Wednesday, May 04, 2005

A greater role of Asian Development Bank (ADB) in the development of Asian countries is becoming significant. ADB is standing almost side by side with WB. WB sanctioned 38.7 dollar loan to the Countries in the period 1996-98. During the same period ADB gave 20.6 bn. dollars. Loans sanctioned by ADB increased in the years following and the gap between the two institution is decreasing.
Loans granted by ADB to India and the conditions imposed alongwith the loans have become noteworthy. India gets a share of 10 percent of total loans provided by ADB and it is estimated to increase upto 17 percent by year 2007. WB policies of granting loan attracts greater attention of academics, media and common citizen and its impact and consequences are also widely discussed but little attention is pain on action and misdeeds of ADB and their impact upon the development process in Asia. An analysis of its growing impact is therefore needed. Poverty is widespread in Asia . Every third Asian has a daily income less than a dollar, thereby forcing them to live below the poverty line. Poverty is a sensitive issue politically too. For this reason the ADB has proclaimed poverty eradication as one of its main objective of its programme and to get the conditions of loan acceptable. ADB declared 'poverty reduction' to be its main agenda in 1999. It is expected that all its condition shall become acceptable due to this declared objective. An all together different picture emerges when we go deeper into the policies, programmes and strategies imposed upon the borrowing countries. Whenever a number country approaches ADB for a loan it imposes compulsory condition on them to adopt (a) market based development process and (b) opening up of economy for TNCs. It imposes the conditions of liberalisation of trade and investment, to increase the share of private sector in production and delivery of goods and to decrease or completely abolish the subsidies provided by the state in public interest to goods and services, to impose the condition of complete cost recovery upon services produced by public sector or to adopt complete privatisation. ADB conditionalitics create public ire in turn borrowing countries hence it sometimes asks to establish institutions which in turn recommend implementation of these. For an example ADB promoted establishment of Karnataka State Urban Infrastructure Finance Corporation. The corporation recommends the policies which ADB wants to be implemented. Such institution are establishment in almost all Asian countries. A few examples shall explain how under ADB influence public drinking water supply systems or power sector or agriculture have been started functioning against the interest of common public and poor. One fifth of ADB loans are given by 'reforming' drinking water supply. Consider the condition imposed by ADB in four cities of Central Indian state of Madhya Pradesh. While granting loan for their drinking water supply the municipalities (local authorities) have been asked to remove public water taps from localities of the poor and the slums, the common use 'Community taps' shall have to install meters and increase the rates of water supply. These condition shall snatch away the access to clean drinking water from the poor and diseases shall start eradication of population living under poverty. The local self government of two other cities Ratlam and Ujjain of M.P. have refused to accept ADB loans due to these conditions. These anti poor steps of ADB are supported and strengthened by WTO provision also. WTO provisions recommends that the member countries shall provide the same facilities to foreign investors which are available to the domestic investors (municipalities and municipal corporations). In such a situation subsidies given to local institutions are forced to be withdrawn or the same amount of subsidy is given to TNC investors. ADB conditionality and WTO provision create a situation which paves the way of foreign investors into the water sector easily. Multinational Corporations are eager to invest in this sector now a days because they consider it to be a heavy profit making venture. This system has provided these corporations new opportunities for exploitation and loot but the poor are being deprived of their basis drinking water need. Allowing multinational corporations enter water business was the main reason behind upsurge of protest movements in Latin American countries Bolivia and Argentina.
In a similar fashion condition of privatising electricity supply is imposed by ADB while granting loans for energy and power sector and private investors are safeguarded from the risks involved thus making it a burden on the public sector. New investors are thus welcome to into the power sector without any risk involved. Public Sector undertakings are being destroyed under the burden of debts worth billions of dollars borrowed from ADB or international patrons like the Government of Japan. This loan and investment being free from risks and governments providing them a counter guarantee of a fixed income, the finance system of the governments is also facing a collapse. According Grane Writer, Policy Director of Probe International, "Unlike commercial banks ADB does not suffer from any loss whenever its project fails. The governments have to pay back the complete amount taken as loan. In many cases of non feasible project the governments have to take new loans to compensate for the shortcomings of the projects. Ultimately the burden of these non feasible, forced projects falls on the shoulders of taxpayers. Consumers are also faced with increased power-tariffs. It is not only the poor countries even in developed countries like USA consumers in California and New England had to pay more for private sector generated electricity inspite of earlier claims, that it would be cheaper."
ADB does not only impose conditions of privatisation while sanctioning energy sector loans, it adopts a position of policy-maker too. Indonesian writer Febi Tunia while analysing the impact of ADB loans for electricity projects writes, "ADB does not limit its role of a lending institution, it interferes and disturbs the laws, policies and regulatory mechanism of borrowing countries. In Bangladesh the Electricity Regulation Bill was drafted by ADB itself, in Indonesia. ADB and WB had an important role in preparing the outline for electricity sector reforms and in Philippines too privatisation of this sector was adopted under ADB pressure."
The adverse impact of all these changes falls ultimately on the weaker sections of the society. The compulsion of ADB loan repayment and insistence of these institution to maintain 'a high growth rate' weakens the strength of the governments to adopt programmes to safeguard security of the weaker sections. Thus not only investment through WB and ADB loan creates an adverse impact on the poor, its repayment too creates an adverse impact.
The expediency of turning domestic agricultural produce towards international market has diminished the strength of price control (by the govts.) and public procurement (purchase by the Government) of agricultural produce. Flooding of local markets with heavily subsidised foreign produce has decreased the strength of the farmers to compete in the domestic market too. Indebtedness of small farmers and fishermen of Thailand, India, Philippines and South Korea has increased due to these factors, they are forced to take on the streets and are committing suicide. They are forced to migrate towards cities in search of employment but are facing displacement again and again on the count of 'beautification schemes'. Provisions of providing security to the work force being abolished they are forced to join as 'contract labour' which is highly exploitative and does not even provide the 'minimum wages'. Developing the cities with Singapore and Shanghai as their models forces their frequent displacement.
'Private sector is more efficient them than the public sector' - This belief of ADB has been proved to be wrong. It was the lack of management of the private sector which created the Asian Economic Crisis. Risks and economic burden arising out private sector mismanagement are ultimately transferred upon the shoulders of common citizen and it has increased the public debt too. Private sector has an important role but rampant privatisation in absence of proper vigilance by the public and balancing power of the society is producing only undesirable effect .

Dr. Rampratap Gupta,
6, Mohijpura, Rampura,
Distt. Mandsaur, M.P. (India)

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