huge physical public health
alike education and water, despite fierce criticism. A World Bank’s infrastructure over the time but they have not sufficient man power
Independent Evaluation Group (IEG) report evaluated almost $18 to deliver health care services efficiently and their utilization is very
billion worth of health, nutrition and population work covered low because of sub standard quality. To get rid of this lacuna Public
projects from 1997 to 2008 across the World Bank Group. It rated private partnership is presented as a mode of implementing
220 projects according to how well they met stated objectives, government programs and schemes.
regardless of how good those objectives were. Interestingly, there Over the last few years there have been many initiatives to
improve the efficiency, effectiveness and equity in provision of
1
The Eastern region and Bundelkhand region have been given weightage in selection due to healthcare services and experiences of these programs show that,
their backwardness. Remoteness, inaccessibility, location un-served by any type of health
facilities were identified by the reporting of the respective medical incharge of primary health it is not only the lack of funds but also lack of political, managerial
centers on the basis of average distance covered to reach sub centers, PHC, CHC and district
hospitals, condition of road, transports facilities, connectivity of villages during rainy season. 1
World Bank Health Work Flawed Still Pushing Privatization of Services
and technical ability in government health care delivery system The promotion of PPIs in healthcare has raised questions
which is provoking Public private partnership in this sector. about equity especially in the access of low-income or marginal
The UPHSDP scheme lacks practicality on various grounds groups to reproductive health services, or the right of communities
like, the scheme was not focused towards any particular scheme to participate in decision-making regarding health care priorities.
moreover it contains too much components of service delivery (117 The social franchising and social marketing models have been
facilities) which cannot be maintained as far as quality is concerned. studied in Bangladesh and the issues of subsidy withdrawal and
UPHSDP was also unable to give a concrete or a model solution cost recovery have emerged as a significant challenge. Quality
to the problem. Therefore, it cannot be a replicated to urban and control of franchised health service provision is also difficult when
semi urban areas. the nature of services varies with each individual user and the
evaluation of rational and high-quality care cannot be done by the
Monitoring and evaluation of the project is again great
user. Similarly there is a concern with contracting of public health
challenges in its own Coordination between different regulatory
services in the absence of strong pro-consumer and regulatory
components are week. Simultaneous operation of NRHM and other
laws, and of sufficient managerial capacity within the public sector
government health schemes diluted the idea and enthusiasm of
to regulate and monitor the process in a transparent and effective
UPHSDP in the state.
manner so as to ensure accountability of the contractor. Therefore,
With social health insurance schemes (another World Bank there is urgent need to devise a proper government health care
Model), it has been found that when providers are paid ‘fees for delivery in order to streamline the public health system and reach
service’ they tend to increase the tests, drugs and the length of the urban/semi –urban and rural areas of the state.
hospital stay. But if the providers are paid on a ‘capitation basis’,
they are motivated to contain costs and adhere to rational Why is the World Bank in Need of Reform?
prescriptions and therapy. The other issue relates to health The World Bank’s failure to achieve its primary mission of
insurance for the vast informal sector in India, especially women poverty alleviation is now acknowledged at the most senior levels
who are largely outside the ambit of the formal sector employment. of the Bank itself, as well as by the Canadian Auditor General.
Pre-payment schemes may not be sufficiently financially viable, Evidence of project and portfoli failures have led to increasing calls
since risk-pooling by poor populations has to be cross-subsidized for a comprehensive review of the World Bank and the IMF, the
by either the government or by enrolling higher-income groups. most recent call coming from the countries of the G-7 in the
Moreover it may exclude the poorest and those without access to communique from their 1994 Naples summit. The fundamental
cash incomes such as adolescents, the elderly or disabled. reform of the Bretton Woods Institutions (BWIs) is urgently needed.
In conclusion, it can be said that UPHSDP is just an initiative Over the past decade, the World Bank has come under
to PPP in Uttar Pradesh. Government is very fanatical to invite increasing criticism from a wide range of groups in the North and
100 Direction of development

