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
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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 World Bank - a financial institution designed to cater to
the needs of the international community, which provides techni-
cal assistance within the highly volatile fiscal world, to enable de-
veloping countries to address important infrastructural require-
ments. World Bank funds target development programs to reduce
poverty. It is the largest public development institution in the world,
lending around US$ 25 billion a year to developing countries. In
existence for over 60 years, the Bank has expanded from a single
institution-the International Bank for Reconstruction and Develop-
ment (IBRD)—to five institutions, each dealing with a particular
area of operations. These include financing and other supports for
relief and rehabilitation, physical and institutional infrastructure in
sectors such as energy, transportation, extractive industry and tele-
communications, restructuring of key sectors such as health, edu-
cation, water and agriculture to make them private sector and mar-
ket friendly, private sector development, and mitigating investment-
associated risks for private companies. Corporate influence is mani-
fested in and through the Bank in several ways. Most obvious are
the supports extended to private corporations through three of its
specialised institutions: the International Finance Corporation (IFC),
Multilateral Investment Guarantee Agency (MIGA) and International
Centre for the Settlement of Investment Disputes (ICSID). Every
year, the World Bank (Bank) channels more than US$ 25 billion to
developing countries in the form of loans and grants with the os-
tensible aim of reducing poverty and promoting economic growth.
A significant amount goes directly to the private sector, especially
large corporations, in the form of loans, technical assistance and
mitigation of investment risks.
India was among the 17 original participants of the 1944
Bretton Woods conference which conceived the idea of the Inter-
national Bank for Reconstruction and Development (IBRD)—more
commonly known today as the “World Bank”. In fact, it was the
India delegation which first suggested the name IBRD. The Bank’s
New Delhi office, established in 1957, is the oldest continuously
functioning World Bank country office.
The Bank lending to India started in 1949, when the first
loan of $34 million was sanctioned for Indian Railway that roses to
2.9 billion in 2005. Currently India is largest lender of the WB. How-
ever it is minuscule amount accounting less than 2 percent of India’s
GDP, but cost of this lending is highly prized. With this little amount
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
are some major targets of the bank for promoting corporate inter-
est through privatization and/or public private partnership.
Changes in Inland Waterways Authority of India Act - 1985,
Foreign Exchange Regulation Act-1973, The Companies Act -1956,
Monopolies Restricted Trade Practices Act, Industrial Disputes Act,
Indian Trade Unions Act - 1926, Bank Companies Act – 1970, Sick
Industrial Companies Act – 1985, Employees Provident Fund Act
are few to name, where the bank has suggested and succeeded
to make favourable changes.
An extreme example is agricultural sector, which contrib-
utes 21% of India’s GDP, its importance in the country’s economic,
social, and political fabric goes well beyond this indicator. The ru-
ral areas are still home to some 72 percent of the India’s 1.1 billion
people, a large number of whom are poor, but Government of In-
dia has substantially changes a number of related polices like,
gradual abolition of input subsidies on fertilizers, irrigation, elec-
tricity, credit etc, removal of trade restrictions on agricultural com-
modities, unification of prices so that the current system of dual
markets in food grains and other agricultural commodities disap-
pears, a drastic curtailment of food subsidy confining the Public
Distribution System(PDS) only to the deserving poor, freedom of
operations for agri-business corporations, abolition of land ceiling
laws (APMC Act), future trading in agricultural commodities etc.
The scale of influence is oblivious as agriculture in India is
the Bank’s largest portfolio in any country. More than 130 agricul-
tural projects have received $10.2 billion Bank financing so far in
India. The current portfolio of about 30 projects under implemen-
tation in India includes agriculture and allied (diary, rubber, sericul-
ture, fish and shrimp cultivation) sector.
There is a woeful lack of serious discussion and debate
among the policy-makers on the adverse impact of liberalization
and globalisation policies routed by bank’s lending and assistance
program. In this context preset work is an effort to bring these
important issues in public domain for discussion and further ac-
tion.
I am thankful to Global Green Fund, INSAF and CCSR for
conveying this work to me. The present work is a combined effort
of these organizations and their team.
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
developing and under-developed nations of the world to:
 Reduce poverty.
 Develop an investment-environment.
 Increase job opportunities.
 Work towards sustainable economic growth.
 Promote socio-economic growth through investment.
 Strengthen governments with education.
 Empower the development of legal and judicial systems,
business opportunities and protection of individual rights.
 Benefit from micro credit as well as large corporate
undertakings.
 Combat corruption.
 Promote research and training opportunities.
The World Bank is the largest public development institution
in the world, lending around US$ 25 billion a year to developing
countries. The main purposes of the Bank, as outlined in Article
One of its Articles of Agreement, are: “to assist in the reconstruction
and development of territories of members by facilitating the
investment of capital for productive purposes” and “to promote the
long-range balanced growth of international trade and the
maintenance of equilibrium in balances of payments by encouraging
international investment ... thereby assisting in raising the
productivity, the standard of living and conditions of labour in their
territories”.
The Bank aims to achieve these goals through the provision
of long-term loans to governments for the financing of development
projects and economic reform. Voting power on the Bank’s board
is based on the members’ capital subscriptions which means the
members with the greatest financial contributions have the greatest
12 Direction of development
say in the Bank’s decision-making process. The US government
holds 20 per cent of the vote and is represented by a single
Executive Director. The 47 sub-saharan African countries, in
contrast, have two Executive Directors and hold only seven per
cent of votes between them.
Each member of the Bank contributes two per cent of its
subscription in gold or US dollars and 18 per cent in its national
currency. Members pay in 20 per cent of the capital while the
remaining 80 per cent is kept “callable” (to be paid in the event of
a default). This guarantee allows the Bank to raise money for its
lending purposes on international capital markets by the sale of its
bonds. Interest rates on World Bank loans are revised every six
months and typically, the Bank charges borrowers a rate of interest
0.5 per cent above its own cost of borrowing on the international
market, the proceeds going towards paying the Bank’s operating
costs and to add to reserves. Loans were originally supposed to
be given only to “specific projects”—usually infrastructural projects,
such as the construction of highways, dams, and
telecommunications facilities, and social welfare projects, such as
those in the health and education sector.
In 1980, the Bank introduced adjustment lending under its
structural adjustment programme (SAP) to provide financing to
countries experiencing balance of payments problems while
stabilisation measures took effect. These loans are provided to
countries for social, structural and sectoral reforms, for example
for the development of national financial and judicial institutions.
The World Bank attaches conditions to its loans with the stated
aims of ensuring the country’s economy is structured towards loan
repayment.
The Bretton Wood Institutions:
After World War I, during the inter-war period, it was difficult
for the European countries to return to the pre-1914 economic
world because of the war debts they owed to each other and to the
United States. The Allies had depleted their reserves during the
war due to imports of food and wartime supplies. After the war,
reserves were further depleted in order to service wartime debts.
Because their reserves were low, their currencies were worth less.
Consequently, European nations could not maintain the gold
standard after the end of World War I. Although several countries
returned to the gold standard in the mid-twenties, the system
13 Direction of development
ultimately fell apart permanently in 1931.
During the same period, commodity prices had soared due
to speculation. However, the market could not maintain the inflated
prices of the oversupplied commodities indefinitely. Eventually
commodity prices plummeted and the U.S. stock market crashed
in 1929. The ensuing Great Depression intensified the demand for
gold. Since commodity prices had sharply declined, export income
had also declined. In order to protect reserves, countries began to
“hoard” gold and reserve currencies such as the dollar. This caused
a shortage of gold and dollars.
To make matters worse, country after country began to
devalue their currencies (i.e., reduce the currency’s value vis-a-
 vis other currencies) in order to make exports cheaper to foreign
buyers. A country’s goods become cheaper when it devalues its
currency because another country buying these goods can buy
more of the exporting nation’s money with its own money. Since
the goods are to be paid with the exporting country’s currency and
the price of the goods remains the same as before the devaluation,
the goods are cheaper.
The problem was that other countries also began to use this
technique to avoid losing buyers for their goods. There was really
no advantage to these “competitive devaluations.” In fact, countries
around the world, including the United States, implemented
measures restricting trade and payments in order to reduce imports
and protect their domestic economies. All of this led to a severe
drop in global economic activity and, in Germany, contributed to
the rise of Hitler.
It was immediate after World War I most countries wanted
to return to the old financial security and stable situation of pre-war
times as soon as possible. Discussions about a return to the gold
standard began and by 1926 all leading economies had re-
established the system, according to which every nation’s circulating
money had to be backed by reserves of gold and foreign currencies
to a certain extent. But several mistakes in implementing the gold
standard (mainly that a weakened Great Britain had to take the
leading part and that a number of main currencies where over- or
undervalued) led to a collapse of the economic and financial
relations, peaking in the Great Depression in 1929. Every single
country tried to increase the competitiveness of its export products
in order to reduce its payment balance deficit by deflating its
currency.
This strategy only led to success as long as a country was
14 Direction of development
deflating faster and more strongly than all other nations. This fact
resulted in an international deflation competition that caused mass
unemployment, bankruptcy of enterprises, the failing of credit
institutions, as well as hyper inflations in the countries concerned.
In the 1930s several conferences dealing with the world
monetary problems caused by the
Great Depression had ended in failure. But after World War
II the need for a stabilizing system that avoided the mistakes, which
had been made earlier, became evident. Plans were made for an
innovative monetary system and a supervising institution to monitor
all actions. First negotiations took place under wartime conditions.
In 1944 an international conference took place in Bretton
Woods, New Hampshire (USA). 44 countries attended this
conference in order to restructure international finance and currency
relationships. The participants of this conference created the
International Monetary Fund (IMF) and the International Bank for
Reconstruction and Development (IBRD/World Bank). Additionally,
they agreed on implementing a system of fixed exchange rates
with the U.S. dollar as the key currency. The plans for the system
of Bretton Woods were developed by two important economists of
these days, the American minister of state in the U.S. treasury,
Harry Dexter White, and the British economist John Maynard
Keynes who stated: “ We, the delegates of this Conference, Mr
President, have been trying to accomplish something very difficult
to accomplish.[...] It has been our task to find a common measure,
a common standard, a common rule acceptable to each and not
irksome to any.”1 This statement outlines the difficulty of creating
a system that every nation could accept. The ideas of John Maynard
Keynes and Harry Dexter White have been described as very
different from each other on several occasions but in fact there
are extraordinary similarities. According to the White plan, a Bank
for Reconstruction (today the World Bank) and an International
Stabilisation Fund should be established. The Keynes plan called
for the same. The only difference was that Keynes wanted to vest
the IMF with possibilities to create money (a fact that can easily be
understood in the background of Great Britain’s suffering from the
deflation policies in the Inter-War period) and with the authority to
take actions on a much larger scale. In case of balance of payments
imbalances John Maynard Keynes recommended that both sides,
debtors and creditors, should change their policies. Countries with
payment surpluses should increase their imports from the deficit
15 Direction of development
countries and thereby create foreign trade equilibrium. Harry Dexter
White, on the other hand, saw an imbalance as a problem only of
the deficit country. Economists today agree that White was mistaken
and Keynes was more farsighted.2 However, Keynes’ plan was
never discussed seriously at Bretton Woods and the participants
agreed on the White plan. The United States defined the value of
its dollar in terms of gold, so that one ounce of gold was equal to $
35. All other members had to define the value of their money
1
Moggridge, Donald (1980). Activities 1941 - 1946 : shaping the post-war world, Bretton
Woods and reparations. London: Macmillan
2
Bradford Delong, J. (2000, December 10th). www.j-bradford-delong.net/Econ_Articles
Reviews/skidelsky3.html
 according to what was called the “par value system” in terms of
U.S. dollars or gold.
The U.S. Britain and other industrial countries were very
worried that after World War II the events of the inter-war period
would repeat themselves. They sought to prevent this reoccurrence
by setting up a system that would provide monetary order as well
as facilitate investment in economies where little private capital
was expected to flow, namely the European economies, which laid
the foundation of Bretton Wood Institutions (BWIs). They also
hoped economic prosperity—starting with reconstruction of war-
ravaged Europe—would promote peaceful relations. Given the
inter-war experience, economic policymakers of the time viewed
floating exchange rates—that is, rates mandated by market
forces—as destabilizing. They believed floating exchange rates
produced speculation and large shifts in the value of the exchange
rate. They also wanted to avoid competitive devaluations and the
ensuing trade restrictions, which had brought trade to a virtual
standstill.
In this sequence, the gold standard provided the stability
policymakers wanted to pursue at the end of World War II. One of
the principal founders of BWIs, Lord John Maynard Keynes of
Britain, was especially critical of the standard. Thus, the founders
favored a fixed exchange rate system tied to gold that would
promote important domestic goals such as full employment and
price stability. They also wanted a system that would allow countries
to maintain sound external economic relations (healthy and
balanced international trade and foreign investment— balance of
payments equilibrium) without having to impose trade restrictions
to, say, reduce imports.
These objectives were seems promising and there were no
16 Direction of development
harm in doing so, but there were a large number of intricacies
behind the functions and objectives of such institution. It can be
understood by looking back in history and circumstances of
establishment of World Bank and other BWIs.
Although the conference’s objectives formally mentioned
“development,” relatively little time was devoted to discussing the
plight of “developing countries.” Instead, the participants—the
United States and the United Kingdom in particular—focused on
promoting currency stability, devising a system of international
payments, and organizing the economic reconstruction of Europe.
Most of the discussions related to figuring out how the IMF would
operate, a subject that required much debate and analysis of
technical issues relating to international monetary affairs.
The U.S. and the Britain agreed that some sort of mechanism
would have to be created to supply countries experiencing balance-
of-payments deficits with temporary loans (“liquidity”), the two
countries had serious disagreements over how resources would
be made available. Keynes, representing a deficit country (the U.K.),
wanted to create a system that would provide deficit countries with
plenty of credit upon request. He therefore proposed an
International Clearing Union (ICU) that would issue a new form of
international money called “bancor” and monitor lending from one
country to another. Keynes wanted the ICU to issue about $26
billion worth of the new money.
