MAC: Mines and Communities

World Bank Creates Poverty in India

Published by MAC on 2004-06-15

World Bank Creates Poverty in India

Xavier Dias, Adhikar

June 2004

Parej June 1st: With the aim of supporting India’s reform and expansion of the coal sector, the World Bank (the Bank or WB henceforth), in 1997, provided finance for expansion at 25 mines of Coal Indian Ltd (CIL). This was done under the Coal Sector Rehabilitation Project (CSRP), approved in September 1997, with an International Bank of Reconstruction and Development (IBRD) loan of over US $ 530million. Parallel with this, another loan was given for the Coal Sector Environmental Social Mitigation Project (CSESMP). This was to assist CIL’s efforts to mitigate the environmental and social impacts of this mining expansion in the 25 mines. It was approved in May 1996, with a loan of US$ 63 million from the International Development Association (IDA)[i]. It was envisaged that, after being tested and revised as necessary during the five-year time period financed by the Bank, CIL would apply its new environmental and social mitigation policies in its 495 mines[ii].

Chotanagpur Adivasi Seva Samiti (CASS) an NGO working among the Project affected Peoples (PAPs) of Parej Coal India Project (Hazaribagh, Jharkhand India) is one of the few Indigenous Organisations in the World to take on the WB when it announced a ombudsman type agency called the Inspection Panel to look into complaints of Indigenous People’s affected by its funding. Playing by the rules set by the World Bank, CASS patiently went through the cumbersome process of getting the Inspection to come to Parej do an inspection and present their Report to the World Bank. The Bank with great reluctance made their own interpretation of this report and gave its recommendations. The recommendations were much criticized the world over. Coal India was supposed to implement these recommendations. One of the recommendations was that the Bank would have to monitor the project and make a six monthly report.

In November 2003 when the Bank Monitoring team visited the PAP’s of Parej they concluded that all 70+ families they managed to interview complained that their suffered a decrease in incomes after being displaced

In a letter dated May 12th 2004 to CASS, the World Bank Country Director (India) calls for a meeting between Coal India Ltd., the World Bank representatives and CASS to discuss the recommendations of the November report which mentioned that the PAPs of Parej have suffered a ‘decrease in income’. The World Bank would like to rectify this, for which it is installing an External Monitoring Panel.

Western Agencies firmly believe that they are the Missionaries of Development that elevates the poor. Their societies pride themselves on good morals and this is a big embarrassment for the Bank. NGO’s working all over the world with PAP’s from Narmada Bachao Andolan to African, Latin American and South Asian Countries had for years been crying hoarse that the World Bank creates poverty. What is common knowledge to the rickshapullers and coolies of Ranchi or Hazaribagh or Bagio city, need a number of mechanisms and processes to be realised by the Bank. They need Inspection Panels, then External Monitoring Panels, then again Investigative panels, then dozens of meetings in Guest Houses of the Mining Companies and country capitals, as the agencies fly down their experts from Washington for these meetings, just to educate themselves on facts that the coolie proletariat in our cities cry about each day. These facts are written on the faces and ribs of PAP’s.

After this drama is over, the 174 PAP’s families of Parej will get some incentives to increase their incomes. This is being done not as a measure of Justice, but as a face-saver for the Bank. The other lakhs of PAP’s of the dozen’s of Coal India Projects and the Big Dam Projects and the projects yet to come, will have to remain content with the fact that all the International Financial Institutions and Corporations that have taken their lands and displaced them are having a sound sleep, morally sure that they are the new Missionaries of Development and Poverty reduction. Unless, of course, if history changes course and the PAP’s find ways of waking them from their slumber.

[i] At the early planning stage, the CSESMP was initially conceived as a component of the CSRP, but in November 1995, the project was split into an environmental and social component, the CSESMP, and an investment component, the CSRP. Progress on mitigation activities was linked to the CSRP through a series of covenants in Schedule 9 of the CSRP loan agreement. This meant that disbursements under the CSRP for any particular mine would be contingent on timely and effective implementation of the mine specific RAPs, EAPs, and IPDPs.

[ii] Due to unsatisfactory performance under the CSRP regarding coal sector reform and financial covenants, as well as unsatisfactory performance in the area of economic rehabilitation under the CSESMP, Management informed the Ministry of Coal and CIL on January 20 2000, that it was moving towards suspension. On July 25 2000 Management cancelled the undisbursed balance of the CSRP Loan. Coal India Ltd. however, decided to continue with mitigation programs started under the CSESMP. On April 20, 2001, it extended the CSESMP closing date for one year June 30, 2002. At the time the extension was granted, about US$24 million was undisbursed. The CSESMP project eventually closed in June 30 2002, with approximately 79% fund utilization.

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