101 Direction of development


private sector to help in delivery mechanism of health system. South. Environmental groups argue that many World Bank projects
Private Medical collages/Dental colleges are m which mushrooming have had a disastrous effect on the environment. The World Bank
to increase the supply of doctors and other health personals but it often finances large infrastructure projects, including dams, open
is again doubtful whether regarding quality control. Even though, pit mines, and road construction. In case after case these projects
till date the Uttar Pradesh did not have any effective PPP model in have been proven economically unsound, have destroyed pristine
health care delivery system. Government officials of health rainforests, rivers and estuaries, and have uprooted the livelihoods
department are making strategy for involving private sector through of millions of Third World citizens who are affected by them. World
Public Private Partnership (PPP), the state government has already Bank-funded development projects have forcibly resettled 2.5
engaged consultant to explore the possibility and finalise the bid million people since 1986 alone, and will likely uproot another 2.5
papers for handing over as many as six projects to private million by the year 2000.
companies. Other groups have been critical of the World Bank’s policies
of structural adjustment designed to assist countries in correcting
their balance of payments or debt problems. These programmes
have exacted an unacceptable toll on the poor and the environment
(see brief on “Structural Adjustment Programmes”. Increasingly,
these groups have joined together in the 50 Years is Enough
Campaign to call for the fundamental reform of the World Bank.
The record of the World Bank in financing environmentally
and socially destructive projects, as well as failed adjustment
programs insensitive to local realities, is also a serious problem.
These failures were brought to the fore in a recent World Bank
review of its projects. The Wapenhans Report cited a significant
deterioration in the overall quality of project lending. Another internal
independent report on the IDA-funded India’s Sardar Sarovar dam
project noted that the Bank systematically failed to live up to its
own environmental guidelines in evaluating and implementing the
project.
102 Direction of development

Direction of development
103 Direction of development
ANNEXURE 1COMPARATIVE LEVELS OF DEVELOPMENT – UTTAR PRADESH AT A GLANCE

Comparative Levels of Development

Indicators U.P. India Some Progressive States


I- Per Capita income (Rs.) *
(at current prices )
2008-09 18710 37490 Haryana 58531
(Other States Data for 2007-08) (14) Maharashtra 47051
Punjab 44923
Gujarat 45773
Himanchal Pradesh 40134
Kerala 41814
Tamil Nadu 40757
Agriculture
1. Holdings below 1.0 hect. 76.90 63.0 Maharashtra 47.3
(2000-01) (12) Haryana 46.1
Karnataka 46.0
Gujarat 29.4
Punjab 12.3

2. Per Capita Net area sown 0.09 0.13 Rajasthan 0.27


(2005-06) (hect.) (11) Madhya Pradesh 0.23
Gujarat 0.18
Karnataka 0.19
Maharashtra 0.17
Punjab 0.16
Haryana 0.16

3. Percentage of net 78.6 43.4 Punjab 95.2


irrigated area to net (3) Haryana 82.3
area sown (2006-07) Bihar 54.5

4. Cropping Intensity (2005-06) 150.5 135.9 Punjab 190.6


(5) Haryana 182.4
West Bengal 180

5. Consumption of 149.6 117.1 Punjab 210.0


fertilizer (kg/hect.) (2007-08) (5) Tamil Nadu 178.3

104 Direction of development


105 Direction of development

Andhra Pradesh 199.6


Haryana 187.6

6. Productivity*
(qtl/hect.)(2007-08)
- Wheat 28.2 28 Punjab 45.10
(4) Haryana 41.60
Rajasthan 27.5
Gujarat 30.1

- Rice 20.6 22.0 Karnataka 26.3


(8) Punjab 40.2
Haryana 33.6
Andhra Pradesh 33.4
Tamil Nadu 28.2
West Bengal 25.7