The United States, represented by Harry Dexter White,
objected to Keynes’ proposal because it would amount to a huge
loan from the United States to the rest of the world. In contrast to
the Keynes plan, the White plan reflected the agenda of creditor
nations, or more specifically the only expected creditor nation, the
United States. The U.S. had the highest level of gold reserves, its
infrastructure was not damaged by the war, and neither was its
economy. So it was probably going to be the main contributor to
the liquidity mechanism.
This prospect worried the U.S. negotiators. They wanted to
avoid putting too many dollars into foreign hands, mainly because
the U.S. Treasury and the U.S. Congress would probably not agree
to such an outcome. Consequently, it was important for White to
limit the extent to which the United States would be liable for
financing the post-war adjustments of other countries. The United
States also wanted the international institution to have the power
to require deficit countries to adopt policies that would restore
17 Direction of development
balance of payments equilibrium.
These concerns were reflected in White’s proposal for an
international organization called the Stabilization Fund (SF). To
address the liability concern, the SF plan, unlike the ICU proposal,
required members to contribute their own currencies and gold to
the Fund.
Rather than borrowing directly from other countries (the ICU
plan), deficit countries would have to obtain the currencies they
needed from a fund established and operated by the SF.
Each member country’s contribution would reflect their
relative economic strength. The U.S. contribution would be limited
 to just under $3.5 billion, far less than its liability under Keynes’
proposal.
The United States’ other main concern—requiring countries
to adopt sound economic policies—was reflected in a proposed
rule that would require countries to comply with conditions set forth
by the SF in exchange for accessing the pool of currencies. This
conditionality approach was intended to create longer-term stability
by promulgating economic and monetary policies that would help
prevent future crises.
It was obvious to everyone the IMF would not be created
without the approval of the United States and the United Kingdom.
Both countries faced major challenges at home. The U.S.
negotiators knew the U.S. Congress would not vote in favor of the
ICU plan because elements of the plan were so unfamiliar to them,
and because of their perception that the United States, as creditor,
would be at a disadvantage.
On the U.K. side, the British Parliament and public were not
prepared to accept a plan based on a fixed exchange rate system
that would completely deprive the nation of its sovereign right to
control its monetary policy in order to protect its domestic economy.
They wanted the power to change the exchange rate; they wanted
to be able to manage the domestic economy because they feared
the sterling was going to be very weak and require the government’s
protection.
A series of compromises led to the creation of an international
organization, the International Monetary Fund, which closely
resembled the White plan. Given the U.K.’s concerns, the exchange
rate system allowed countries to make a ten percent modification
of the exchange rate. A larger change required IMF approval,
18 Direction of development
although if the change was to correct a “fundamental
disequilibrium,” then the IMF had to approve. In addition, White’s
proposal to tie lending to economic policy reform was dropped in
the compromise.
However, White’s approach was ultimately vindicated when
the IMF adopted the conditionality practice in the 1950’s.(Footnotes)
The Idea of World Bank (IBRD):
Today the World Bank is at the center of many conversations
regarding international finance and development. But at the Bretton
Woods Conference, creating the World Bank was an afterthought—
and even when the participants did focus on it, “development” was
not their primary concern. Preparations for creating the IMF had
been underway for close to five years. There had been preliminary
drafts for the World Bank charter, but they had not been subject to
extensive discussion. In June 1944, just prior to the Bretton Woods
conference, a number of countries met in Atlantic City, U.S.A., to
prepare an agenda for the conference. There, the United Kingdom
submitted the “boat draft”—the document was drafted on the Queen
Mary—which became the basis for discussion at the Bretton Woods
conference.
At the conference the main point of contention was whether
“development” or reconstruction would be the World Bank’s priority.
The European nations were particularly interested in World Bank
assistance for post-war reconstruction. The Soviet delegation
emphasized, for example, that the main purpose of the World Bank
was to assist in the reconstruction of infrastructure and the
revitalization of European economies destroyed by the war The
delegations from developing countries were more interested in the
formation of the World Bank than the IMF. Mexico proposed
language for the W orld Bank’s charter that would make
development a priority. The proposal, not surprisingly, failed.
However, developing nations did succeed in introducing the
language found in Art. III, Section 1(a) which states the Bank’s
facilities would be used with “equitable consideration to projects
for development and projects for reconstruction alike.”
The USA has been and still is the dominating power of the
Bretton Woods system. After World War II the United States was
the country with the biggest economic potential. The U.S. dollar
was the currency with the most purchasing power and it was the
only currency that was backed by gold. Additionally, all European
nations that had been involved in World War II were highly in debt
19 Direction of development
and transferred large amounts of gold into the United States, a
fact that contributed to the supremacy of the USA. Thus, the U.S.
dollar was strongly appreciated in the rest of the world and therefore
became the key currency of the Bretton Woods system. The
headquarters of the two main institutions (the IMF and the World
Bank) are situated in Washington D.C. The dominant role of the
USA already became apparent when the American ideas of the
Bretton Woods system gained more acceptance than those of
Great Britain. The plans of the British economist John Maynard
Keynes were rejected and the model of the American economist
White was favoured. Despite “Keynes’s part in constructing the
 Bretton Woods system, [...] his vain struggle, over five wartime
missions to Washington, to preserve Britain’s financial
independence from the United States”1 the Bretton Woods system
is dominated by the USA.
Those who attended the Bretton Woods Conference in New
Hampshire wanted to establish a monetary system that would
prevent the repetition of the chaos during the interwar period (1918-
1939), which was marked by high inflation, restrictions on
international trade and payments, speculation in the foreign
exchange market, sharp movements in central banks’ foreign
reserves, wildly fluctuating exchange rate movements, gold
shortages, and sharp drops in economic activity (deflation). To
accomplish stability and economic growth, the founders of the IMF
agreed upon a “gold exchange standard.” The reference to gold is
important, so let’s review a bit of history before we explain the
Bretton Woods System in more detail. The system agreed upon at
Bretton Woods was related to the gold standard period between
1870 and 1914. Many hoped the BWIs would restore the perceived
order of the gold-standard system, minus the standard’s problems.
That international monetary system required that each unit of a
country’s currency represent a certain weight of gold—i.e., central
banks were required to keep an “official parity” between the
country’s currency and gold. Maintaining the official parity required
central banks to keep adequate stocks of gold as “reserves.”2
It was quite obvious during the early days of the World Bank
that the reconstruction of Europe would take priority over
development. But, in actuality, the World Bank made only a few
loans to Europe. This was due to the U.S. Marshall Plan, which
took over most of the financing for the reconstruction of Europe.
With one of its two main responsibilities gone, the World Bank
20 Direction of development
made many loans to developing countries early on. Within the next
few decades, the number of developing nations grew. In the 1960s
and 1970s, more countries joined the ranks of developing nations
as newly independent states emerged out of the grips of
colonialism.
At first, these new nations focused on obtaining and
strengthening their sovereignty. Their main focus was the right to
self-determination and recognition of their sovereignty. Many
countries expected that once this was established, their economies
would flourish and “development” would follow.
1
The Economist, November 25th ,2000
2
Sandra Blanco & Enrique Carrasco, The Functions of the IMF & the World Bank
In order to build the economies of the developing nations,
the World Bank engaged in project lending. The aim of the early
projects was to increase the nations’ abilities to sustain economic
development through generating income from projects. The only
way to do this was to build up the resources necessary for economic
growth. Early World Bank lending to developing nations stressed
the development of infrastructure, industry, and agriculture. For
instance, it was important to develop electric power plants and
roads before manufacturing factories could open and before light
and heavy industry could be developed. None of these economic
activities could develop without electric power. Without good roads,
no investor would want to do
business with a country because
there was no way to transport Unfortunately, many of the ex-
products. Thus, the World Bank colonies had been used by the
project lending was intended to colonial powers as sources of raw
foster a welcoming environment materials and as markets for
for the factors that lead to industrial and manufactured
economic growth. The post- goods. Few of these new
colonial push to develop did countries, therefore, had the
result in higher rates of growth. infrastructure and industrial
Many developing countries power that would sustain
witnessed increases in per capita economic development.
income (total income in a country
divided by the number of people) and gross national product (the
value of goods and services produced and sold in a given time
period), but most of the increases in income were concentrated in
sectors directly involved in what became a state-led process of
economic development. Typically, the government sector, those
employed in industries, and those who otherwise had special ties
21 Direction of development
to the government or to foreign investors benefited the most.
Many other people—those not connected to the key
sectors—did not benefit from this type of development. The push
to develop led to great migrations of people from rural areas to big
cities, where many could not find jobs. In addition, development
projects tended to favor industrialization over agricultural
development, which led to increased poverty in rural areas.
Some policymakers thought that the gap between the rich
and the poor would eventually shrink with increased economic
growth. They believed that if government policy favored the sectors
that appeared to be thriving, the whole country would be better off.
 In other words, the increased wealth generated from development
would “trickle down” to the poorer sectors of society.1
Initially, till 1968 the World Bank mainly lent money, following
fiscal conservatism. Loan applications were very carefully
screened. The plan of action followed at the onset was to establish
the World Bank as an institution that was designed for investment
as well as providing loans. Under the chairmanship of John McCloy,
France was the first country to receive World Bank aid, over the
rejection of Chile and Poland. The $250 million dollar loan was
forwarded under strict repayment conditions. In time, the emphasis
for suitability was shifted and a number of non-European countries
were forwarded aid, on presumption and calculation that the
borrowing nation had the capacity to repay the loan in good time.
Loans were forwarded to under-developed and developing nations
to fund development of transportation systems and power plants.
Later on, the focus shifted on poverty alleviation and enabling
nations to help their people benefit from access to basic needs.
The loan amount and number of loans increased as the funds were
made available to also address infrastructural requirements and
social services. Robert McNamara, the World Bank president in
1968 is credited with the implementation of a new technocratic
management of funds. McNamara made World Bank funds
available for building utilities and schools, hospitals, agricultural
reforms and to improve literacy rates. Investigations prior to the
loan sanctions not only enabled the loan amounts to be forwarded
quickly, but also increased loan volume. The bond market was
used to increase capital. Through the 1980s, the World Bank focus
was on structural adjustment and streamlining the economies of
several developing countries.
Today, the World Bank integrates its lending practices to
22 Direction of development
meet environmental and infrastructural requirements, the world
over. The new ‘green’ focus has made capital available to a number
of developing and under-developed nations to improve exports,
attain economic equanimity and at the same time guarantee citizens
upgraded utilities and services.
Conceived during World War II at Bretton Woods, New
Hampshire, the World Bank initially helped rebuild Europe after
the war. Its first loan of $250 million was to France in 1947 for
post-war reconstruction. Reconstruction has remained an important
focus of the Bank’s work, given the natural disasters, humanitarian
Sandra Blanco The 1960s and 1970s: The World Bank Attacks Poverty; Developing Coun-
1
tries Attack the IMF
BOX-1
The World Bank
The World Bank provides over $24 billion in assistance to
developing and transition countries every year. The Bank’s projects
and policies affect the lives and livelihoods of billions of people
worldwide - sometimes for the better, but very often in controversial
and problematic ways.
The World Bank was originally established to support
reconstruction in Europe after World War II, but has since reframed
its mission and expanded its operations both geographically and
substantively. Today, the Bank’s mission is to reduce poverty. It has
over 184 member countries and provides over $24 billion annually for
activities ranging from agriculture to trade policy, from health and
education to energy and mining. The World Bank provides funding
for bricks-and-mortar projects, as well to promote economic and policy
prescriptions it believes will promote economic growth. For example,
part of the over $300 million the Bank is currently providing the West
African country of Niger funds health programs addressing HIV/AIDS
and irrigation. However, the Bank also promotes more controversial
projects in the country, like privatization of state enterprises.
The World Bank is not a bank in the common sense of the
word. A single person cannot open an account or ask for a loan. Rather,
the Bank provides loans, grants and technical assistance to countries
and the private sector to reduce poverty in developing and transition
countries.
The World Bank Group is actually comprised of five separate
arms. Two of those arms - the International Bank for Reconstruction
and Development (IBRD) and the International Development
Association (IDA) work primarily with governments and together are
commonly known as “the World Bank”. Two other branches - the
International Finance Corporation (IFC) and Multilateral Investment
23 Direction of development
Guarantee Agency (MIGA) - directly support private businesses
investing in developing countries. The fifth arm is the International
Center for Settlement of Investment Disputes (ICSID), which arbitrates
disagreements between foreign investors and governments. This
webpage outlines key features of the two arms that are now collectively
referred to as the World Bank: IBRD and IDA
emergencies, and post conflict rehabilitation needs that affect
developing and transition economies.
Today’s Bank, however, has sharpened its focus on poverty
reduction as the overarching goal of all its work. It once had a
homogeneous staff of engineers and financial analysts, based
 solely in Washington, D.C. Today, it has a multidisciplinary and
diverse staff including economists, public policy experts, sectoral
experts, and social scientists. 40 percent of staff are now based in
country offices.
The Bank itself is bigger, broader, and far more complex. It
has become a Group, encompassing five closely associated
development institutions: the International Bank for Reconstruction
and Development (IBRD), the International Development
Association (IDA), the International Finance Corporation (IFC),
the Multilateral Investment Guarantee Agency (MIGA), and
the International Centre for Settlement of Investm ent
Disputes (ICSID).
During the 1980s, the Bank was pushed in many directions:
early in the decade, the Bank was brought face to face with
macroeconomic and debt rescheduling issues; later in the decade,
social and environmental issues assumed center stage, and an
increasingly vocal civil society accused the Bank of not observing
its own policies in some high profile projects. To address concerns
about the quality of Bank operations, the Wapenhans Report was
released and soon after, steps toward reform were taken, including
the creation of an Inspection Panel to investigate claims against
the Bank. However, criticism increased, reaching a peak in 1994
at the Annual Meetings in Madrid.
Since then, the Bank Group has made much progress. All
five institutions have been working - separately and in collaboration
- to improve internal efficiency and external effectiveness. Clients
report to be broadly pleased with the changes they see in Bank
Group service levels, commitment, deliveries, and quality. More
than ever before, the Bank is playing an important role in the global
policy arena. It has effectively engaged with partners and clients in
24 Direction of development
complex emergencies from post-conflict work in Bosnia to post-
crisis assistance in East Asia to post-hurricane clean-up in central
America to post-earthquake support in Turkey and in Kosovo and
East Timor. Notwithstanding these considerable progress, the Bank
Group’s agenda is not yet complete, nor can it ever be, while the
challenges of development continue to grow.
