Reformists got ‘incentives’: WB

HYDERABAD: The World Bank officially admitted to providing ‘incentives’ to political leaders who took risks in implementing the reforms under its guidance in the country.
In a draft ‘Strategic Directions for World Bank Engagement’ in the Water Resources sector, under the section pertaining to Andhra Pradesh, the bank feels that, “The art of reform is defining a sequenced, prioritised set of reform actions, of picking the lowhanging fruit first, and ensuring an appropriate incentive system for political leaders who take these risks.�
According to the bank, the reform process can be “most effective when it identifies reforming political leaders and provides them with the backing for their reform programmes,� which can be inferred to mean that the chief minister of Andhra Pradesh N Chandrababu Naidu, as the bank feels, is the ‘first and strongest reformer.’ However, the World Bank admits that efforts to promote reform, often had little result, and hence in recent years, it has taken a radically different position in India.
The bank feels that the central issue is not ‘vision’, but ‘how to move from here to there’ or the ‘political economy of reform.’ Also, the bank is able to ‘exert little leverage through conditionality’. In a highly controversial observation, the bank mentions that it is difficult to reform the performance of the managers of the irrigation department, which the state government realises as the next challenge.
In what could ultimately lead to the privatisation of the irrigation department, the draft mentions that the discussions between the bank and the government are “centring on the assessment of options for developing service providers which operate on modern institutional principles, including competition and accountability to users, and for management and maintenance of assets.�
The bank maintains that the challenge in the state is to assist the state in its efforts to be a ‘facilitator’ in the management of the water resources and “the World Bank is likely to remain a central partner for both advice and investments in advancing this ambitious and vital agenda.�
Coming to the contentious issue of privatisation of the urban water sector, the bank clearly states that it has “decided to discontinue financing of urban utilities unless they are associated with major institutional reforms,� and that the bank is focusing its advisory services on states “which have shown commitment to fiscal and institutional reforms.