- Sugarcane 572.1 688.8 Kerala 1090.0

(10) Tamil Nadu 1074.8


Karnataka 875.5
West Bengal 752.7
Maharashtra 809.1
Andhra Pradesh 821.7
Gujarat 719.9

- Potato 219.70 183.30 Gujarat 249.4


(3) West Bengal 247.00

7. Percentage of area under 21.8 36.9 Kerala 90.35


commercial crops (more (14) Gujarat 64.90
remunerative crops) (2005-06) Andhra Pradesh 46.35
Tamil Nadu 43.01
Maharashtra 43.49
Karnataka 41.69
Note: Figures in bracket indicate the ranking of Uttar Pradesh among 15 major states
Source: Uttar Pradesh Planning Department
http://upldwr.up.nic.in/pc-cd/wasteland_atlus_UP.pdf

106 Direction of development


107 Direction of development
ANNEXURE 2LAND USE PATTERN IN SELECTED DISTRICTS FOR UPSLRP IN DIFFERENT PHASES

1998-99
Sl. No. District Having Barren and Culturable Total Fallow Lands Current
Largest Problemed Un Waste Fallow Other than Fallow
Land Area Culturable Land Land Current Fallow
1 KHERI 79300 5528 36315 41843 478699
2 ALLAHABAD 76578 23505 27732 51237 357676
3 JHANSI 72444 7933 16171 24104 349267
4 RAEBARELI 70934 27542 24719 52261 283582
5 FAIZABAD 68502 14989 22752 37741 341128
6 SITAPUR 64714 12515 48779 61294 426138
7 HARDOI 63004 28574 37103 65677 419674
8 SULTANPUR 62517 19117 45657 64774 285679
9 SONBHADRA 60468 15649 20474 36123 186845
10 AZAMGARH 59203 11086 32472 43558 304844
11 BAREILLY 58149 5353 7047 12400 331448
12 FATEHPUR 57641 16232 46273 62505 277949
13 MUZAFFARNAGAR 54855 3101 4970 8071 326299
14 BADAUN 53808 16527 20271 36798 408078

15 MEERUT 53639 5590 4592 10182 314025


16 KANPUR (S) 53556 10723 19145 29868 193745
17 BARABANKI 53472 21927 22429 44356 256055
18 GONDA 52860 9193 30893 40086 279865
18 MIRZAPUR 52504 15316 9630 24946 215327
20 ETAWAH 51879 10965 17467 28432 292703

2001-02
Sl. No. District Having Barren and Culturable Total Fallow Lands Current
Largest Problemed Un Waste Fallow Other than Fallow
Land Area Culturable Land Land Current Fallow
ALLAHABAD 90326 27401 40831 68232 347430
1 KHERI 78997 5486 35773 41259 479215
2 JHANSI 72826 7306 25275 32581 343209
3 RAEBARELI 71431 27255 32464 59719 274133
4 SITAPUR 66733 12735 40221 52956 432881
5 HARDOI 63614 28734 33312 62046 422537
6 AZAMGARH 63379 10120 36188 46308 298177

108 Direction of development


109 Direction of development
7 SULTANPUR 62735 19665 43587 63252 286180
8 BAREILLY 61647 3664 7172 10836 329402
9 SONBHADRA 59696 14708 15106 29814 193284
10 BARABANKI 58760 20115 27580 47695 251043
11 FATEHPUR 57704 15266 28190 43456 295304
12 KANPUR (S) 55938 9040 20768 29808 193086
13 BAHRAICH 55118 5811 12553 18364 331163
14 MUZAFFARNAGAR 54460 3582 5971 9553 325848
15 MIRZAPUR 54391 8262 13268 21530 219386
16 BALLIA 54223 4758 17661 22419 215494
17 KUSHINAGAR 54177 1948 7782 9730 220164
18 GONDA 53603 7979 14153 22132 293029
18 BADAUN 53441 16373 14528 30901 415125
20