The World Bank maintains funds or capital from investments
made by in various operations by subsequent investment in the
world financial market. This subjects the investment made to
fluctuations and restrain on lending activities. Majority of the World
Bank funds are got from forty donor countries. These nations
replenish the lent funds every three years. The replenishments
are dependent on timely loan repayment. In case of any upsets in
this arena, automatically the future lending capacity of the Bank is
affected.
IMF and World Bank:
The World Bank and the IMF or International Monetary Fund
are both inter-governmental support systems that are dedicated to
the improvement of the world’s financial order. Both are directed
by the member nation governments. Both, the IMF and the World
Bank have their headquarters in Washington, D.C. The difference
lies in the fact that the World Bank is a development institution,
while the IMF functions as a cooperative institution. While the former
looks into loan requisites by under-developed and developing
nations, the latter handles payments, repayments and receipts.
World Bank offers two types of loans: investment and
development policy. While investment loans are those that are
forwarded to support economic and social development,
development policy loans are offered as quick finance to support
institutional reforms to reduce third world debt. The Bank provides
analytical services for economic and social infrastructural
improvements. It also encourages innovation and cooperation
between local stakeholders to generate:
 Debt relief in the case of very poor countries.
 Development of sanitation and water supply.
 Support immunization programs during epidemics.
 Create ‘green’ initiatives.
The World Bank mainly lends to governments, although
certain Bank facilities can also provide direct support to private
25 Direction of development
businesses and to non-profit organisations. Middle-income
countries (usually countries with per capita incomes of between
US$1,506 and US$5,445) and poorer countries termed as
“creditworthy” borrow from the IBRD, while the poorest countries
(with per capita incomes of less than US$1095) borrow from
the IDA. Loans granted by IDA are interest-free but borrowers are
required to pay a fee of less than one per cent of the loan to cover
administrative costs. The IFC provides project financing for private
sector projects in developing countries through loans and equity
finance by mobilising capital in international financial markets. Forty
per cent of the IFC’s investments are in the financial sector.
MIGA provides political risk insurance or guarantees to private
 investors and lenders to encourage foreign direct investment (FDI)
into developing countries.
The World Bank in India:
India was among the 17 original participants of the 1944
Bretton Woods conference which conceived the idea of the
International Bank for Reconstruction and Development (IBRD)—
more commonly known today as the “World Bank”. In fact, it was
the India delegation which first suggested the name IBRD. The
Bank’s New Delhi office, established in 1957, is the oldest
continuously functioning World Bank country office.
The World Bank does not operate alone. In India, the Bank
works with multiple development partners: the government, other
BOX-2
The IFC, MIGA and ICSID Help Mobilize the Private Sector.
The International Finance Corporation (IFC), formed in 1956,
promotes private sector investment in poor countries that would
otherwise not easily attract private investment. It does this by providing
long-term market-priced loans and equity financing for private sector
projects. The IFC’s participation in a project acts as a seal of approval,
encouraging other private investors to become involved.
Established in 1988, the Multilateral Investment Guarantee
Agency (MIGA) is the most recent addition to the World Bank Group.
MIGA is an investment insurance agency that encourages foreign direct
investment in developing nations. It does this by providing guarantees
against political (noncommercial) risks. In this way, investors are more
willing to invest in countries that may not be politically stable.
The International Center for Settlement of Investment Disputes
(ICSID) was established by treaty in 1966 in order to provide a forum
for arbitration or mediation of disputes between foreign investors and
26 Direction of development
their host countries. Its purpose is to promote increased flows of
international investment by providing a forum outside the host state
for settlement of investment disputes. Parties cannot be forced to use
ICSID conciliation and arbitration services. But once they have
consented to arbitration under the ICSID Convention, neither can
withdraw unilaterally.
The work of the World Bank Group is intended to facilitate
foreign private investment in one form or another. Such investment is
frequently critical to the economies of host countries. However, many
people and organizations believe the benefits of investment fail to
benefit the society as whole. In fact, many believe foreign investment
frequently increases the gap between the poor and the rich.
bilateral and multilateral donor organizations, nongovernmental
organizations (NGOs) and the most important the private sector.
The Bank’s method of operation is not to implement “World Bank
projects,” but to provide financing and advice for projects. The World
Bank has developed an action plan known as the India
Country Strategy (CAS) which describes what kind of support and
how much could be provided to the country over a period of
around four years. The CAS directly supports the government’s
five-year plan and focuses on strengthening the enabling
environment for development and sustainable growth and
supporting critical interventions of special benefit to the poor and
disadvantaged. The World Bank also produces studies and reports
based upon its own analysis of a given issue. Topics of research
come from the Bank’s Country Strategy. Additional studies include
reviews of economic policies (Country Economic Memoranda),
fiscal spending (Public Expenditure Review), environmental
reviews (Environmental Action Plan), and other specific topics.
India receives roughly half of its World Bank loans interest
free for other loans and credits it has to pay regular interest rates
of W B. These are provided by the Bank’s International
Development Association. Even grants, credits and loans provided
at zero interest have costs with a 0.75 percent finance charge. The
remaining half of World Bank loans to India are provided by the
International Bank for Reconstruction and Development, another
W orld Bank agency which provides loans at low interest
rates. Countries that borrow from the IBRD have more time to
repay than if they borrowed from a commercial bank—15 to 20
years with a three-to-five-year grace period before the repayment
of principal begins, but low interest rates has other cost e.g. strong
policy interferences.
27 Direction of development
Since 1991, the so called inception of liberalization period
India is blindly following every policy direction in all spheres of
economic activities. Gradually it remains the Bank’s largest single
borrower. WBs lending to the India touched $2.9 billion in FY 2005
– more than double the amount lent a year earlier.
Interestingly, the bulk of new lending has gone to
infrastructure and human development projects, reflecting the
potential for corporate interests. Another symbol of the wasted
interest is India’s HIV/AIDS control programme of which WB is the
largest financers of India’s National Aids Control Program (NACP)
with US$275 million credits, ignoring other major health sector
requirements of nation.
 Gradually the WB is encroaching India’s sovereignty as
nation state and direct extending its credit to state governments. A
key focus of its credit to state government has been fiscal reforms
of state governments. There are many other number of examples
where WB dictates its agenda e.g. for more than 50 years, World
Bank assistance to India’s energy sector has covered oil and gas,
coal, power projects and alternative sources of energy, because
American corporate has deep interest in this sector.
The World Bank’s Country Strategy (CAS) for India for 2009-
2012 focuses on fast-track development of infrastructure. The
strategy envisages a total proposed lending program of US$14
billion, for the next three years, of which US$9.6 billion is from the
International Bank for Reconstruction and Development (IBRD)
and US$4.4 billion (SDR 2.982 billion equivalents at the current
BOX-3 The Bank-India Relations
India’s involvement with the World Bank dates back to its
earliest days. India was one of the 17 countries which met in Atlantic
City, USA in June 1944 to prepare the agenda for the Bretton Woods
conference, and one of the 44 countries which signed the final
Agreement that established the Bank. In fact, the name “International
Bank for Reconstruction and Development” [IBRD] was first
suggested by India to the drafting committee. The Indian delegation
was led by Sir Jeremy Raisman, Finance Member of the Government
of India and included Sir C. D. Deshmukh (Governor of the Reserve
Bank of India, later to become India’s Finance Minister), Sir Theodore
Gregory (the first Economic Advisor to the Government of India), Sir
R.K. Shanmukhan Chetty (later independent India’s first Finance
Minister), Mr. A.D. Shroff (one of the architects of the Bombay Plan)
and Mr B.K. Madan (later India’s Executive Director in IMF).The Bank
28 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
lending to India (1949 - 1959) saw just about 20 loans for a total
amount of $611 million. During the years 1960-69, overall lending to
India from the Bank rose to $1.8 billion, about three times the level
in the previous decade. Between 1970-79, there was a large increase
in the absolute volume of IDA lending and the IDA share in total
Bank assistance reached a high of 80% in this decade. However, in
the 1980s, India’s share in total IDA lending declined to 25% and
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
the level of $1.5 billion in the previous decade. (Source: http://
www.ieo.org/world-c2-p1.html)
exchange rate) from the International Development Association
(IDA).
It is said that the strategy is closely aligned with the
Government of India’s own development priorities expressed in
the Eleventh Five Year Plan i.e. ensuring participation of private
sector. Under the strategy, the Bank will use lending, dialogue,
analytical work, all with engagement of the private sector to achieve
its goals.
World Bank suggests that for India’s rapid and sustained
growth, major investments in power, transport, water, and urban
development are important. Inadequate power supply remains a
critical constraint to growth; while GDP grew at an average of about
8% a year over the past five years, electricity generation only grew
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
and more than 50% are in poor condition. Inadequate urban
infrastructure is hampering the expansion of growth centers. While
the Eleventh Plan foresees a major role for private sector
involvement in infrastructure development through PPPs, these
may not materialize to the extent hoped for in the aftermath of the
global financial crisis, therefore the World Bank specially focuses
on infrastructure investment in its new strategy, including on
strengthening the capacity of government agencies to design and
manage public-private partnerships (PPPs). In other words only
public-private partnerships (PPPs) are the answer of all
development troubles.
Agriculture is another sector having vast potential for this
PPP model. Low agricultural productivity is keeping some 60
percent of India’s population behind. Shortages of basic rural
29 Direction of development
infrastructure - from roads to electrification - are hindering the
growth of off-farm activities. No doubt, agricultural growth has been
faster over the past five years (4.7% per year)- facilitated by very
good monsoons, greater production of high-value fruits, vegetables,
and dairy products, an increase in the minimum support price for
grains, and the sudden increase in global prices for agricultural
products. According to bank, sustaining this level of performance
over the longer term will be difficult without addressing several
policy and structural constraints, including a myriad of restrictions,
subsidies, support prices, sector governance issues, as well as
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

target of WB reform policies. The new strategy devotes more
resources (read more guided credit and loans) to engaging in these
states. Intensive technical assistance will be provided to help these
states develop their administrative capacity. Technical and advisory
services are the major part of bank lending to these states.
The assistance to other states such as Andhra Pradesh,
Karnataka, Punjab, Tamil Nadu, Haryana, Gujarat, and Maharashtra
is costlier, where bank is helping to forge the institutions needed in
these middle income states. Lending to these states are in the form
of comparatively high priced IBRD loans, with the International Fi-
nance Corporation (IFC) – the Bank’s private sector arm – provid-
ing support for private sector clients.
31 Direction of development
regenerated through repayments of loan principal on 35-to-40-year,
no-interest loans, which are then available for re-lending. IDA
accounts for more than 40% of our lending.
Through the IBRD and IDA, the WB offer two basic types of
loans and credits: investment operations and development policy
operations. Countries use investment operations for goods, works
and services in support of economic and social development
projects in a broad range of economic and social sectors.
Development policy operations (formerly known as adjustment
loans) provide quick-disbursing financing to support a country’s
policy and institutional reforms. Each borrower’s project proposal
 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.
Financing through the International Development Association (IDA),
the Bank’s concessional lending arm, is provided for 0.75% p.a.,
repayable over a period of 35 years, inclusive of a 10 year grace
period. When combined with IDA financing, the cost of borrowing
on commercial terms from the more market-based IBRD works
out some costlier for India. Broadly, IDA credits support projects
and programs in lower income countries to improve health and
education, as well as the development of rural infrastructure and
livelihoods. In India, World Bank projects often have a blend of
IBRD and IDA funding. For example, in FY08, out of new Bank
lending of US$ 2.7 billion, US$ 1.4 billion was from IDA, and US$
1.3 billion from the IBRD. For the Government of India, the cost of
borrowing from the World Bank is:
TABLE-2
Cost of Borrowing from World Bank for India1
Cost of Borrowing Cost of Average combined
from IDA Borrowing cost of borrowing
(in SDR #) from IBRD(in US$) from IBRD and IDA
(35-year maturity (20-year maturity
including 10 year including 5 year
grace period) grace period)
0.80% p.a.* Libor flat or 1.63% p.a. *
3.41% p.a.*i
*: Assuming 5-year disbursement profile and based on
Forward London Inter-Bank Offer Rate (LIBOR) as of January 5,
2009. IBRD cost is based on variable spread for rate-setting from
July 1, 2008 to December 31, 2008.
34 Direction of development
# : Special Drawing Rights. 1 SDR = 1.519 USD as
on January 5, 2009. More details on IDA financial terms
@: Assuming borrowing in the proportion of 40% from IBRD
and 60% from IDA
i: Interesting fact here is that in most of developed and
developing countries the commercial rate of interest for business
purposes to corporate is less than 3 percent. Whereas, the IBRD
charges 3.41 % p.a. from India and other developing countries for
development assistance.
A large amount of loan to India is granted as Development
Program Landings (DPL). DPL lending is aimed at helping states
1
For more details on IBRD products, see: http://treasury.worldbank.org/index.html.
to increase their development spending on basic social services
such as education and health, safety nets for the poor, as well as
for building critical investments in basic infrastructure. Lend to states
in India that are relatively poor or otherwise disadvantaged. These
states often have large fiscal burdens and need to create greater
fiscal space for more effective spending on development
programs. To be eligible for DPL financing, state governments
need to have effective policies and programs in place to meet their
development priorities. They must also demonstrate their ability to
address issues of inclusive growth by improving their basic systems
of governance with greater transparency and accountability to their
people. DPLs support state governments in India to generate
greater employment opportunities for their people. State
governments frequently find that the biggest obstacle to generating
new jobs is the regulatory burden imposed on private enterprises
which hinders new investment. These regulations mostly end up
hurting small businesses and farmers and implicitly supporting
larger businesses that can cope more easily with the costs of such
burdensome regulations. DPLs therefore support state
governments in their efforts to encourage more open and
competitive environments and polices, such as those that remove
local monopolistic practices which hurt farmers and small
producers.
