'The World Bank portfolio in Karnataka has grown rapidly in recent years. Five Bank-financed investment projects amounting to a total of about US$750 million were under implementation in the state. In addition, Karnataka is participating in several Bank-financed multi-state projects. The state thus accounts for almost 6 percent of the World Bank's portfolio in India.

Three new investment projects for a total of US$ 531 million are under preparation in Karnataka - a state health systems project (US$ 131 million), the Karnataka Municipal Reforms Project (US$ 250 million), and the Karnataka Panchayat Strengthening Project (US$ 150 million).

In addition, the Bank is supporting the state's development agenda through the Karnataka Economic Restructuring Program. Two Economic Restructuring Loans/Credits have already been disbursed -- US$ 150 million in June 2001 and US$ 100 million in March 2002.

Apart from lending projects, the Bank has been providing the state with technical assistance and advisory support on a variety of policy related matters'.

This is how the World Bank introduces its role in the in the Karnataka state on its website. The critical point here is to understand the fact that with such active participation and support by the Bank (as it claims) where are the loop holes that have dragged Karnataka into the abyss of economic deprivation, suicides, jeopardized growth pattern; which is to say for whom is the huge technical, economic support that the Bank claims being invested for. Some of the facts that provoke one to question these growth and investment patterns are:

  • Farmers are driven to suicide by various factors, but the single most common trigger is severe indebtedness to moneylenders charging extortionist rate of interests.
  • Soaring cost of agricultural inputs and collapse of agricultural commodity prices.
  • The first tranche of the World Bank provided Karnataka restructuring loan in 2001 that came with the condition that the government withdraw from the power sector as operator and regulator of utilities.(emphasis added) - This meant: partial withdrawal of the power subsidy, discontinuation of free power for agricultural water pumps and significant increases in power rates. His has resulted into farmers getting squeezed by the collapse of agricultural commodity prices.

Inspite this, there is an increasing focus of International Financial Institutions (IFIs) like the World Bank (WB), the Asian Development Bank (ADB), USAID and other bilateral donor agencies on Karnataka, which is often referred to as 'reform state' with respect to financial and economic reforms process in India. It has also been a focus state of the World Bank along with U.P and A.P. After state level restructuring during 2000-2002 (KERL-I and II) these institutions have now started restructuring loans for urban, urban water, rural water and panchayats sectors to more comprehensively influence the development agenda. One of the major role here has been of the political leadership who have led the way by legitimizing these processes and negating the concerns of the poor and marginalized. There is a long borne understanding that the loans are a solution to the problems like drought, water shortages, economic development etc. But the process of Loan Business by the Bank and other IFIs has subverted /converted the constitutional mandates of governments, keeping the development changes outside the purview of being evaluated or debated in state legislative assembly, the legislative council or the parliament. Rather it has pushed a model of development based on debt financing with an increasing attention to local governments which is basically decentralizing the debt burden.

In this context there have been many efforts in the past at city, village and state level to raise, discuss, debate and critique the policies and projects of these IFIs in Karnataka. But the need of the hour is to channelize the momentum and participation of various sections of society especially urban and rural CBOs with membership of poor people, NGOs trade unions, traders associations, scientists, researchers and others to evaluate the impact of the motives of the World Bank in Karnataka. This also becomes crucial since many loans are likely to go into the IInd phase (such as KSHIP).


Arvin Kejriwal -Delhi Water Privatization
Amit Bhaduri - Response to the World Bank
Madhura Swaminathan - World Bank and Food Security


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