2006-07
Sl. No. District Having Barren and Culturable Total Fallow Lands Current
Largest Problemed Un Waste Fallow Other than Fallow
Land Area Culturable Land Land Current Fallow
ALLAHABAD 94618 25359 76060 101419 315684
1 KHERI 80742 4186 27244 31430 485935
2 RAEBARELI 76142 25538 34697 60235 271732
3 JHANSI 73957 7549 62207 69756 305847
4 SITAPUR 69451 12031 36285 48316 438052
5 SULTANPUR 67711 18973 47853 66826 283651
6 AZAMGARH 66241 7902 32368 40270 302916
7 HARDOI 66191 25468 44668 70136 421532
8 BARABANKI 65183 14283 43718 58001 292101
9 UNNAO 64866 26626 31254 57880 302166
10 BAHRAICH 59968 5998 18737 24735 324862
11 SONBHADRA 58843 14203 57800 72003 152352
12 FATEHPUR 58736 15242 30345 45587 292966
13 BAREILLY 58338 3200 11300 14500 329289

110 Direction of development


ANNEXURE 3: BLOCKS FALLING IN OVER-EXPLOITED,
CRITICAL AND SEMI-CRITICAL CATEGORIES IN U.P

BLOCKS FALLING IN OVER-EXPLOITED, CRITICAL AND


414047
190726
189861
270273
225228
293983
SEMI-CRITICAL CATEGORIES, U.P. (AS ON 01/04/2000)
S. DISTRICT Over Critical Semi-Critical
No. Exploited
1 AGRA ETMADPUR BAH
FATEHABAD
2 ALIGARH LODHA CHANDOS JAWAN SIKANDARPUR
KHAIR
29329
50276
33485
42454

21105
3972

3 ALLAHABAD KANDHIYARA
URWA
4 BAGPAT BINAULI KHEKRA
5 BAHRAICH SHEOPUR
6 BARABANKI DEWA
18053
41311
26773
27635

14797
2795

7 BAREILLY ALAMPUR ZAFARABAD


MAJHGAWAN
8 BIJNOR NOORPUR
9 BUDAUN ASAFPUR AMBIAPUR
BISAULI DAHIGAWAN
11276

14819
8965
6712

1177
6308

GUNNAUR ISLAM NAGAR


RAJPURA JUNAWAI
WAZIRGANJ UJHANI
10 DEORIA BHALUWANI BANKATA
11 ETAH MAREHRA SAHAWAR
SAKEET
12 FARRUKHABAD BARHPUR
57762
57556
55812
55692
55556
55265

KAMALGANJ
13 FATEHPUR AMAULI
KHAJUHA
111 Direction of development

112 Direction of development


MALAWAN
14 FIROZABAD NARKHI JASRANA
KUSHINAGAR

15 GHAZIABAD HAPUR
KANPUR (S)
MIRZAPUR

LONI
LALITPUR
BADAUN

16 HATHRAS SASNI
GONDA

17 JHANSI GURSARAI
18 JYOTIBA JOYA GANGESHWARI
PHULE NAGAR HASANPUR
19 KANNAUJ HASEREN
JALALABAD
KANNAUJ
14
15
16
17
18
18
20