Where relevant, DPLs support state governments in the
development of policies and programs that encourage greater
inclusion and protect the environment. State governments may
seek to address these issues in different ways, such as through
regulations that: strengthen indigenous peoples’ rights, conserve
forestry resources, provide for more equitable property rights, and
those that strengthen environmental protection and benefits to local
35 Direction of development
residents affected by mining, hydropower or other issues. DPLs
follow the guidelines of the Government of India, especially to
ensure that state governments’ policies and programs are able to
return them to a path of medium-term fiscal sustainability.
But in fact, the DPL reduce government spending on
development programs and priorities. Advocate or support any form
of forced privatizations and lay-offs of public sector employees,
since these are counter-productive. Instead, they support programs
and policies that arrive at ways of protecting workers and jobs,
and those that generate more jobs by promoting new avenues of
growth in the rural, agricultural and urban sectors.
 DPLs to state governments in India do not involve interest
rate issues, since state governments do not have purview over
such broader financial sector matters. They do however support
state governments where they wish to put state rural credit and
cooperative institutions on a sound footing so that farmers can
access credit more easily. Similarly, DPLs to state governments
do not involve import tariff, foreign ownership, or export orientation
issues, as they do not have purview over these matters.
BOX-4
IFC and MIGA: Supporting the private sector
While the World Bank (IBRD and IDA) provides credit and
non-lending assistance to governments, the IFC provides loans
and equity financing, advice and technical services to the private
sector. Its stated mission is “to promote sustainable private sector
investment in developing countries, helping to reduce poverty and
improve people’s lives.” Although the IFC is a public entity, its
clientele consists of transnational, national and local companies.
The operations of these pri-vate enterprises often privilege
profitability over sustainability and “business confidentiality” over
the public’s right to know. As a result, it is frequently difficult for the
public to measure or influence the development impacts of the
IFC’s activities.
The IFC is more influential than numbers alone suggest.
Through its lending and advisory activities, it mobilizes funds from
other lenders. In recent years, the IFC has also exerted an
increasing influence on the lending standards followed by other
international financiers (such as private banks), particularly when
they operate in countries without strong standards.
MIGA’s stated goal is to help developing countries attract
and retain private investment by providing companies with insur-
ance against loss of their assets due to war, expropriation or other
36 Direction of development
political instability. In addition to offering insurance to private
companies, MIGA mobilizes guarantees from other sources for
investors and assists host governments with legal services and
strategic advice about investment. MIGA has been criticized for
not ensuring that local populations and the environment are
protected against the risks that investments may pose to them. It
is active in many “risky” postconflict countries, for example helping
investors profit in contexts where local populations may not be in
a position to defend their own interests.
Source: Bank Information Center, www.bicusa.org/toolkit pp 2.4.
In the past several years, the Bank’s lending practices have
made a marked shift from conditionality-based lending to country’s
policy and program priorities however these program and polices
itself are based on WB polices. Today, World Bank lending is
governed by a set of terms and operational guidelines called the
Safeguard Policies ensuring that Bank projects success. Among
other issues, these Safeguard Policies cover the protection of the
environment, cultural property, natural habitats, forests, indigenous
peoples, dam safety, and international waterways, and promote
the fair and equitable rehabilitation of people if Bank projects affect
them, which can be done only on bank’s guideline. The World Bank
also lays down various procurement and financial management
norms to ensure accountability (to whom??) in the procurement of
goods and services under a project.
The W orld Bank clearly state that it believes that
development needs and priorities vary widely between countries
depending on a variety of factors, and that there is no one-size-
fits-all model of development. Privatization is only best options
available. India today, like many developing countries, is facing a
large and growing shortfall in the provision of electricity, water,
transportation, schools, hospitals, etc. To meet the rapidly growing
needs of the people, the World Bank believes that the private
sectors have important roles to play.
Apparently The World Bank’s program in India is guided by
the country’s own development agenda, however country’s
development agenda itself is govern by W orld Bank’s
agenda. Within this broad agenda, the World Bank focuses on
areas where it (read their associate corporate) can contribute the
most. These include primary schooling, healthcare, basic
infrastructure, rural livelihoods, water supply and sanitation.
37 Direction of development
The World Bank believes that there is no single approach
that can improve basic services as varied as water, power, health,
and education. However for these services to improve, especially
for the poor, we do believe that greater accountability of service
providers – whether public or private - is a key element. On its
part, the government invests a great deal of money and effort to
provide basic services to the people. However, in the face of growing
demand for services of good quality and the often weak
performance of government service providers, the private sector
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
bear the brunt of both poor public and private services. Solutions
that are suitable for each sector therefore need to be found to
better assure the provision of basic services to the people. Given
the large role already played by non-government service providers,
Bank believe that it makes sense to consider how these
providers could contribute, but with careful consideration of
coverage, cost, quality, and the capacity of government to develop
and manage different strategies
Same like India’s needs for investments in infrastructure are
huge. Government estimates show that an investment of $475
billion is needed to meet the country’s current shortfall. The public
sector alone cannot meet these enorm ous
requirements. Therefore, banks suggests like many other
countries, India too have to turn to the private sector to supplement
what the public sector can do. The private sector has already shown
that it can make a major contribution in areas such as
telecommunications, ports and roads.
In case of education the World Bank does not believe that
primary schooling should be privatized, because it may be a huge
burden on private sector to reach in rural areas. Therefore it
suggests that “at the secondary level (Grades 9-12) where the
financing and provision of schooling for all children is not the
government’s sole responsibility, the Bank is of the view that both
the public and private sectors need to expand to absorb the
increasing numbers of students, and improve the access, equity
and quality of education provided. The same is true for vocational
and higher education”.
In Health Care services the bank’s report suggests that given
the already large private sector service delivery taking place in India
38 Direction of development
(quacks etc), the World Bank believes that well designed policies
to selectively engage private providers can expand the coverage
and quality of basic health services for the people, especially the
poor because public financing has been shown be an essential
element in providing health care to the poor. But governments
across the world are often constrained in reaching widely dispersed
poor populations with good quality health services. As a
result,India’s health sector is already highly privatized; most health
care services are delivered by private providers, and more than 3/
4 of all health expenditure comes from private sources. Most of
this spending goes to private providers.
In case of electricity, the World Bank believes that it is neither
desirable nor possible to have a single solution for improving the
delivery of electricity services. Countries will need to leverage skills,
financial resources and techniques which are available in the public
and private sectors, and indeed in communities themselves, to
meet the growing demand for electricity services. As is already
happening, optimal delivery of electricity services will need to be
tailored to the existing circumstances and will require a suitable,
and evolving, form of public, private and community partnership.
Urban Water Supply is another case to privatise for corporate
interests; however the World Bank apparently denied to directly
recommending the privatization of water supply services in India.
But it suggests that ”in fact, the reality on the ground is that provision
of drinking water supply services in India has undergone a de-facto
privatization. Urban residents make their own private provision for
water by digging tube-wells, adding storage tanks and infrastructure
for pumping and purifying water in their homes, as well as buying
bottled drinking water and water from tanker trucks. Residents
are paying a high price to augment unreliable, inefficient and unsafe
water as it is currently supplied, and it is the poor who suffer most
from the current state of affairs”. Matter of fact is that in absence
of assured water supply, making self provisions for drinking water
and privatization of water services are completely different things.
As it does for other urban services, the World Bank
recommends that water supply utilities be run in a professional
manner, are financially sustainable, and ensure affordable supply
for those who cannot pay. It recognizes that the public sector must
retain primary responsibility for ensuring reliable, affordable and
safe water supply to India’s citizens. For this reason, the World
Bank recommends that the government retains ownership of water
39 Direction of development
supply infrastructure and regulates water resources. The
government has a long history of contracting with private sector
firms to design and construct water systems and to provide goods
and services (only World Bank expert know this fact??). Hence
(?), direct engagement by the government of the private sector to
help improve efficiency, reliability and quality of water supply
services would be much more effective and affordable than the de
facto privatization that is now the norm in Indian cities.
The World Bank’s support for rural services in India has gone
through an important evolution over the last decade. Gradually the
WB is directly interfering in all sphere of economic activities.
 While implementing these projects in India and elsewhere, the
Bank has increasingly recognized that local governments play a
critical role in scaling-up and sustaining the delivery of services.
Drawing on these lessons, the Bank has increasingly focused on
the linkages between service delivery and Panchayati Raj
Institutions (PRIs). For example, in the rural water and sanitation
sector, the Bank has adopted a set of rules for sectoral investments
that strengthen ties with PRIs. The design of the
Karnataka, Maharashtra and Kerala rural water supply projects has
given Panchayats greater decisions over investments and operating
systems under a participatory process. Similarly, in the
Chhattisgarh Rural Poverty project, the infrastructure component
is being implemented by Panchayats.
The World Bank’s current Country Strategy goes a step
further and proposes direct support to Panchayats rather than
relying on indirect links through sectoral delivery systems. If
livelihood projects can strengthen the ability of communities to
organize themselves around the delivery of private goods, the direct
strengthening of local governments increases PRI’s capacity to
respond to the demand by communities for local public goods. It
also strengthens the ability of PRIs to support existing sectoral
programs in water and sanitation, rural roads, health and
education. The predicament in this idea is that direct involvement
with PRIs makes them unaccountable to state government of which
W B itself a proactive advocate. The Karnataka Panchayat
Strengthening Project is the first of this new generation of projects
that directly focuses on strengthening the PRI system. The Bank
is now looking at adopting this approach in other States.
Another important aspects of WB projects are displacement
of peoples. In principle World Bank projects have social safeguard
40 Direction of development
policies on Involuntary Resettlement and on Indigenous Peoples.
The first lays down principles and processes to safeguard the
interests of those adversely affected by land acquisition and
displacement on account of Bank projects. The second requires
free, prior, and informed consultation with tribal populations to
ensure that Bank projects deliver social and economic benefits
that are culturally appropriate and inclusive. It also ensures that
potentially adverse impacts are either avoided, or when avoidance
is not feasible, that such effects are minimized and mitigated.
The Bank’s social safeguard policies define higher standards
than those found in most countries, including India, in terms of
compensation for land acquisition (at replacement value) and
resettlement (livelihood restoration), and for citizen participation.
In the preparation of Bank financed projects, assessments are
made of the borrower’s policies, and measures are put in place to
fill gaps between the Bank’s policy requirements and the borrower’s
policies. Specific implementation plans as well as institutional and
monitoring arrangements are put in place based on these policy
frameworks. The policy frameworks and specific implementation
plans (e.g. a Resettlement Plan or an Tribal Peoples’ Development
Plan) are legally binding on the borrower who is responsible for
the preparation, implementation, and monitoring of specific
plans. The Bank’s role is that of reviewing policy frameworks and
plans to ensure that they conform with the Bank’s Safeguard
Policies.
World Bank projects are designed to ensure that Indigenous
Peoples receive social and economic benefits that are culturally
appropriate, and gender and intergenerationally inclusive. In the
Indian context, a Tribal Peoples’ Development Plan is prepared in
consultation with the scheduled tribes inhabiting the project area
in accordance with the requirements of the Indigenous Peoples’
policy. Tribal and other vulnerable communities are engaged in
micro-level planning along with other members of the village.
Specific Tribal Peoples’ Development Plans are prepared to
address the specific needs of tribals and other vulnerable groups.
These are costed and monitored separately. But in practice merely
there are any example in which case banks has followed these
policies to avoid the distress of indigenous peoples.
The World Bank, which is one of the world’s largest sources
of funding and knowledge to support governments of member
countries in their efforts to invest in schools and health
centers, provide water and electricity, fight disease, and protect the
41 Direction of development
environment. Principally, the World Bank is not a “bank” in the
common sense. The World Bank is an international organization
owned by the 184 countries both developed and developing that
are its members. Since it was set up in 1944 as the International
Bank for Reconstruction and Development. The number of member
countries increased sharply in the 1950s and 1960s, when many
countries became independent nations. As membership grew and
their needs changed, the World Bank expanded and is currently
made up of five different agencies. All support to a borrowing
countries is guided by a single strategy (in the case of Afghanistan
it is the “Transitional Support Strategy”) that the country itself
 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
The World Bank Proposal
Agriculture contributes 21% of India’s GDP, its importance
in the country’s economic, social, and political fabric goes well
beyond this indicator. The rural areas are still home to some 72
percent of the India’s 1.1 billion people, a large number of whom
are poor. Most of the rural poor depend on rain-fed agriculture and
fragile forests for their livelihoods. The sharp rise in foodgrain
production during India’s Green Revolution of the 1970s enabled
the country to achieve self-sufficiency in foodgrains and stave off
the threat of famine. Agricultural intensification in the 1970s to 1980s
saw an increased demand for rural labor that raised rural wages
and, together with declining food prices, reduced rural poverty.
Sustained, although much slower, agricultural growth in the
1990s reduced rural poverty to 26.3 percent by 1999/00. Since
then, however, the slowdown in agricultural growth has become a
major cause for concern. India’s rice yields are one-third of China’s
and about half of those in Vietnam and Indonesia. With the
exception of sugarcane, potato and tea, the same is true for most
other agricultural commodities. The Government of India places
high priority on reducing poverty by raising agricultural productivity.
However, bold action from policymakers will be required to shift
away from the existing subsidy-based regime that is no longer
sustainable, to build a solid foundation for a highly productive,
internationally competitive, and diversified agricultural sector.
Sapping Indian Agriculture
There is a woeful lack of serious discussion and debate
among the policy-makers on the adverse impact of liberalization
and globalisation policies on agriculture.The policies imposed by
44 Direction of development
the World Bank-IMF have a component directly affecting the
agrarian economy. These policies have the following components:
 The gradual abolition of input subsidies on fertilizers,
irrigation, electricity, credit etc.
 The removal of trade restrictions on agricultural
commodities so that the domestic prices are not out of
tune with world prices.
 A unification of prices so that the current system of dual
markets in food grains and other agricultural commodities
disappears.
 A drastic curtail-ment of food subsidy confining the Public
Distribution System(PDS) only to the deserving poor.
 The removal of all restrictions on the choice of what to
produce, where to sell etc.
 Freedom of operations for agri-business corporations.
 Abolition of land ceiling laws.
The World Bank views on agriculture can be found in two
recent documents. The World Development Report (WDR) 1986,
deals with the general issue of Trade and Pricing in World
agriculture. The second volume of the World Bank’s 1991 Country
Economic Memorandum for India, sub-titled ’Agriculture-
Challenges and Opportunities’, is the latest bank document
specifically dealing with Indian agriculture1.
