The Guardian November 22, 2000


The further mortgaging of India

The ten-day visit of the World Bank President to India has confirmed 
apprehensions that the Vajpayee Government is all set to further mortgage 
the Indian economy. The Finance Minister, after weeks of bluster, had to 
finally admit that the Indian economy is virtually in a shambles.

The growth rate is estimated to be much less than the projected seven per 
cent; worse, agriculture is slated to grow by a mere one per cent.

The crucial capital goods sector, the bedrock of growing investment 
opportunities, has seen a drastic fall in investment.

Despite the unprecedented burden imposed on the people through the oil 
price hike, the high levels of international oil prices are putting a 
severe strain on India's balance of payments.

The World Bank President's visit came in this very background.

Predictably, the Finance Minister has beseeched the World Bank to increase 
its loan commitment to India. The World Bank President, in turn, assured to 
raise the level of loans to India to around US$3 billion by the end of 2001 
and to US$4 billion thereafter.

Those under the illusion that this would give a spurt to investment 
opportunities, and consequently to economic growth, in India would do well 
to note the conditions the World Bank has imposed.

Much of this loan, the World Bank President clarified, would be in the 
sphere of social infrastructure and for containing the spread of AIDS!

What is more worrying is the fact that this increasing reliance on foreign 
loans comes at a time when the total liability of the central government 
has increased by 61 per cent in the four years since 1994-95.

The Comptroller and Auditor General (CAG), in his latest report for the 
year ending March 1999, states that this liability constitutes 57.44 per 
cent of the GDP.

The report notes that "the pressure of repayment of the principle and 
payment of interest on the external debt has already turned the net inflow 
negative since 1994-95."

In other words, India is already in a debt trap borrowing in order to 
fulfil its commitments on earlier borrowings.

Official statistics inform us that the net outflow on such repayment 
commitments was as much as US$3.5 billion between April and August 2000. 
Thus the US$3 billion loan promised by the World Bank will go, almost 
exclusively, for servicing our previous loans.

Thus the country's economic assets will increasingly be mortgaged and India 
will be pushed into a situation where, in order to service its loans, it 
will have to sell off public assets for a song.

In the process, the burdens of servicing such loans will be transferred to 
the people through cuts in subsidies and drastic reductions in governmental 
expenditure that will have a direct adverse effect on those very areas 
which provide some relief to the people.

While the Vajpayee Government ostensibly urges the World Bank to route its 
assistance through the centre, it has virtually allowed its President to 
directly negotiate with various state governments.

This undermines the basis of India's constitution.

Clearly, the World Bank is now pursuing its agenda of advancing the 
interests of imperialist foreign capital at the expense of India's economic 
sovereignty and the livelihood of the vast majority of her people.

The Vajpayee Government and these state governments are acquiescing in this 
strategy of imperialism as its local agents.

But the people of India will not tolerate such attacks on their country's 
sovereignty and their livelihood.

The mounting surge of struggles by various sections of the working people 
is evidence to the fact that these policies will not be taken lying down.

The recent power tariff hike in Andhra Pradesh evoked large-scale popular 
opposition in the state. As we go to press, bank employees have gone on a 
nationwide strike (see page 8), crippling the financial transactions in the 
country.

Coal workers have issued the notice for a strike against the privatisation 
of coalmines.

Farmers, in their millions, are out in the streets in various parts of the 
country, protesting against the dumping of cheaper, subsidised agricultural 
imports that has ruined their livelihood and is pushing many towards 
suicides and starvation deaths.

All these struggles, which today are being conducted in different and 
separate streams, are bound to converge in the coming days into a mighty 
people's protest by the time the next budget is presented.

All patriotic Indians will have to strengthen this movement to safeguard 
India's economic sovereignty and the basic livelihood of her people.

* * *
Ganashakti Newspaper

Back to index page