TALGRAM
UMARDA ANNEXURE- 4 :AMENDING LAWS
20 LAKHIMPUR KHERI BEHJAM A portion of the money that the Bank lends or grants in your
DHAULAHARA country goes straight to government coffers to support certain
MITAULI changes in your country’s laws, regulations or institutions. This
MOHAMMADI financing, often called “adjustment” or “development policy” lending,
21 MIRZAPUR RAJGARH does not support physical investments like roads, hospitals and
22 MORADABAD SAMBHAL DINGERPUR
schools. Instead, the money provides both an incentive and a
23 MUZAFFAR NAGAR SHAHPUR
cushion to your government for adopting policy and institutional
UN
reforms advised by the Bank. The Bank doesn’t give out its money
24 PRATAPGARH ASPUR DEOSARA
casually. Adjustment loans are typically provided in one or more
PATTI
installments (called “tranches”), each of which is tied to the
RAMPUR KHAS
borrower’s fulfillment of specific requirements.
25 RAIBARELI AMAWAN
CHHATOH
Like investment projects, policy loans and grants are
JAGATPUR
developed by task teams typically led by an economist, and follow
SALON
a project cycle similar to that for investment loans but with
26 SAHARANPUR GANGOH NANAUTA
documents specific to adjustment lending (see Quick Reference:
NAKUR
Project and Policy Lending Cycles and Documents). The
27 SITAPUR RAMPUR GONDALAMAU
opportunities to obtain information about and influence the content
MUTHURA KASMANDA
of policy loans are more limited than they are for project lending.
SAKRAN
The policies addressed through “adjustment lending” remain more
28 SULTANPUR BHADIYAN
of a black box because the World Bank and government officials
29 UNNAO GANJ MURADABAD
typically discuss them behind closed doors and far from citizens
TOTAL 2 20 53
impacted by them. However, as opaque and distant as they may
seem, policy reforms can have very direct - and at times, dire -
consequences for a country’s population.
In order to implement conditionalities posed by the World
Bank and the IMF, the Indian Government has taken many steps
to amend and change the existing legislations. These legislative
changes cover vast range of areas like industry, banking, labor,
public sector companies, health, power, foreign exchange and
113 Direction of development

114 Direction of development


foreign capital1.
Following is the list of laws which have been amended after
1991 to implement structural adjustment program in India.
 Inland Waterways Authority of India Act, 1985
 Inland Vessel Act
 Foreign Exchange Regulation Act,1973
 The Companies Act, 1956
 Industrial Finance Corporation Act
 Monopolies Restricted Trade Practices Act
 Industrial Disputes Act
115 Direction of development

















IISCO Act, 1976

ONGC Act 1959


Indian Electricity Act

Merchant Shipping Act

Air Corporation Act, 1953


Indian Telegraph Act, 1885
Bank Companies Act, 1970

Maternity Benefits Act, 1961


Indian Trade Unions Act, 1926
Iron and Steel Companies and

Employees Provident Fund Act


The Electricity (Supply) Act, 1948

Miscellaneous Provisions Act, 1978

Sick Industrial Companies Act, 1985


Indian Iron and Steel Company Act, 1972

Mines and Minerals (Regulation and Development) Act

ANNEXURE 5: World Bank Lending to Uttar Pradesh


PROJECT NAME APPROVAL CLOSING LENDING IBRD IDA TOTAL SECTOR1 MJSECTOR 1
DATE DATE PROJECT COMM COMM AMT
COST AMT AMT
Uttar Pradesh
Tubewell Irrigation and Agriculture, fishing, and
Irrigation Project 6-Sep-61 30-Sep-64 6 0 6 6 drainage forestry
Sone Irrigation Irrigation and Agriculture, fishing, and
Project 29-Jun-62 31-Dec-67 15 0 15 15 drainage forestry
Gorakhpur
Fertilizer (Historic)Fertilizer (Historic)Industry
Expansion and other
Project 21-Dec-71 31-Mar-76 10 0 10 10 chemicals
Uttar Pradesh Agriculture, fishing, and
Agricultural (Historic)Agricultural
forestry
Credit Project 24-May-73 31-Dec-77 38 0 38 38 credit
Water Supply
and Sewerage (Historic)Urban Water, sanitation and
Project - Uttar water supply flood protection
Pradesh 19-Aug-75 31-Dec-82 40 0 40 40
Power Project - (Historic)Electric Power
Singrauli (Historic)Thermal & Other Energy
Thermal 1-Mar-77 30-Jun-84 150 0 150 150
Forestry Project Agriculture, fishing, and
- Social Uttar Forestry forestry
Pradesh 5-Jun-79 31-Dec-84 23 0 23 23
Uttar Pradesh Agriculture, fishing, and
Public Tubewell Irrigation and forestry
Project 15-Apr-80 31-Mar-83 18 0 18 18 drainage