The document of WDR avers that government interventions
at all stages of production, consumption and marketing of
agricultural products and inputs have resulted in greater
inefficiencies, lower output and incomes. This report is silent on
government’s role in providing agricultural infrastructure, reforms
in tenancy or ownership structures. It ignores the glaring fact that
during the colonial period prices were in fact ‘right’ but agricultural
performance was abysmal. The WDR concludes by claiming that
getting prices right, cutting subsidies and liberalizing world
agricultural trade would make everyone happy and recommends
its own adjustment loans and Sectoral Adjustment Lendings
(SECALs).
So far, India has not taken any agricultural SECAL, and
progress on the priorities identified by the Bank has also been
slow. Nevertheless, food and fertilizer subsidies have been the
target of the government. The committee on reforming the financial
45 Direction of development
system (known as the Narasimham Committee) has recommended
major reductions in the quantum of credit directed towards the
agricultural sector by the public sector banks. Mercifully enough,
Government of India unlike the World Bank, is not touting these
measures as ‘agricultural reform’ but exercises at reducing the
fiscal deficit and improving the profitability of the financial sector.
The Bank’s Prescriptions:
The Bank’s 1991 Country Memo-randum’s recommendations are
as follows :
 Reducing agriculture subsidies.
1
http://www.ieo.org/world-c7-p1.html
  Regaining control of public expenditure.
 Improving the safety net offered by food programs while
restraining costs.
 Initiating credit reforms to prevent the collapse of the
agricultural credit system.
 Ending coercive marketing and trade restrictions.
The agricultural SECALs consists of these short term
priorities, along with reduced coverage of PDS and the rural banking
network.
Capital spending by the Union government is being slashed
especially agriculture related investments. The effective decline in
financial transfers to the States will affect their ability to increase
or maintain investments in agriculture, a state subject. If any further
BOX-5
The Symbiosis between the Bank and Corporats
The ‘symbiosis’ between the bank and corporations is well
demonstrated in the biotechnology and agrochemical industries. The
World Bank’s agriculture policies have been practically written by
corporations such as Monsanto, Aventis, Novartis and Dow. Even
as the bank expanded its rhetoric about environmental sustainability
in the 1990s, its projects advocated increasing farmers’ access to
agro-chemicals and genetically modified seeds. During this time,
the bank also entered into business partnerships with nearly all
leading pesticide and biotechnology companies through a staff
exchange programme that involved 189 corporations, governments,
universities and international agencies6. A marketing analyst from
Aventis (now Bayer CropScience) spent nearly four years in IBRD
to develop IBRD’s position on agricultural biotechnology and
strategies to leverage financing through IFC.
Novartis’ (now Syngenta’s) head of public affairs spent a year
46 Direction of development
working on outreach strategies for the W orld Bank’s rural
development unit. Bank officials placed in Novartis and Rhone
Poulenc Agro (now part of Bayer) in the late 1990s assisted them
with biotechnology regulatory issues and rural development
partnerships. The bank thus adjusted its agricultural strategies to
satisfy leading biotechnology and agrochemical corporations, which
in turn gained access to public policy making in developing
countries. Pro-corporate thinking is deeply embedded in the World
Bank. Many of its presidents and senior staff come from the corporate
sector and ‘market solutions’ feature prominently in the bank’s
strategies for addressing virtually any challenge whether
deforestation, global warming or food and water scarcity.
disincentive to agricultural investment is required, this would be
provided by the implementation of the recommendation of the
Narsimham Committee that loan to priority sectors (including
agriculture) to cut to only 10% of total bank-lending from 40% at
present.
This move is totally ill- conceived. Instead of reducing the
subsidy element in the raised interest rates, it seeks to cut the
volume of agricultural lending and reduce the reach and coverage
of the banking system in rural areas. All this will lead to further
decline in investments in agriculture as in the last decade1.
Devaluation and partial convertibility of the rupee have made the
international prices of food much higher in rupee terms—almost
50% since June 1991.
The performance of the agricultural sector is important for
the overall success of government’s economic strategy, since
continues to be the largest employer. The boom sectors of the
80s—chemicals, consumer durables and high-tech services—have
very little linkages to agriculture. Agricultural raw materials play a
less significant role than industrial inputs. But the importance of
agriculture cannot be wished away. The Government has yet to
announce a national agricultural policy.
The recent policy changes have affected the agricultural
prices. The devaluation and partial convertibility of the rupee
(wherein food grain exports and imports are at market rates) have
made the international prices of food much higher in rupee terms
(by almost 50% since June 1991), fueling expectations of rising
domestic food prices. Domestic food prices increased by almost
50% between 1991-93.
As almost all studies of poverty in India have shown a
47 Direction of development
combination of rising food prices and decelerating growth is a sure
prescription for increased poverty. And recent studies (e.g., by the
International Institute for Applied Systems and Analysis) have shows
that globalisation of agricultural trade will improve incomes of rich
farmers and may increase exports. This not by increasing
production but prices and reduced consumption. The major
consequence will be increased poverty since those most affected
adversely will be the poorest groups in the country—landless
agricultural laborers, marginal farmers and urban unorganized
workers—whose main item of consumption is food. The real
victims, whether of neglecting agricultural investment or, of
1
http://www.ieo.org/world-c7-p1.html
 globalisation of agricultural trade under GATT, will be those who
are already living on the very fringes of survival in India.
Uttar Pradesh is the most populous state of India. According
to the 2001 census, U.P.’s population was a little over 166 million
accounting for 16.4 percent of the country’s population, although
the state accounts for only 7.5 percent of the country’s geographical
area. Hence, U.P. has a very high population density – 689 persons
per square kilometer - which is more than twice the national
average, of 324. U.P.’s population has increased almost three times
since 1947, the year of India’s independence. It is increasing at
the rate of 2.3 percent per year, up from 2.2 percent during 1981-
91. That is, U.P. is now adding about 3.8 million people per year.
The number of females is 7.86 crores and that of males is 8.75
crores. The male-female ratio is 1000:898. The urban population
is 3.45 crores while 13.15 crore population lives in the rural areas.
It is the fourth largest State in terms of geographical area covering
2.40 lakh sq. kms. and comprising 70 districts, 17 divisions, 298
FIGURE 1: DISTRICTS OF UTTAR PRADESH
48 Direction of development
tehsils, 823 development blocks, approximately 720 urban local
bodies, 8814 Nayaya Panchayats, 51826 Gram Sabhas and 97134
revenue villages. The State has a preponderance of small villages,
which implies that a large spread of social & economic infrastructure
requiring more resources. Uttar Pradesh ranks very low even in
terms of basic household amenities. Only 20 percent of households
in Uttar Pradesh have electricity connection, 15 percent have
access to safe drinking water; 11 percent have toilet facility; and
the public distribution system for food grains reaches only 5 percent
of households.
U.P. is a landlocked state, mainly rural with an economy
that is primarily agrarian. The industrialisation pattern in the state
is highly skewed with the western region of the state accounting
for most of the industries of the state. The main agricultural crops
in the state are wheat, rice, sugarcane, pulses and vegetables.
The main industries in the state are cement, vegetable oils, textiles,
cotton yarn, sugar, jute, and carpet. The sectoral break-up of the
state’s GSDP in 2002-03 was 32 percent from agriculture, 22
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
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

the people in UP live in the rural areas; and 66% are dependent on
agriculture for their livelihood. Agriculture accounts for 38% of
GSDP3.
Uttar Pradesh is among important states for the national
economy and primarily agrarian in nature. Thus the agriculture
sector is critical for the state, which contributes about 40 percent
to the state gross domestic production as against 25 percent at
the national level. Agriculture sector engages about 70percent of
the population and 65 percent work force in the state. Out of 24.2
1
Including recently created Mahamaya Nagar
2
Sharma, Rita (2002) “Reforms in Agricultural Extension: New Policy Framework,”
Economic and Political Weekly, vol. 37, no. 30, pp. 3124-31, July 27.
3
In 2001-02.
53 Direction of development
hectare. The cropping intensity is 151.36 percent. The state is geo-
graphically located in the most fertile tract of indo-gangetic plains
and has good soils and water availability through rainfall and river
flow. Consequently, despite of a number of adverse factors the
state’s agriculture productivity is not very much comparable to the
all India level.
Uttar Pradesh has varied topography as is distinctly demon-
strated through the 9 agro ecological zones-Tarai, Western Plains,
Mid-Wester Plains, South-Western Semi-Dry Plains, Bundelkhand,
North-Eastern Plains and Vindhya, witch have significant varia-
tions in terms of soil conditions, rain fall, temperature etc. Besides
 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

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

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
varieties through private sector firms, the project supported training
and other support to veterinarians, small- and medium-sized
nursery owners, seed companies, and breeders who wish to
establish small businesses to provide inputs and related services
to farmers. To support increased private sector involvement and
public-private partnerships in agri-business, the project helped to
mobilize and facilitate access to credit for subsistence farmers,
landless and unemployed, and rural women. It also ensures that
rural financing institutions are more responsive to meeting the credit
needs of the rural poor, the project will finance orientation and
gender sensitization training and strengthen linkages with farmers
groups.
Some Critical Facts:
The project reclamation technology will be similar to what
has been tested in the pilot project. The project provides for
chemical amendments to reclaim the sodic soils and shallow
tubewells needed to leach salts, and supports on-farm
development, drainage, and inputs needed to cultivate the land.
Close look of the changes in the land use pattern of the project
areas and the claims about project outcome by state government
and propagated by the World Bank has sharp contradiction, for
example
Out of 10 districts, which were part of the UPSLRP-I barren
and uncultivable land in has increased in 5 districts Allahabd,
Fatehpur, Hardoi, Raebareli and Sultanpur (See Table). Whereas,
it again has repeated for 11 district out of 17 (See Table).
However Cultivable waste land has declined in most of the
projects districts, but it was on rise in Allahabd, Hardoi and Sultanpur
66 Direction of development
after implementation of the first phase. Again it was on rise in
Auraiya, Etawa and Jaunpur after second phase. Beside that in
more than 5 district change was almost insignificant (See Table-
5). Same was the situation for area under fallow land. There was
an increase in Aligarh, Allahabad, Mainpuri and Pratapgarh and in
other 4 districts namely, Etah,Fathepur, Raebareli, Hardoi and
Sultanpur the change was insignificant (less than one percent) (See
Table-6). In the second phase out of 18 districts, it was on rise in
Aaligrh, Allahabd, Etah, Hardoi Kanpur (Sahar),Kanpur (Dehat)
Mainpuri and Sultanpur. In another 8 districts - Azamgarh, Fatehpur,
Etawa, Hardoi, Unnao, Pratapgarh, Raebareli and Jaunpur there
was insignificant change (See Table).
In contrast to claims of reclamation of sodic land, increase
in irrigation facility and increase in net sown area and gross sown
area both indicators has declined in project districts. In the first
phase in Aligarh, Allahabad, Etah, Etawa, Fatehpur, Hardoi,
Sultanpur districts there was net decline in NSA. In the second
phase NSA has declined in Allahabad, Etah, Jaunpur, Pratapgarh
and Raebarli districts (See Table).
Same was the case for gross sown area GSA. The GSA
has declined in 7 out of 10 districts, except in Mainpuri, Pratapgarg
and Raebareli. In the second phase of the project, Allahabd, Etah,
Fatehpur, Kanpur- Sahar and Pratapgarh districts has registered
a negative change in GSA (See Table). These are the results of 15
year’s effort and investment of millions of rupees. In fact this project
has ensured only one thing i.e. reduction in role of government
and increasing participation of private sector in agriculture.
The world bank is a major advocate of rational use so f
natural water resources but in this project 10930 Tubewell
developed and Pump Sets added on these new boring and already
existing borings without pumpsets, which lead to sharp decline in
water level in project districts in first phase only. The practice was
repeated in second and third phases and the outcome is over
extraction of ground water in five out of ten project implementation
districts. Excess use of chemicals for reclamation of land also has
yielded negative results. A large of districts has reported
contamination in drinking and ground water (see Annexure-3).
The other major venture of the World Bank - Uttar Pradesh
Agricultural Diversification Project This environmental assessment
for India’s Second Uttar Pradesh Agricultural Diversification Project
assesses environmental impacts and possible environmental and
social risks in activities aiming to increase areas and yields of
67 Direction of development
diversified field and tree crop, livestock, and fish products, and
increase the proportion marketed and processed. It was proposes
good environmental practices to integrate into project activities to
promote sustainable natural resource management. A long list of
environmental concerns and risks include using a poor quality of
bio-pesticides and increasing level of fertilizer and pesticide use
generally, poor storage and handling of seeds that are themselves
of poor quality, decline in crop yields and loss of soil fertility,
increased use of bio-agents, higher demand for irrigation water for
vegetables and increased water demand, more electricity
consumption and disposal of polyethylene sheets, waste generation
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
people of those countries, which receive financial assistance from
these institutions; because conditionalities imposed on borrower
countries has several hidden costs. These conditionalities includes
liberalization of domestic market, investment and the financial
sector—, deregulation, privatisation of nationalised industries and
free trade. Most of these conditionalities are attached without due
regard for the borrower countries’ individual circumstances and
the prescriptive recommendations by the World Bank fail to resolve
concrete economic problems within the countries.
These institutions are also
BOX-10 shaping the development discourse
We hear the refain, through their research, training and
“a rising tide floats all publishing activities. As the World Bank
boats.” But for those who
is regarded as experts in the field of
don’t own boats or have
financial regulation and economic
leaky boats, a rising tide
development, their views and
means greater inequality
prescriptions may undermine and/or
between them and the
eliminate alternative perspectives on
more fortunate.
development.
