WB loan: Is the state bending backwards?

No truck with World Bank: Opp; Govt says it will bring global recognition and large fund flow

The World Bank (WB) loan issue has split the state wide open. It’s an expensive loan with demanding conditions, warns the Opposition. Supporters in the government  trash the caution, saying it will bring both global recognition and large fund flow.

The WB’s Rs 25,000 crore financial support to the state for developing the Mumbai Metropolitan Region (MMR) has raised several eyebrows within the bureaucracy as well as polity. What made the government, which till recently had opposed the WB policies, do a turn-around, they wonder.

The announcement came at a time when a section of bureaucrats were very much against the WB’s stringent rehabilitation policies that affected crucial projects like the Jogeshwari-Vikroli and Santacruz-Chembur link roads. The bank’s insistence  on daily reports, inspection panels and the independent monitoring teams was seen as a direct interference with the state’s work. Many also voiced concern over the presence of a WB “consultant” in the MMRDA premises, authorised to check every paper work.

Opposition has slammed the government for “selling out” the state. “We raised funds for the Maharashtra State Road Development Corporation (MSRDC) through capital markets despite pressure to borrow funds from the WB,” said senior BJP leader Nitin Gadkari. “The WB is 10 times more bureaucratic then our political system. It takes years to disburse the loan, and the delay proves costly. The MUTP project is a classic example of this restrictive regime.”

“In an era when Indian financial institutions are backing large projects, the Maharashtra government is pushing the state into further debt,” added Gadkari. “Infrastructure Leasing and Finance Services (ILFS) recently pumped in huge funds into Chhattisgardh at 8.5 per cent interest rate. Maharashtra, too, could have looked for the best deal by approaching Indian and other global finance companies?”

“Mr Flyover” of the BJP-Sena regime pointed out to the huge deposits lying with the Indian banks, which could be borrowed for developing infrastructure, power and rural economy.

Faced with reality of resettling all encroachers on government land in expensive alternate locations like the Bandra-Kurla Complex (BKC), many bureaucrats admitted that the state had failed to trace the fine line of conditions when it signed the MUTP loans from the WB. So what prompted the officials to move back to Washington again, even when Chief Minister Vilasrao Deshmukh was ready to borrow from the Japanese Bank for International Co-operation (JBIC), known for its low interest and less conditional approach?

“The WB has accepted our concerns that rich encroachers must be moved out, while the poor must be resettled,” said Sanjay Ubale, secretary, special projects. He added that since the MMR region was 10 times bigger than Mumbai, a strong organisational support was needed. He, however, did not rule out other financial institutions joining the fray.

“The WB has shown its willingness to fund. After finalising our plans, we will check the conditions and competitive edge of all financers before taking a final call.” Gadkari, on the other hand, felt the time was ripe to boost Indian financial companies. “We must not allow any global financial body to dictate the terms,” he said.