116 Direction of development


117 Direction of development
Kanpur Urban
Development (Historic)Urban (Historic)Urban Develop-
Project 27-Oct-81 30-Jun-87 25 0 25 25 management ment
Uttar Pradesh Agriculture, fishing, and
Tubewells Irrigation and forestry
Project (02) 8-Mar-83 31-Mar-91 101 0 101 101 drainage
Irrigation Project Irrigation and Agriculture, fishing, and
- Upper Ganga drainage forestry
Modernization 24-May-84 30-Sep-94 125 0 125 125
Power - Uttar (Historic)Other (Historic)Electric Power
power&energy
Pradesh 15-Jun-88 31-Dec-96 350 350 0 350 conversion & Other Energy
Power - Uttar (Historic)Other (Historic)Electric Power
power and energy
Pradesh 15-Jun-88 31-Dec-96 350 350 0 350 conversion & Other Energy
UTTAR Primary
PRADESH education Education
BASIC EDUCA-
TION 10-Jun-93 30-Sep-00 193.9 0 165 165
Uttar Pradesh Agriculture, fishing, and
Sodic Lands Crops forestry
Reclamation
Project 10-Jun-93 31-Mar-01 80.2 0 54.7 54.7
Uttar Pradesh
Rural Water Water, sanitation and
Supply and Water supply flood protection
Environmental
Sanitation
Project 25-Jun-96 31-May-03 71 59.6 0 59.6

Second Uttar Primary


Pradesh Basic education Education
Education
Project 4-Dec-97 30-Sep-00 76 0 59.4 59.4
UTTAR
PRADESH Forestry Agriculture, fishing, and
FORESTRY 9-Dec-97 31-Jul-03 65 0 52.94 52.94 forestry
Uttar Pradesh
Sodic Lands Irrigation and Agriculture, fishing, and
Reclamation drainage forestry
Project (02) 15-Dec-98 30-Sep-07 286.6 0 194.1 194.1
INTEGRATED General
WATERSHED agriculture, Agriculture, fishing, and
DEVELOP- fishing and forestry
MENT forestry sector
PROJECT 15-Jun-99 30-Sep-05 193 85 50 135
Uttar Pradesh
Third District
Primary Education
Education Primary
Project 16-Dec-99 31-Mar-06 214.7 0 182.4 182.4 education
UTTAR
PRADESH
POWER
SECTOR Power
RESTRUCTUR- Energy and mining
ING PROJECT 25-Apr-00 31-Dec-04 236 150 0 150
Uttar Pradesh
Health Systems

118 Direction of development


119 Direction of development
Development
Project 25-Apr-00 31-Dec-08 127.58 0 110 110 Health Health and other social
UTTAR services
PRADESH
FISCAL
REFORM &
PUBLIC Central gov. Public Administration,
SECTOR administration Law, and Justice
RESTRUCTUR-
ING 25-Apr-00 30-Oct-00 251.27 126.27 125 251.3
Uttar Pradesh
Water Sector Irrigation and Agriculture, fishing, and
Restructuring drainage forestry
Project 19-Feb-02 31-Oct-10 173.7 0 149.2 149.2
Uttar Pradesh Roads and Transportation
State Roads highways
Project 19-Dec-02 31-Dec-10 614.84 488 0 488
Allahabad Roads and
Bypass Project 14-Oct-03 30-Jun-09 320.2 240 0 240 highways
Uttaranchal
Decentralized General Agriculture, fishing, and
Watershed agriculture, forestry
Development fishing and
Project 20-May-04 31-Mar-12 89.35 0 69.62 69.62 forestry sector
Lucknow-
Muzaffarpur Roads and
National highways Transportation
Highway Project 21-Dec-04 30-Jun-10 805.97 620 0 620