In result, in today’s world, the
richest 20 percent of the world’s population receives 83% of the
world’s income, while the poorest 60% of the world’s people receive
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
energy, 75% of the world’s metals, 85% of the world’s wood, 60%
of the world’s food, and produces about 75% of the world’s
environmental pollution. This globalization of market forces has
greatly increased inequality. Just 150 years ago there was not great
inequality between the standards of living of people across the
78 Direction of development
world.
in fact, it is out of capacity rich peoples, capitalists and
corporates to generate wealth in such extent. A closure look of the
world economic advancement clearly suggests that these so called
development organization and international financial institutions,
especially the World Bank has created a conducive environment
for private sector to accumulate wealth. It is evident that, the
globalization of market forces, vigorously promoted by the World
Bank, creates greater inequality. Over the past 30 years the
globalization of the economy-led by prescriptions of the World Bank,
the International Monetary Fund and transnational corporations-
has proceeded at a faster pace. These institutions have pressured
BOX-11
Playing Weak: Selectively Downplaying
the Bank’s Power
The World Bank often says, we don’t have any leverage
if we are not involved in the project. But in reality, the World
Bank Group remains an extremely powerful institution, with
strong influence over member governments. While financing
a project provides one vehicle through which the Bank Group
exercises its leverage, it is by no means the only channel of
influence available to the institution. The Bank’s ability to
condition its overall lending to a country and its public and
private communications can also significantly impact decisions
taken by a Government. Moreover, if the Bank
Group is financing a project in order to have a say over
how it is done, then the Bank’s leverage is strongest before it
disburses its funds. Thus, if social, environmental and
transparency problems are not remedied before funding is
distributed, the Bank is far less able to ensure that they will be
resolved later.
Source: Bank Information Center, www.bicusa.org/toolkit pp, 2.15
governments to remove barriers to the cross-border flows
commodities and capital.
From its inception, the World Bank continue to keep
reassuring the developing world that high economic growth rates
will solved the problems of poverty, hunger and inequality. The
data of world trade from 1960 to 1989 shows that during a period
of significant growth in world trade global inequality got significantly
worse: the ratio between the richest 20% and poorest 20% of the
79 Direction of development
world population went from 30 to 1 to 59 to 1.
In fact, it can be said that the World Bank is not to promote
“development” but rather to integrate the ruling elites of third world
countries into the global system of rewards and punishments. That’s
why inequality within developing countries is on rise, especially in
recent past.
Since, direct colonial control on the modern world is no longer
tolerated, therefore corporate elite seeks an indirect way to control
policies implemented by developing world governments and the
World Bank can effectively do this with their policies. India, for
example, remains poor despite receiving $28.8 billion since 1961.
 That money did nothing to make India open its economy, which
remains “mostly unfree” according to same global Index.
An examination of the record of World Bank and IMF
performance in developing countries shows that, far from being
the solution to global economic instability and poverty, these two
international institutions are a major problem. For one thing, their
lending practice deters growth because the money they loan
removes incentives for governments to advance economic
freedom, and breeds corruption. For these reasons, the vast
majority of recipient countries have been unable to develop fully
after depending on these institutions for over 40 years1.
Evidence from many countries shows that the policies
promoted by the World Bank are disastrous. The “free market”
economic model being pushed on developing world is not the same
as industrial countries used to develop themselves. All the wealthy
countries-the USA, Japan, Germany, England, France and the
recent success stories such as Taiwan and South Korea-used a
heavily protectionists, state-interventionist model that had
government play a strong role in directing investment, managing
trade and subsidizing chosen sectors of the economy. The United
States was in many ways the “mother country” of protectionism,
showing other wealthy countries how to do it.
The debate on the ability of international financial institutions
to influence reform in other countries had its peak about five years
ago, when the U.S. Congress created the IFIAC. The IFIAC
assessed the role and effectiveness of the World Bank, the
International Monetary Fund, the regional development banks, the
Bank of International Settlements, and the W orld Trade
Organization. Regarding the IMF and the World Bank, the IFIAC
concluded that the work of these institutions left much to be desired.
80 Direction of development
High cost and low effectiveness characterize many development
bank operations as well. The World Bank’s evaluation of its own
performance in Africa found a 73% failure rate.... In reducing poverty
and promoting the creation and development of markets and
institutional structures that facilitate development, the record of
the World Bank and the regional development banks leaves much
room for improvement2.Specifically, The IMF has given too little
attention to improving financial structures in developing countries
1
IMF and World Bank Intervention: A Problem, Not a Solution, Published on September 17,
2003 by Ana Eiras
2
The full International Financial Institutions Advisory Commission (IFIAC) report is available in
English at www.house.gov/jec/imf/meltzer.ht.
and too much to expensive rescue operations. Its system of short-
term crisis management is too costly, its responses too slow, its
advice often incorrect, and its efforts to influence policy and practice
too intrusive.
The World Bank and Corporate sector
In its existence for over more than 60 years, the World Bank
has expanded from a single institution — the International Bank
for Reconstruction and Development (IBRD) — to five institutions,
each dealing with a particular area of operation. These include
financing and support for relief and rehabilitation, physical and
institutional infrastructure in sectors such as energy, transportation,
extractive industry and telecommunication, restructuring of key
sectors such as health, education, water and agriculture,
development of private sector, and mitigating investment associated
risks for private companies. Despite a number of scandals, the
World Bank remains powerful. In most of its client countries, it is
the only doorway to international trade, development finance and
private investment capital. It derives its power and policy agendas
from its wealthy shareholders — governments that comprise the
G-7 countires, which routinely use the bank to secure lucrative
trade and investment deals for their respective transnational
corporations (TNCs) in developing countries. Corporate influence
is manifested in and through the World Bank in several ways. Most
obvious is the support extended to private corporations through
three of the bank’s specialised institutions: the International Finance
Corporation (IFC), Multilateral Investment Guarantee Association
(MIGA) and International Centre for the Settlement of Investment
Disputes (ICSID).
Interestingly the World Bank channels about US $18-20
81 Direction of development
billion to developing countries in form of loans and grants with the
ostensible aim of reducing poverty and promoting economic growth.
The bank always acts in tandem with its sibling agency, the
International Monetary Fund, even in countries that no longer
borrow from the fund. However, all finances from the bank do not
go to the governments. A private sector, especially large
corporations get a significant amount of this loan/aid/assistance
through directly channel, in the form of loans,
The IFC, which is the bank’s private sector arm and the
world’s largest multilateral source of equity and loan financing for
private enterprises in developing countries, claims to support
economic development, employment and poverty reduction by
 BOX-12
Bringing in the private sector: the IFC and
MIGA in your country
The IFC and MIGA provide financing directly to transnational,
national, and local private sector companies investing in developing
and transition countries, often building off of policy reforms supported
by the World Bank Group’s lending and advice to governments.
Increasing private sector investment, and particularly foreign direct
investment, is a central tenet of the development model promoted
by the World Bank Group.
The emphasis on foreign direct investment has been
challenged by evidence from the field, which does not prove a
correlation between increased FDI and public welfare. One recent
study conducted by the United Nation’s own Commission on Trade
and Development (UNCTAD), found that FDI is not the unqualified
good that World Bank Group advice and analysis sometimes make
it out to be. Their activities are supposed to be consistent with the
priorities identified in the Bank’s CAS (or equivalent strategy) for a
given country. But because neither the IFCnor MIGA publishes its
own formal strategy for its interventions in a country, it is difficult to
know how they select which sectors they engage in or specific
projects they pursue. Similar to the task teams in charge of World
Bank projects, there are teams of IFC and MIGA staff responsible
for the loans, investments and guarantees they provide to private
companies. These teams, headed by investment officers at the IFC
and underwriters at MIGA, are typically smaller than those working
on Bank projects.
IFC and MIGA project cycles are more opaque and
considerably shorter than those of the World Bank. Claiming that
they are constrained by business confidentiality requirements, the
IFC and MIGA don’t publicly disclose much information about how
projects are identified, designed or implemented. Neither institution
publicly reports on the development impacts of the projects it
supports, making it difficult to assess how well the institutions are
82 Direction of development
contributing to poverty reduction and sustainable development.
With virtually no advance notice and little information about
their private sector operations, as well as shorter project timelines,
the opportunities for the public to influence IFC and MIGA operations
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
provides aggregate or summary information on the social,
environmental and economic impacts of its operations. However,
civil society has succeeded in forcing the IFC and MIGA to modify
or even abandon problematic projects by exploiting their sensitivity
to reputational risk. The IFC is particularly attuned to its reputation.
Source: Source: Bank Information Center, www.bicusa.org/toolkit
promoting open, competitive and efficient markets and supporting
private companies in developing countries. IFC mainly supports
large, well-funded corporations and not small-scale, local
entrepreneurs. Through the IFC, corporations get access to large,
government-sponsored infrastructure, service delivery projects and
investment opportunities that are relatively risk free. On the other
hand, local communities have little say and no benefits in these
investments as social and environmental safeguards are
increasingly overridden by corporate demands for profits.
The IFC has developed a range of financial tools and
services to enable private companies to manage investment risks
and broaden their access to capital and developing company
markets. The bank and IFC have also established the ‘Rapid
response knowledge initiative’, which specialises in policy advice
on business environment reforms and privatisation policy in
developing countries. The initiative maintains a cyber-service called
‘Private sector blog — a market approach to development thinking’
to promote its pro-market, pro-corporate ideology.
Another constituent of the World Bank- MIGA provides some
of the most important services to private corporations by mitigating
the political risks of private investment in high risk, low income
and conflict-ridden nations. MIGA’s forte is political or sovereign
risk, which includes governmental actions that jeopardise corporate
revenues. MIGA risk guarantees protect corporate investors against
losses resulting from government expropriation of assets and
breach of contract, war and civil disturbances including insurrection,
coups d’état, revolution, sabotage, and terrorism. MIGA prides itself
as a leader in the political risk insurance industry and collaborates
with private and public insurers to “encourage private sector
insurers into transactions they would not have otherwise
83 Direction of development
undertaken”1. MIGA’s beneficiaries are generally TNCs in sectors
such as water, energy, oil and gas, telecommunications,
automobiles, agribusiness and luxury hospitality. MIGA also
provides “dispute mediation” services and in this, it is
complemented by ICSID, which serves as a private, almost secret
court to settle disputes between states and private investors2.
The World Bank routinely assists host governments and
private contractors in project preparation and mobilising project
1
ibid
2
ICSID has been in the spotlight recently because of a US $50 million lawsuit brought against
the Bolivian government by Bechtel and Aguas Del Tunari for cancellation of a water privatization
contract in the Bolivian town of Cochabamba.
 BOX-13
The Multilateral Investment Guarantee Agency (MIGA)
The Multilateral Investment Guarantee Agency (MIGA)
is the political risk insurance arm of the World Bank Group7.
Established in 1988 to help developing countries attract and
retain private investment, it furnishes private enterprises
investing in developing countries with non-commercial risk
insurance and provides developing country members with
technical assistance regarding investment promotion. MIGA
guarantees protected investors against loss resulting from
expropriation, breach of contract, war and civil disturbance
including insurrection, coups d’état, revolution, sabotage and
terrorism. In addition to offering insurance to private companies,
MIGA mobilizes additional guarantees for investors and assists
host governments with legal services and strategic advice
regarding investment. By September 2008, MIGA had
issued 922 guarantees for over 96 developing countries
cumulatively worth over $19.5 billion since 1990.
finance: it hires private consulting firms to work alongside
government departments to design projects and implement
arrangements, mobilises project financing (through IFC) and
underwrites loans (through MIGA or other partnering risk
guarantors). The costs of environmental and social mitigation are
left to the government and society, and the terms of project financing
and guarantee generally favour private companies.
The World Bank insists borrowing countries to shrink labour
and environmental regulations and establish corporate friendly
taxation and property regimes, the World Bank virtually assures
84 Direction of development
private investors a free ride at the cost of local communities,
workers and the environment. The bank’s almost religious belief
in commercialisation and privatisation has served corporations well.
Regardless of the problem or sector (water, electricity, agricultural
marketing, health, education, etc.) the bank demands that the
governments step back and the markets step in.
Same as structural adjustment programmes (SAPs) now
renamed as ‘poverty reduction strategies’, the reform packages
are designed to open up the markets and economies of borrowing
countries to foreign investors through trade and investment
liberalisation, privatisation of public utilities, state marketing boards
and state enterprises, and financial deregulation.
Privatisation includes a range of measures: from unbundling
(breaking up) operations in public enterprises and outsourcing the
unbundled operations to eventual sale of public enterprises either
whole or in parts. Included in the package are private contracts for
high-end ‘technical assistance’ and procurement of ancillary goods
and services. Although the World Bank insists that procurement
and contracting are the responsibilities of the implementing agency
(usually a government department), privatised assets and
construction, consultancy and procurement contracts generally go
to large corporations, contractors and consulting firms that are well
versed with the bank’s rules for bidding and procurement.
The bank’s development vision is a capitalist one in which
the role of the government is to create an ‘enabling environment’
for the private (corporate) sector to flourish and for the market to
sort out crucial issues of access and distribution. The World Bank
is proud of its support for corporations and private investors and it
is clearly expressed on the MIGA’s website.
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
and even if disputes do arise, our leverage with host governments
frequently enables us to resolve differences to the mutual
satisfaction of all parties”.
In fact from its commencement, the World Bank is using
development and poverty reduction programmes as smokescreens
to further corporate interests. It uses its position as a preferred
creditor and aid coordinator in developing countries to create
opportunities for private corporations, contractors and consultants
to profit from structural needs and crises in developing countries.
Clearly, dismantling corporate power over our public goods,
85 Direction of development
services and commons will also require dismantling the World Bank.
World Bank and Education Sector:
Education is a precondition for economic development of a
country. Countries like India having a large population with fiscal
limitation have been a thrust area for other than government
institutions. Therefore, there is a wide scope for private sector
participation to capture the unnerved/underserved market. Hence
the World Bank has immense interest in education sector of
developing countries. In India, the World Bank has provided huge
loans for large number of educational projects e.g. only since 2000,
the World Bank has committed over $2 billion to education in India.
 It also provides technical support to design education development
directives to central and state governments.
Integrated Child Development Services –the one of the
largest programme of such kind, which comprise decentralized
and integrated approaches to early childhood development.
Through this programme the World Bank is doing research to
explore improvements in service delivery using micro-planning and
finding synergies among various social programs for children.
Currently third phase of this prohramme is being implemented in
various states.
Another leading program is Sarva Shiksha Abhiyan being
implemented by the World Bank along with development partners
(UK’s DFID and the European Union) to support. In the first Phase
(2003-2007) of this program the Bank invested $ 500 million to
expand facilities and improve infrastructure. In the second Phase
(2007-2012) the Bank has provided a total of $ 1.35 billion. The
bank believes that only private sector can help to overcome the
gaps.
