People's Democracy

 ANDHRA PRADESH

Opposition Parties Resolve To Stall World Bank Loan

M Venugopala Rao

LEADERS of various opposition parties, including the CPI(M) and the CPI, in Andhra Pradesh expressed  their resolve to stall an agreement under the project name “Andhra Pradesh Economic Reform Loan 2” which the caretaker Chandrababu Naidu government proposed to sign to get a structural adjustment loan to the tune of $240 million (about Rs 1100 crore) from the World Bank. The opposition has condemned the conditionalities attached to this agreement as they are detrimental to the interest of a vast majority of the people. 

Leaders of eight opposition parties underlined the need for a united and wider movement of the people to thwart the proposed agreement between the government and the World Bank at a convention on “World Bank’s Agreements And Their Consequences And Dangers” organised by the state committee of the CPI(M) in Hyderabad on December 6. They also stressed on the imperative of defeating the TDP-BJP combine in the forthcoming elections to the Legislative Assembly.

State secretary of the CPI(M) B V Raghavulu, who presided over the convention, recollected that after Chandrababu Naidu had become the chief minister, the state government signed three structural adjustment loan agreements with the World Bank, one in 1998 for $540 million, another in 1999 for $250 million for power sector, and the third in January 2002 for $350 million and implemented the conditionalities attached to them. The conditionalities included reduction of subsidies to the people, collection of user charges in the fields of medicare and education, increase in water cess, etc; privatisation or closure or restructuring of public sector units by reducing the existing strength of the employees as also their pay and allowances; facilitating entry of market forces in all sectors and complete withdrawal of government’s role.  Implementation of those conditionalities imposed by the World Bank had caused severe harm to the interests of various sections of common people and made their lives miserable, as the experience all these years had confirmed.  Suicides of farmers, starvation deaths and deaths that had taken place on account of diseases, sunstroke, etc. were the consequences of the implementation of the World Bank inspired reforms, Raghavulu said.  The World Bank has been interfering in all the policies of the state government and Chandrababu Naidu has been acting as the chief executive officer of the World Bank and not as the chief minister of the people, he commented.

In its report on implementation of the reform process, the World Bank found fault with the Naidu government for not informing it of  “considerable increase in subsidised power supply to agriculture” when the loan was being negotiated in February 2002. The policies, schemes and their terminology were all the conditionalities of the World Bank and the latter’s consultants were engaged in all the departments of the government, Raghavulu explained.  Before the 1999 elections, the Naidu government had announced several welfare schemes to allure the people and had withdrawn the same after winning the elections, he recollected. 

BABU & BANK TALKED ABOUT POLLS

Expressing satisfaction over implementation of its conditionalities by the Naidu government, the World Bank, in its “Implementation Completion Report”, stated: “There are a few problem areas, particularly the financial performance of the power sector, that remain as challenges. The sustainability of the overall fiscal reform programme significantly depends on the actions taken in the power sector.  If not addressed adequately, the financial burden of the power sector will inflict more damage to the state’s fiscal health.  But if GoAP remains committed as it has been in the past, there is no reason to believe that such challenges will not be successfully tackled.  The important thing is that GoAP continues to move forward in pursuit of its development vision.  It has requested the Bank to provide a follow-up adjustment loan in support of its reform programme. With the state assembly elections due in 2004, there is likely to be a period of uncertainty.  It is therefore likely that major reform actions could be postponed until the elections are over.”  All this indicated that Chandrababu and the World Bank had discussed the issue of elections and that the chief minister had agreed to implement the anti-people reforms more vigorously in the post-poll period, Raghavulu made it clear. That is how the World Bank is interfering in the political process in the state. The World Bank had asked the Naidu government to reduce rice subsidy and eliminate bogus ration cards.  Though there are about 12 lakh bogus rations cards in the state, the government has informed the World Bank of total elimination of bogus cards.  The government has recently issued about 30 lakh new white ration cards which would require an additional rice subsidy of about Rs 300 crore per annum.  Raghavulu pointed out that those ration cards would be rendered useless after the elections, just as the Jayalalitha government in Tamil Nadu had rendered the ration cards honorary.

In the public information document for the APERL 2, the World Bank has indicated the following conditionalities to be implemented by the Naidu government:  1) Amending the Agricultural Market Act with an omnibus provision that allows institutions other than the government to set up an agricultural market.  The GoAP is in the process of amending its Agricultural Market Act. 2) A constrained and inflexible industrial labour market is one of the main factors contributing to low labour productivity in AP.  The GoAP plans to introduce new legislation that will lead to establishment of labour arbitrators in notified areas.  This, in turn, is likely to result in a faster resolution of industrial disputes. 3) AP’s public enterprise reform programme has matured.   Out of 19 units under phase I, actions for sixteen were completed, five units were closed and eight privatised.  Phase II programme covers 69 enterprises and will be implemented with a target of an average 15 units per year and is likely to be completed by 2005-06.  4) With the objective of deepening the fiscal reform process, the GoAP plans to undertake two further actions: First, to institutionalise the Medium Term Fiscal Framework (MTFF) process through formal legislation, and second, to confirm government policies on managing debt stock, guarantees and contingent liabilities (including pensions) in accordance with central bank regulations through a government.  (Raghavulu explained that implementation of such a process in the African countries under pressure from the World Bank had resulted in increased cuts in allocations to welfare sectors, affecting the common people severely). 5) The GoAP’s reform programme has a broad agenda of governance reforms, encompassing the machinery of government, pay and employment issues, human resource management and development, transparency and citizen orientation, and anti-corruption.  The GoAP plans to continue implementing the reforms spelled out in its governance reform strategy. 6) The GoAP is making progress on a second generation of structural and commercialisation reforms, aiming to provide stability and sustainability to the sector’s fiscal position, increasing cost recovery, reducing/containing subsidy support and locking-in reform gains by preparing for the privatisation of distribution business. (As a result of the people’s struggle against reforms in the power sector, the chief minister could not implement conditionalities like fixing meters to agricultural pumpsets, increasing agricultural power tariff and privatisation of power distribution, Raghavulu explained). 7) The GoAP is developing a strategy emphasising an enabling and oversight role for the state in ensuring that the private sector contributes strongly to the achievement of the health goals outlined in its Vision 2020.