Uttaranchal
Rural Water
Supply and Water supply Water, sanitation and
Sanitation flood protection
Project 5-Sep-06 30-Jun-12 224 0 120 120
Rampur
Hydropower Renewable
Project 13-Sep-07 31-Mar-13 670 400 0 400 Energy and mining
energy
Uttar Pradesh
Sodic Lands Agriculture, fishing, and
Reclamation III forestry
Crops
Project 30-Jun-09 31-Dec-15 272 0 197 197
Uttar Pradesh Health and other social
Health II Project N/A N/A 20 0 20 20 Health services
Second Uttar
Pradesh Agricultural
Diversified extension and Agriculture, fishing, and
Agriculture research forestry
Support Project N/A N/A 186.5 74.6 74.6 149.2

120 Direction of development


Referances:

Principal
1. Indices - Government of India (2001), ‘National Human

Charges
as % of

*World Bank Fiscal Year is from July 1 through June 30. **Total commitment amount is the amount the Bank has agreed to lend to the project at the time of the
18.93

21.95

21.52

50.19

20.95

18.16

22.28

19.08

15.38

17.42
Development Report’, Planning Commission, New Delhi
2. Demography - Total Population and Sex Ratio -Registrar

611.94

646.49

446.40

221.58

195.25

934.96

603.52

386.58

630.87

884.67
General of India (2001), ‘ Provisional Population Tables’’,
Charges Principal Charges Total

142,

132,

project’s approval .Total lending includes IBRD, IDA, GEF/GEF Medium size/Carbon Offset projects.Click here to customize your lending report .
Census of India, New Delhi’; Dependency Ratio-National
43,

23,

40,

39,

71,

78,

36,

74,
Human Development Report (NHDR)
940.14

677.88

152.63

440.29

790.27

432.05

044.19

559.66

883.81

108.33
All amounts denominated in US$ equivalents, ThousandsBased on Balances as of 28-FEB-2010
25,
3. Income - PCNSDP -Planning Commission,’ Tenth Plan

13,

20,

13,

12,

11,
(2002-2007)’, Vol. III, Annex 3.1, Persons in Labour Force,
6,

4,

6,

4,
% of Population living below poverty line – NHDR
Total

671.80

968.61

293.76

781.30

404.98

502.91

559.33

826.93

747.06

776.34
4. Education - Literacy rate - Census (2001), Gross Enrol-
116,

112,
36,

19,

26,

32,

58,

65,

31,

63,
ment Ratio and Teacher Pupil Ratio - Ministry of HRD,
‘Selected Educational Statistics’ 2001Health - IMR and TFR
Principal
as % of

-Planning Commission, Tenth Plan (2003-2007); LEB,


18.92

21.70

21.52

76.04

20.95

23.54

20.69

31.58

15.38

22.54
MMR, Children underweight, Under 5 Mortality Rate, act
% of houses with access to safe
544.48

532.35

446.40

460.05

195.25

493.60

875.54

115.29

630.87

950.12
Charges Total

5. Drinking water, % houses with toilet facilities – NHDR


43,

45,

23,

21,

39,

77,

57,

33,

36,

49,
6. Environment - Forest Survey of India, State of Forest Re-
port (1999)
928.58

119.19

152.63

269.38

790.27

767.89

921.54

947.31

883.81

188.88
7. XIth Plan Working Groups: Crops, Horticulture, NRM,
14,
6,

8,

4,

9,

6,

9,

7,

4,

9,
Marketing, Research, Agro-climatic Zonal Planning, Ani-
Principal

mal Husbandry, Fisheries, Agri-Extension, Gender, Risk


615.90

413.16

293.76

190.66

404.98

725.71

954.00

167.98

747.06

761.24
Annexure 6: Estimated Debt Service Payments - Summary

Management, Credit.
IDA

36,

37,

19,

12,

32,

62,

47,

25,

31,

40,
8. NDC Sub-Committee Working Groups: Irrigation, Dryland
Principal

Farming, Animal Husbandry and Fisheries, Agro-climatic


Charges
as % of

#DIV/0!