Rashtriya Madhyamik Shiksha Abhiyan (RMSA) is another
World Bank supported program for secondary education. The World
Bank has provided estimated $ 650 million for this program. This
is largely based on the analytical work of the World Bank focusing
on strategies to improve access, equity, management and quality
through expanded public private partnerships at the secondary
level.
BOX-14 The bank is also
Pressure to Lend funding Vocational education
Structural imperatives and training program with a
within the Bank drive lending in $280 million project to
ways that may detract from
86 Direction of development
and in this process privatization is main agenda. Interestingly but
not incidentally, it is also the agenda of Indo-US Knowledge
Initiative.
The World Bank and Education Sector in Uttar Pradesh:
World Bank Development Policy Credits in a few states
support state level education reforms through policy dialogue and
research. The World Bank is currently also engaged in Andhra
Pradesh, Bihar, Himachal Pradesh and Orissa with Uttar Pradesh.
Lending to this program include recruitment of additional teachers,
establishment of teacher management information systems,
capacity-building for school-based mass de-worming programs for
improved student health, evaluations of teacher training programs,
and research into the most cost-effective interventions to improve
student learning and never to miss exceeding private sector
participation. According to policy document of the World Bank
public-private partnerships (PPPs) as a key way to deliver
education.
In contrast to this UNESCO’s Education for All Global
Monitoring Report, finds that: “public-private partnerships have a
mixed and modest record on learning achievements and equity.
And low-fee private schools are a symptom of failure in public
provision, not a solution to the problem. The lesson: transferring
responsibility to communities, parents and private providers is not
a substitute for fixing public-sector education systems.”
In Uttar Pradesh, the two major World Bank sponsored
educational projects were implemented. Brief of these projects are
as follows-
 Uttar Pradesh Basic Education Project (UPBEP I; Credit 2509)
for US$165 million, which was approved in FY93 and

poverty alleviation goals. For
instance, the Bank finances its
administrative budget from profits
derived from its finance and
lending operations. Internally,
Bank staff is promoted largely on
the volume of funds they process
not on the effectiveness of Bank
operations — contributing further
to the pressure to lend.
Source: Bank Information Center,
www.bicusa.org/toolkit, pp1.4
upgrade 400 Industrial
training institutes (ITIs)
as centers of excellence.
Further a $300 million project
is operational to improve
India’s technical/engineering
education -TEQUIP II by the
W orld Bank. Hence the
World Bank is in position to
control overall education
system of the country
through various programs
87 Direction of development
compelled on schedule on September 30, 2000;
 Second Uttar Pradesh Basic Education Project (UPBEP II;
Credit 3013) for US$59.4 million, which was approved in FY98
as a complement to UPBEP I, and completed on schedule
together with UPBEP I on September 30, 2000;
 District Primary Education Project (DPEP I; Credit 2661) for
US$206.3 million, which was approved FY95 and completed
after a 15 mo. extension on June 30, 2003;
 District Primary Education Project (DPEP II; Credit 2876) for
US$425.2 million, which was approval FY96 as complement
 to DPEP I and was completed on time, together with DPEP I,
on June 30, 2003.
The Uttar Pradesh Basic Education Projects and the District
Primary Education Projects were prepared in the early 1990s in
the context of a major Indian reform movement in basic education.
In 1986 the government of India enacted New Education Policy
(NEP), to improve primary education. In 1992 the nation’s Central
Advisory Board on Education revised the NPE and added a
Program of Action, which included a decentralized approach to
the planning and execution of Education for All.
In 1992 the balance of payments crisis in India provided
background to the government to reduce expenditures for social
services, prompting the World Bank to provide a US$500 million
Social Safety Net Adjustment Credit, which included planning for a
large “centrally sponsored scheme” called the District Primary
Education Program (DPEP), eventually, which becomes the focal
point of expanded external financial support.
Prior to the District Primary Education Program (DPEP) the
World Bank had not provided any financial support to Basic
Education in India. In 1992 the Bank agreed to a Social Safety Net
Adjustment Credit to India to recover from a balance of payment
crisis which had forced reductions in government expenditures on
social services. The credit included planning for a “centrally
sponsored (subsidized) scheme” that was eventually called the
District Primary Education Program (DPEP). The scheme was to
channel funding and technical assistance to state and district
governments. Increases in external financial support for primary
education also began at this time, with the provision that it all be
coordinated by the GOI under the DPEP program.
88 Direction of development
Uttar Pradesh was the first state to receive such bank-
support. The Uttar Pradesh Basic Education Project (UPBEP I;
IDA credit of US$165 million) was launched in 1993 and was
followed in 1997 by a companion project (UPBEP II), which added
about US$60 in IDA credits to cover increased infrastructure,
teachers and textbooks in the original UPBEP I districts, given much
higher than expected new enrollments there. Reassured by the
viability of UPBEP I, in 1994the government launched District
Primary Education Project (DPEP I; IDA credit of US$260.4 million)
in another six states. In 1996, Phase II was launched (DPEP II;
IDA credit of US$425.2 million), which expanded both the number
of districts in the original DPEP states but also the number of states
covered (from 6 to 9). These four primary education projects were
eventually followed by four additional Bank-supported DPEP
projects in other states, two state-based education adjustment
projects, and finally, the country-wide 2004 Elementary Education
Project (SSA), using a sector-wide, which brought DPEP to scale
in the entire country.
The Uttar Pradesh Basic Education Program (UPBEP-I &
II) Projects had the same main, given that the UPBEP-II was
designed as a way to expanding resources for the earlier1. The
UPBEP, however, did not include the objective of strengthening
institutional capacity at the state and district levels2.
DPEP I and DPEP II had basically the same objectives,
added “children with disabilities” to the list of disadvantaged groups
to be served by the project and it explicitly included the sub-district
level in its capacity building agenda (but this was implicit in DPEP
I’s goal to build block and cluster resource centers and village
education committees) 3. Also, DPEP I/II were different from UPBEP
I/II in their objective to build capacity at the national level, given the
fact that they included more than one state. Also, the DPEP projects
included enhancing community participation among their objectives
while the UPBEP projects did not, but again this goal was included
in the projects’ performance indicators. Finally, while UPBEP
covered both lower and upper primary education, DPEP covered
only lower primary education4. The design features of the DPEP
and UPBEP model were similar. Their objectives included:
 improving access to primary education;
 improving school retention (or, in other words, reducing
dropout);
89 Direction of development
1
Given the fact that the UPBEP-I was planned, including projections of future student
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
taken to overcome this flaw appears reasonable: since UPBEP I was already at its limit of
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
created much more overcrowding than actually occurred and would have seriously, undermined
the quality improvement objectives.
2
World Bank, Development Credit Agreement, Uttar Pradesh Basic Education Project (CR
2509-IN), July 7, 1993.
3
This terminology can be confusing. In UPBEP I/II basic education is defined as lower and
upper primary education. Thus, the
term primary education could also be used to refer to it. In DPEP, the use of the term primary
education referred only to the
lower primary cycle (grades 1-4 or 1-5, depending on the state).
4
World Bank, Development Credit Agreement, Uttar Pradesh Basic Education Project (CR
2509-IN), July 7, 1993.
  improving student learning outcomes (achievement test
scores);
 improving institutional capacity to manage basic/primary
education at the national (DPEP I/II only), state and district
levels; and
 enhancing community participation in primary education.
In all of the project aspects, the World Bank finds public
private partnership and privatization of educational services as only
solution. Attainment of project objectives were generally evaluated
in relation to key performance indicators (where they existed), and
these varied across the two pairs of projects. Eventually both of
these projects did not meet their objective and first and second
phases. The World Bank evaluation report itself indicates that
UPBEP I/II aspired to improve access in terms of district
capacity to enroll 100 percent of 6-10 year olds and 75 percent of
11-13 year olds, levels which were not quite reached, especially if
net enrollment ratios – the appropriate measure in this case – are
used. The goal for student retention was a 50 percent reduction in
student dropout, which turned out to be difficult to assess, given
limitations in data, but the best indicator (a real cohort analysis in a
sample of districts) revealed actual changes were closer to 35
percent. Learning outcomes were to have been improved by 50
percent over baseline levels, and although this was alleged in the
ICR to have been accomplished, the validity of the test was called
into question by the same ICR. Institutional capacity building did
not have good outcome measures, but there was evidence of
positive changes in a number of important management domains.
On community participation, the project activated village education
committees in most locations, but it was unclear how many became
90 Direction of development
“fully functional” or even what that meant.
In DPEP I/II improved access was assessed in terms of the
reduction in enrollment gaps between girls and boys and
disadvantaged groups and the mainstream. Results show this was
not accomplished in 6 of 10 in DPEP II. Enrollment of children of
scheduled castes and scheduled tribes remained underserved.
Reducing dropout to below 10 percent was also not accomplished
in most of districts of the DPEP-I; in DPEP II districts this was
accomplished in only 16 percent of districts. The targets of
improving learning outcomes have not been met in up to 39 percent
of districts (depending on grade level and subject) and did not reach
the goal. Also there are serious questions about the validity of the
DPEP achievement tests. As in UPBEP I/II there were no good
outcomes measures to use in assessing the fulfillment of capacity
building at the national, state, and district level, but a body of
evidence exits to show that meaningful improvement was attained
at all levels. On community participation, most of districts activated
village education committees (in various formats), but as in UPBEP
I/II but a large proportion of them could not be assessed as having
become fully functional.
A report prepared by IEGWB1 evaluated these projects.
Outcomes ratings for these projects are based on their efficacy
(see above), relevance and efficiency. Outcomes ratings for both
UPBEP and DPEP projects are find only moderately satisfactory,
even though the pattern of achievement across the different sub-
objectives is different. Institutional development is rated substantial
for both pairs of projects. Bank and borrower performance are rated
only satisfactory for UPBEP and DPEP.
To conclude it can be said that even after a huge borrowing
from the World Bank on unfavorable conditions of privatization of
services both DPEP and UPBEP has not yielded desired outcomes.
In fact, improving student learning outcomes needs more than just
setting goals and mobilizing inputs; it needs coherent changes in
intermediate outcomes at the classroom level. This implies opening
up the black box of learning improvement efforts and a focus on
change at the classroom level. UPBEP/DPEP have created a
structure from lending for increased teacher professional
development opportunities, but so far changes in classroom both
quantitative and qualitative have been below expectations.
Privatization of the educational services is not a solution. One major
factor in this is the lack of coherence in the various parts of the
system. Therefore state government must have to rethink its
91 Direction of development
strategy for universal primary education beyond the public private
participation and the World Bank’s purview.
1
The Independent Evaluation Group assesses the programs and activities of the World Bank
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
improved directions, policies, and procedures through the dissemination of lessons drawn
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,
preference is given to those that are innovative, large, or complex; those that are relevant to
upcoming studies or country evaluations; those for which Executive Directors or Bank
management have requested assessments; and those that are likely to generate important
lessons.To prepare a Project Performance Assessment Report (PPAR), IEGWB staff examine
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
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
government are part of structural adjustment program in India.
Government has taken up following measures to implement SAP :
Health in India : Current Scenario & Future Directions
The model of globalisation of health that is being pursued
here in India is the American model, in consonance with all other
aspects of the economy. The American health model, that is the
least humane and the most inequitous, still pledges much more
public expenditure on health than the Indian policy-planner can
dream of in his worst nightmare. One can thus imagine the level of
suffering and deprivation that is awaiting millions of people here
as the process of globalising health gains momentum in the years
to come. For the majority of the working people and the lower
economic classes it would be a frightening denouement with the
health market being out of their reach and public sector health
services having been emasculated. The role of the PHCs, already
in a state of advanced decline, is continuing to being marginalised
further. With rampant environmental degradation and thoughtless
decapitation of public health, hitherto unheard of epidemics will
rear their heads.
The present health situation in India is a sad story of depri-
vation. The blatantly paradoxical spectacle of buying and selling of
health improvements as a consumer goods by the well-off minority
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
of the country on the other hardly evokes any comment. The mor-
bidity and mortality levels in the country are still unconscionably
high and that the still-unsatisfactory health indices are, in turn, an
indication of the limited success of the public health system in meet-
ing the preventive and curative requirements of the general popu-
92 Direction of development
lation, the data presented by the Government fails to indicate the
nature and extent of neglect and deprivation of health of the vast
majority of the population.
Part of the story is evident from statistics showing very un-
even levels of attainment of health across the rural-urban divide as
also across the geographical divide between the better-performing
and the poorly-performing states. It cannot be a matter of pure co-
incidence that all the better performing states (Kerala, Maharashtra,
and Tamil Nadu) are known to have better preserved public health
systems right down to the PHC level as opposed to the poorly per-
forming ones, where even the physical infrastructure and the man-
power resources are grossly inadequate and frequently non-exis-
tent. It can be seen in table below.
BOX-15
 Devaluation of rupee by 23%.
 New Industrial Policy allowing more foreign investments.
 Opening up more areas for private domestic and foreign
investment.
 Part disinvestment of government equity in profitable public
sector enterprises.
 Sick public sector units to be closed down.
 Reforms of the financial sector by allowing in private banks.
 Liberal import and export policy.
 Cu? ts in social sector spending to reduce fiscal deficit.
 Amendments to the existing laws and regulations to support
reforms.
 Market-friendly approach and less government intervention.
 Liberalization of the banking system.
 Tax reforms leading to greater share of indirect taxes.
All the above mentioned ingredients of SAP are based on
the Anderson Memorandum titled “Trade Reforms in India” dated
Nov. 30, 1990 submitted to Government of India by the World Bank.
It is interesting to note that this memorandum was not disclosed to
the then Prime Minister, Mr. Chandra Shekhar, the then Finance
Minister and the Cabinet Secretary by a group of senior officials in
the Finance Ministry. Incidentally, all these officials were ex-World
Bank and ex-IMF employees.
Social and public infrastructure in Uttar Pradesh is not in a
good situation. Uttar Pradesh lags behind national mortality and
fertility declines, according to the National Family Health Survey
(NFHS). An Indian woman on average bears 2.7 children during
her lifetime, but the typical woman in Uttar Pradesh bears 3.8.