NO RIGHT TO MAKE AGREEMENTS

Raghavulu made it clear that the caretaker government had no right to enter into a loan agreement with the World Bank with such dangerous conditionalities.  Saying that the CM had no courage to tell the people about those conditionalities, Raghavulu challenged him to seek the people’s verdict in the forthcoming polls by putting those conditionalities before them.  Raghavulu warned that strong resistance from the people would come to the reform process and the government would resort to increased repression of the movements of the opposition and the people and that the police raj would be intensified, if the TDP regained power.  Without preparing for a dialogue with naxalites, Chandrababu  was trying to cover up his government’s failures and hoodwink the people by bringing the issue of naxalism on the poll agenda, Raghavulu said.  Raghavulu asked every political party to write to the caretaker government that it had no right to enter into a loan agreement with the World Bank.  He announced that the Left parties would meet the governor of the state and request him to restrain the government from entering into such an agreement with the World Bank and asked other political parties also to follow suit.  All political parties should hold conventions like this, mobilise others and explain to the people the danger of the conditionalities of the World Bank. 

Dr Y S Rajasekhara Reddy, former leader of the Congress legislature party, said it was an undisputable fact that the thinking of the World Bank was pro-rich and against the common people and the poor. Chandrababu Naidu was the foremost among the leaders who came closer to the World Bank, he said.  Saying that the priorities of the Chandrababu government were lop-sided, Rajasekhara Reddy pointed out that the chief minister was exhibiting roads, flyovers, parks, star hotels, etc., in and around Hyderabad as development, while farmers and handloom weavers in the state were committing suicides and dying of starvation.  The government was not prepared to deal with such serious issues and not even a committee was appointed to study the issue.  According to the information given by the central government in the Parliament, 7.10 lakh jobs were lost in Andhra Pradesh on account of closure of industries. If vacant posts in different departments of the government were filled up, 2.5 lakh jobs could be created, but the government was not prepared for that, agreeing as he was to the conditionalities of the World Bank, Rajasekhara Reddy said.  Referring to the spree of assurances and schemes being announced by the caretaker chief minister in the pre-election period, he said Chandrababu and the World Bank were trying to cheat the people.  Rajasekhara Reddy said the Congress party was not against taking loans from the World Bank, but only against the conditionalities.  If Congress comes to power, it would take loans on its conditions only, he said.  The Congress government would give free power to agriculture and to the poor families using only one bulb, even if the World Bank did not agree to that and refused to give loans, Reddy announced.  Resources could be mobilised from the people by issuing bonds, he said.

The proposed new loan from the World Bank with conditionalities was going to be a disaster for the state, Aziz Pasha, state secretariat member of the CPI, said.  International loans taken by the developing countries were leading them to indebtedness and they were repaying money three times more than what they had actually borrowed, he explained.  Under the reforms regime, priority was being given to the dominant class and inequality in the society was increasing, he said.  The World Bank loan is not going to benefit the poorer sections of the state.  Aziz Pasha said we should prepare the common people and the working class to oppose the loan and launch an agitation collectively.  Nayani Narasimha Reddy, general secretary of the Telangana Rashtra Samithi, said the chief minister was trying to hoodwink the people again by taking the loan from the World Bank.  He said the people were prepared to defeat the CM and all that was needed was to mobilise them on a large scale to agitate against the government and its policies.  M Omkar, state secretary of the MCPI, said it was wrong to take loans for unproductive purposes and spend the same without any return to the state.  The chief minister was behaving like a great dictator, as if he were the be-all, Omkar criticised.   Chandrababu was trying to transform the government into a fascist regime and take the World Bank-dictated reforms forward, Govardhan of the CPI(ML) New Democracy criticised.  Chandrababu Naidu was a culprit who was implementing the reforms prescribed by the  World Bank, knowing fully well that they would engulf all sectors, and the entire society in a crisis, G Vijaya Kumar of the  CPI(ML) said.  Murahari of the SUCI said the Left and democratic parties and  people’s movement should defeat the Naidu government.  Y Venkateswara Rao, state secretariat member of the CPI(M), earlier welcoming the leaders, said that all political parties were invited to the convention, but, regrettably,  there was no response from the TDP and the BJP.