While
prime minister Manmohan Singh, on his way back from a
highly successful tour of the UK and the US, addressed
one of the main bastions of capitalism, the New York Stock
Exchange, back home a simmering, ideological battle raged
within the nodal economic agency, the Planning Commission.
The
four Left parties, which offer critical support to the
Congress-led government at the centre from outside, had
challenged the presence of foreign experts from the World
Bank, the Asian Development Bank, McKinsey & Co and
the Boston Consulting Group on the the Planning Commission''s
joint consultative committee on industry for a mid-term
appraisal of the 10th five-year plan.
The
Left known for its anti-World Bank and anti-IMF stand
has not been able to digest the fact that multilateral
agencies would have a say in the planning process of the
country. It is ironic that the West Bengal government
which has a Left Front government ruling for the last
27 years has enlisted the help of foreign experts and
consultants including McKinsey & Co.
In
June this year, the West Bengal government took the decision
to accept World Bank assistance after a gap of five years
as it was satisfied that World Bank and other multilateral
agencies had stopped imposing conditions on loan recipients.
However
against the backdrop of the tug of war in the corridors
of the Planning Commission, the World Bank recently unveiled
its country strategy for India building a growing relationship
with the Government of India between 2005 and 2008 to
accomplish one of the missions of its ''millennium development
goals'' that of halving poverty by 2015. The strategy
also envisages an increased lending programme of up to
US $ 3 billion a year.
Grappling
with two Indias
Interestingly, one of the aims of the World Bank is to
help India bridge the widening gulf between the rich and
the poor within India a long cherished desire nurtured
by the Left and a laudable objective in the preamble of
the Indian Constitution.
According
to the World Bank there remains a substantial disparity
of opportunity, particularly in the education, health,
and economic prospects of women and other vulnerable groups.
In addition, a growing gulf has emerged between Indian
states, with the result that poverty is getting increasingly
geographically concentrated. According to the strategy
report, India has over one-quarter of the world''s poor
(between 260 million and 290 million) and the World Bank
endeavours to assist India with best practices and financing
for development.
The
World Bank''s country director for India, Michael Carter
says, "Looking at these disparities, what emerges
is a picture of India occupying two worlds simultaneously.
In the first, economic reform and social changes have
begun to take hold and growth has had an impact on people''s
lives, opportunities have opened up. In the other, citizens
appear almost completely left behind by public services,
employment opportunities, and brighter prospects. Bridging
the gap between these two Indias is perhaps the greatest
challenge facing the country today."
A
glance at the common minimum programme (CMP) hammered
out by the United Progressive Alliance, which the Left
Parties support, reveals that its goals are not particularly
different from the country strategy for India which, the
World Bank unveiled recently.
Both
these documents express concerns about the emergence of
two Indias and the regional disparities as a result of
which one is the rich India and the other is the poor
India.
The
CMP talks about redressing growing regional imbalances
both among states as well as within states, through fiscal,
administrative, investment and other measures. It mentions
that it is a matter of concern that regional imbalances
have been accentuated by not just historical neglect by
also by distortions in the allocation of plan and budgetary
resources, and central government assistance. It voices
the fact that in the 10th five-year plan, states
like Bihar, UP and Assam received per capita allocations
much below the national average.
Carter
also says "There is another India we must not forget,
and it is still home to nearly a third of the world''s
poor people. More than half of these live in the four
states of Bihar, UP, MP and Orissa alone, and more than
two-thirds in rural areas." He points out that this
is where a crisis-prone farm sector still supports two-thirds
of the population where per capita incomes are abysmally
low.
Infrastructure,
the key to growth and progress
This is another area, which is accorded top priority by
the World Bank and the CMP. The World Bank sees priority
to infrastructure as an important tool to attack poverty.
In a global poll (consisting primarily of India''s opinion
leaders) conducted by the World Bank as to what its main
objective should be, 43 per cent said it should support
efforts to reduce poverty and 42 per cent said it should
focus on infrastructure development.
Carter
points out that poverty reduction cannot occur without
infrastructure development roads, electricity,
water and sanitation, transportation and communications.
The
UPA, through the CMP, has committed itself to a comprehensive
programme of development and expansion of infrastructure
right from providing basic amenities like roads, highways,
water supply, sewage treatment and sanitation to urban
renewal and expansion of social housing.
Part
of the widening gulf between India''s rich and poor can
be attributed to the neglect of the rural poor and lack
of productive employment opportunities in the countryside.
The UPA is planning to revamp the functioning of the Khadi
and Village Industries Commission and launch new programmes
for the modernisation of coir, handlooms, power looms,
garments, rubber, cashew, handicrafts, food processing,
sericulture, wool development, leather, pottery and other
cottage industries.
The
government is giving the highest priority through investments,
credit and technological support to continued growth of
agriculture, horticulture, aquaculture, floriculture,
afforestation, dairy farming and agro-processing that
will help significantly in creating new jobs.
The
World Bank is looking at helping with rural livelihoods
situation with an emphasis on community driven projects.
Human
Development Improving the quality of life
The World Bank''s country strategy talks of high priority
to human development in terms of education, health, social
protection. Similarly, the CMP deals with each of these
issues separately. It plans to raise public spending in
education to at least 6 per cent of the GDP with at least
half this amount being spent on primary and secondary
sectors. It has also earmarked special funds for development
of women and children especially in rural areas and urban
slums.
Social
harmony and protection of minorities is also a priority
for the new government. It proposes to enact a model comprehensive
law to deal with communal violence and encourage each
state to enforce the law. The government also proposes
to raise public spending on heath to at least 2-3 per
cent of GDP over the next five years, with a high priority
to food and nutrition security.
It
is clear that both the World Bank and the Left parties,
which form a part of the ruling group in India, have the
same goals as far as social responsibilities are concerned.
It will be interesting to observe how Singh and his handpicked
deputy chairman of the planning commission, Montek Singh
Ahluwalia, harmonise the common views of ideological opponents
in the future.
There
have been instances where Left parties have gone hammer
and tongs at some of the UPA government''s policies such
as the foreign direct investment limits and employee provident
fund rate reduction.
Normally,
multilateral institutions attach conditionality mainly
to structural adjustment loans. However, the World Bank
itself is moving away from its earlier rigid norms of
conditionality-linked adjustment loans.
It is now adopting a development policy lending approach
in which governments take ownership of reforms and develop
programmes that meet the needs of their individual countries.
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