About 44 percent of married women in Uttar Pradesh use
93 Direction of development
contraceptives, compared to 56 percent of their counterparts
nationally. Infant mortality in the state is high at 73 deaths per 1,000
live births1. And most health indicators in Uttar Pradesh changed
very little from the previous NFHS in 1998/99. There are around
3.5 or 4 million live births in Uttar Pradesh each year, since an
estimated 14% of the 26 million Indian births occur here (RGI,
2006).
Beyond that there are a number of unwanted pregnancies,
miscarriages and still births or maternal deaths before birth. Based
on SRSii estimates, the MMR of Uttar Pradesh was 517 in 2002-
2003, which means roughly around 20,000 maternal deaths in a
year in this state alone. According to estimates, the proportion of
 BOX-16
The World Bank’s Preemption Doctrine:
A Misguided Mission
The World Bank often says, If we don’t finance this project,
someone else would, and it would be worse. But in reality, the World
Bank is a public financial institution with limited resources. Its stated
objective is to promote sustainable development and reduce poverty.
It has neither the mandate nor the means to prevent all bad projects
from taking place or to make all potentially harmful investments slightly
less damaging. Arguing that a project will be better if the Bank is
involved is not sufficient or sound rationale for supporting it. Indeed,
this logic could justify Bank involvement in any operation, from a toxic
chemical factory to a highway through a rainforest, in order to pre-
empt others from doing it more carelessly. In recent years, the Bank
has frequently held out the threat of Chinese financing as a justification
for its own, pre-emptive involvement in various high-impact projects.
Given its finite resources and the opportunity costs of activities it
undertakes, the Bank should select projects on the basis of their
likelihood to make a positive contribution to poverty reduction.
Development dodgeball: deflecting responsibility.
Source: Bank Information Center, www.bicusa.org/toolkit pp, 2.15
ill-health to maternal deaths is 20 times, giving a staggering total
of women who are in need of maternal health care. This situation
has been in evidence since the last few decades, warranting special
planning and provisions for ensuring service provision to all women
to prevent deaths or ill-health. As India enters the twenty-first century
with a bang, it is relevant to ask why this has not happened. It is
neither for lack of state fundsiii nor for lack of donor interestiv.
Using maternal health service provision in Uttar Pradesh as a case
study, I interrogate the service provision facilities for these health
needs of women and what are the public and private sector roles
involved.
94 Direction of development
In lack of proper and functional public health system an
overwhelming percentage of births occur in the private sphere in
UP: according to the SRS figures, 89.9% of deliveries in Uttar
Pradesh occurred at home in 2001-2003 (a slow decline from the
92.2% in 1997-98). Among the births surveyed during NFHS-3 of
2005-2006v in Uttar Pradesh, around 88 % were handled at home
(the figure is 82.5% for rural UP). Around 70.8 % of the births in
UP (76.2% in rural areas) appear to have been handled by non-
health personnel: perhaps including family members and
neighbours as well as traditional birth attendants or TBAs.
Uttar Pradesh has a fairly large public sector health
infrastructure comprising of one Super Speciality Institution
(SGPGI), 7 Government BOX-17
and 4 Private Medical A recent paper on provision of anti-
colleges & Hospitals, 53 retroviral therapy (ART) in India has thrown fuel
District Hospitals, 13 on the flames of the debate over whether public
Combined Hospitals, 388 or private provision is better. Dr Mead Over, a
senior economist at the US-based think tank
Comm unity Health Center for Global Development, found that low-
Centres, 823 Block quality care has negative effects beyond just
PHCs, 2817 Sub Block the patient receiving the care, and concludes
PHCs apart from 20521 “public sector delivery of ART can be justified
Sub Centres, yet only 9 not only because it protects poor AIDS patients
from catastrophic health expenditures, but also
percent of the State’s because it might differentially ‘crowd out’ the
population actually make cheapest (and therefore perhaps the worst) of
use of this facility for the private sector AIDS treatment. If this
treatment of ordinary crowding out slows or postpones the
ailm ents and people development and spread of drug resistant HIV,
mostly have to depend on this is an important reason for preferring public
to private sector delivery.”
private healthcare. In the
Private sector, there are
four Medical colleges & Hospitals and 4913 Male/Female hospitals/
nursing homes at District level in the State. However, there is a
large number of registered and non-registered medical practitioners
in the State and they play an important role in providing medical
service to the rural population. Even though, the physical health
infrastructure in the State is still much below the country average.
For instance, the population covered by a Sub-centre in the State
is 7080 and the average distance is 3.4 km. while the country
average is 5109 and 1.3 km. It is estimated that 11% of people in
Uttar Pradesh are not able to access medical care due to locational
reasons. Further, even when accessed, there is no guarantee of
sustained care. Several other deterrents such as bad roads, the
95 Direction of development
unreliability of finding the health provider, costs for transport and
wages foregone, etc. make it cheaper for a villager to get some
treatment from the local quack.
The Draft Uttar Pradesh Human Development Report
mentions that combined losses due to premature death and
disability from non-fatal illnesses (measured as Disability Adjusted
Life Years – DALYs) are very high in Uttar Pradesh. A World Bank
Study of the year 2000 showed that the estimates of DALYs lost in
six States in India suggest that Uttar Pradesh at 273.2 DALYs, has
the highest loss rate among all the Indian States. A further analysis
of ailments by cause shows that the overwhelming cause of
premature death and disability can be attributed to ‘Group 1’
 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
skill development of human resources.
In fact, the total practice was only just to make way in for
private sector for huge health market. Therefore, the importance
of public private partnership has been effectively conceptualized
during the planning phase of the project. A close analysis of the
project logo itself recognizes the collaborative efforts of public and
private sectors to improve and regulate the health sector and
regulate the health sector delivery. To fulfill this ultimate objective
of the project, an innovative scheme has been started in 2003.
The scheme aim at providing limited curative and preventive health
care services to the disadvantaged section of the society, especially
women, and the poor in remote areas which are identified which
are served as un-served areas by the district health authorities.
The services include prenatal, natal, post natal care, immunization
of children, health education and linkage with government /private
sector for its referral services, in order to reduce maternal and
infant death rates.
In principle the project aim at covering all the districts of UP,
but for creating sub centre level health facilities in remote and in
accessible areas under “innovative Scheme” of the project,28
backward districts1 have been selected in the first phase. Since,
availability of health services vary across the region in the state,
which implies that the existing government facilities are not at easy
reach. Therefore, the project aim to provide only limited curative
and preventive services at these un-served locations under such
innovative scheme through partnership with private / non
government organizations.
A recent evaluation of the World Bank’s health work is
damning in its criticism of the lender’s approach. The World Bank
98 Direction of development
is continuing to push privatization in public services such as health
alike education and water, despite fierce criticism. A World Bank’s
Independent Evaluation Group (IEG) report evaluated almost $18
billion worth of health, nutrition and population work covered
projects from 1997 to 2008 across the World Bank Group. It rated
220 projects according to how well they met stated objectives,
regardless of how good those objectives were. Interestingly, there
1
The Eastern region and Bundelkhand region have been given weightage in selection due to
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
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.
were no highly satisfactory outcomes, and only about two-thirds of
projects had moderately satisfactory outcomes or better. Those
projects which meet their objectives were performing at
substantially lower levels than their outcomes would suggest. For
example, an on-the-ground assessment of one Indian program
showed that “more than half of the pieces of equipment procured
were not delivered or not installed,” while “‘severe construction
deficiencies’ were found on the Orissa Health Systems
Development Project in buildings that [were] reported to be
complete and performing according to specification.” The report
also found that pro-poor projects were only about half the total,
and that only 13 percent of projects had a specific poverty-reduction
objective.
The Independent Evaluation Group (IEG) itself revealed that
the IFC - a part of World Bank Group “supporting public-private
partnerships through advisory services to government and industry
and through its investments, and expand investments in health
insurance.”
Privatisation of the health services is on top agenda of the
whole W orld Bank group agencies. As evident from the
International Finance Corporation (IFC)- the World Bank’s private
sector arm, which decided in early June to invest $20 million in
The Health in Africa Fund, a private equity fund that focuses on
private sector health insurance managed by Aureos Capital,
London1.
Recently national and internal policies/agencies are
pressurising low income states or low HDI ranked states to improve
their health indicators for that they need huge extra resources which
cannot be possible at least in short run as these states have no
capacity to generate extra resources .These poor states like Uttar
99 Direction of development
Pradesh have developed a huge physical public health
infrastructure over the time but they have not sufficient man power
to deliver health care services efficiently and their utilization is very
low because of sub standard quality. To get rid of this lacuna Public
private partnership is presented as a mode of implementing
government programs and schemes.
Over the last few years there have been many initiatives to
improve the efficiency, effectiveness and equity in provision of
healthcare services and experiences of these programs show that,
it is not only the lack of funds but also lack of political, managerial
1
World Bank Health Work Flawed Still Pushing Privatization of Services
 and technical ability in government health care delivery system
which is provoking Public private partnership in this sector.
The UPHSDP scheme lacks practicality on various grounds
like, the scheme was not focused towards any particular scheme
moreover it contains too much components of service delivery (117
facilities) which cannot be maintained as far as quality is concerned.
UPHSDP was also unable to give a concrete or a model solution
to the problem. Therefore, it cannot be a replicated to urban and
semi urban areas.
Monitoring and evaluation of the project is again great
challenges in its own Coordination between different regulatory
components are week. Simultaneous operation of NRHM and other
government health schemes diluted the idea and enthusiasm of
UPHSDP in the state.
With social health insurance schemes (another World Bank
Model), it has been found that when providers are paid ‘fees for
service’ they tend to increase the tests, drugs and the length of
hospital stay. But if the providers are paid on a ‘capitation basis’,
they are motivated to contain costs and adhere to rational
prescriptions and therapy. The other issue relates to health
insurance for the vast informal sector in India, especially women
who are largely outside the ambit of the formal sector employment.
Pre-payment schemes may not be sufficiently financially viable,
since risk-pooling by poor populations has to be cross-subsidized
by either the government or by enrolling higher-income groups.
Moreover it may exclude the poorest and those without access to
cash incomes such as adolescents, the elderly or disabled.
In conclusion, it can be said that UPHSDP is just an initiative
to PPP in Uttar Pradesh. Government is very fanatical to invite
100 Direction of development
private sector to help in delivery mechanism of health system.
Private Medical collages/Dental colleges are m which mushrooming
to increase the supply of doctors and other health personals but it
is again doubtful whether regarding quality control. Even though,
till date the Uttar Pradesh did not have any effective PPP model in
health care delivery system. Government officials of health
department are making strategy for involving private sector through
Public Private Partnership (PPP), the state government has already
engaged consultant to explore the possibility and finalise the bid
papers for handing over as many as six projects to private
companies.
The promotion of PPIs in healthcare has raised questions
about equity especially in the access of low-income or marginal
groups to reproductive health services, or the right of communities
to participate in decision-making regarding health care priorities.
The social franchising and social marketing models have been
studied in Bangladesh and the issues of subsidy withdrawal and
cost recovery have emerged as a significant challenge. Quality
control of franchised health service provision is also difficult when
the nature of services varies with each individual user and the
evaluation of rational and high-quality care cannot be done by the
user. Similarly there is a concern with contracting of public health
services in the absence of strong pro-consumer and regulatory
laws, and of sufficient managerial capacity within the public sector
to regulate and monitor the process in a transparent and effective
manner so as to ensure accountability of the contractor. Therefore,
there is urgent need to devise a proper government health care
delivery in order to streamline the public health system and reach
the urban/semi –urban and rural areas of the state.
Why is the World Bank in Need of Reform?
The World Bank’s failure to achieve its primary mission of
poverty alleviation is now acknowledged at the most senior levels
of the Bank itself, as well as by the Canadian Auditor General.
Evidence of project and portfoli failures have led to increasing calls
for a comprehensive review of the World Bank and the IMF, the
most recent call coming from the countries of the G-7 in the
communique from their 1994 Naples summit. The fundamental
reform of the Bretton Woods Institutions (BWIs) is urgently needed.
Over the past decade, the World Bank has come under
increasing criticism from a wide range of groups in the North and
101 Direction of development
South. Environmental groups argue that many World Bank projects
have had a disastrous effect on the environment. The World Bank
often finances large infrastructure projects, including dams, open
pit mines, and road construction. In case after case these projects
have been proven economically unsound, have destroyed pristine
rainforests, rivers and estuaries, and have uprooted the livelihoods
of millions of Third World citizens who are affected by them. World
Bank-funded development projects have forcibly resettled 2.5
million people since 1986 alone, and will likely uproot another 2.5
million by the year 2000.
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
Ratliff, and Robert Cooter, eds., Law and Economics of
Development (Greenwich, Conn.: JAI Press, 1997); and
Hernando de Soto, The Other Path (New York: Harper
and Row, 1989).
11. Kate Bayliss ( 2000), “The World Bank and Privatisation:
a flawed development tool”, PSIRU, University of Green-
wich
12. Martinussen J. The Limitations of the World Bank’s Con-
ception of the State and the Implications for Institutional
Development Strategies. IDS Bulletin 29 (2), 1998.
13. Ministry of health and Family Welfare Government of In-
dia, 2005-2006 National Family Health Survey (NFHS-3)
Fact Sheet Uttar Pradesh (Provisional data),
14. UPHSDP (Various Documents).Uttar Pradesh Health Sys-
tem Development Project. Lucknow: Project Management
Unit.
123 Direction of development
Yogesh Bandhu is a Social Scientist by
training. Currently he is associated with Cen-
tre for Contemporary Studies and Research
(CCSR), Lucknow as Honorary Fellow and
Research Consultant. He has graduated as so-
cial researcher as Doctoral Fellow of Indian
Council of Social Science Research (ICSSR)
at Giri Institute of Development Studies,
Lucknow and further as Senior Research Fel-
low with United Nations Conference on Trade
and Development (UNCTAD)-India under
Trade Related Research Capacity Building
(TRRCB) Program. He has research exper-
tise in Development Economics, International
Trade and International Development Institu-
tions and carrier in academics in teaching ca-
pacity, edifying undergraduate and postgradu-
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-
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.