#DIV/0!

#DIV/0!

Zonal Planning. Marketing, Credit, Technology and Land


20.70

22.07

28.59

11.38

29.44

11.34

8.34

and WTO issues.


9. National Farmers Commission Reports: Serving Farmers
114.14

761.54

441.36

727.98

271.29

934.55
121 Direction of development

122 Direction of development


67.46
Total

& Saving Farming, Crisis to Confidence,2006: Year of


97,

18,

55,

13,

45,

24,
0

Agricultural Renewal, Jai Kisan: A Draft National Policy


Principal Charges

for Farmers, Towards Faster and More Inclusive Growth


558.69

170.91

664.17

122.65

612.35

919.45
11.57

of Farmers’ Welfare.
17,

4,

5,

3,

4,

1,

10. Examples of these studies include Richard Roll and John


0

Talbott, “Why Developing Countries Just Aren’t?” at


555.45

590.63

777.20

605.33

658.95

015.10
Repayment IBRD

www.worlddevelopmentnow.com/id21.htm; Robert J.
55.9

79,

14,

15-May-10 49,

10,

15-Jun-10 40,

23,

Barro, Determinants of Economic Growth: A Cross-Coun-


0

try Empirical Study (Cambridge, Mass.: MIT Press, 1997);


15-Mar-10

15-Apr-10

1-May-10

15-Jul-10
1-Mar-10

1-Jun-10
1-Apr-10

1-Jul-10

Robert Cooter, “The Rule of State Law and the Rule-of-


Law State: Economic Analysis of the Legal Foundations
of Development,” 1996, in Edgardo Buscaglia, William Yogesh Bandhu is a Social Scientist by
Ratliff, and Robert Cooter, eds., Law and Economics of training. Currently he is associated with Cen-
Development (Greenwich, Conn.: JAI Press, 1997); and tre for Contemporary Studies and Research
Hernando de Soto, The Other Path (New York: Harper (CCSR), Lucknow as Honorary Fellow and
and Row, 1989). Research Consultant. He has graduated as so-
11. Kate Bayliss ( 2000), “The World Bank and Privatisation: cial researcher as Doctoral Fellow of Indian
a flawed development tool”, PSIRU, University of Green- Council of Social Science Research (ICSSR)
wich at Giri Institute of Development Studies,
Lucknow and further as Senior Research Fel-
12. Martinussen J. The Limitations of the World Bank’s Con-
low with United Nations Conference on Trade
ception of the State and the Implications for Institutional
and Development (UNCTAD)-India under
Development Strategies. IDS Bulletin 29 (2), 1998.
Trade Related Research Capacity Building
13. Ministry of health and Family Welfare Government of In- (TRRCB) Program. He has research exper-
dia, 2005-2006 National Family Health Survey (NFHS-3) tise in Development Economics, International
Fact Sheet Uttar Pradesh (Provisional data), Trade and International Development Institu-
14. UPHSDP (Various Documents).Uttar Pradesh Health Sys- tions and carrier in academics in teaching ca-
tem Development Project. Lucknow: Project Management pacity, edifying undergraduate and postgradu-
Unit. ate students with Colleges & State and Cen-
tral Universities.
As a Social Scientist, he has conducted
several field studies and desk researches on
his credit on varying issues including Economic
Development, Poverty, Hunger, Farmers Dis-
tress, Livelihood and many other Socio - Eco-
nomic aspects of common man’s concern. He
has published a number of research papers in
national and international journals of good re-
pute and regularly writing for new papers,
magazines and blogs.
His latest publication “Overcoming Pov-
123 Direction of development

124 Direction of development


erty and Hunger in Bundelkhand” form CCSR
with INSAF (New Delhi) and Bread for the
World (Germany) has engrossed intense in so-
cial sector.