World Bank admits failure

Wednesday, August 30, 2000 - 11:00


World Bank admits failure


The World Bank has admitted that a sector adjustment loan for the restructuring
of India's coal industry “has exacted a severe toll on citizens whose lives
ultimately were supposed to have been made better by economic development”.

The state-owned Coal India received a US$530 million loan from the World
Bank in 1997 to “modernise” coal mining in central and eastern India. Modernisation
included razing the homes of villagers to make way for new facilities.

According to an August 14 internal World Bank report, thousands of villagers
received none of the compensation, retraining and resettlement promised
them as part of the loan deal, even though the company is mining record
amounts of coal. The company, which has blamed the villagers' “laziness”,
had no experience in resettlement or retraining, a fact the World Bank
was aware of before issuing the loan.

Confronted by a growing scandal, Coal India executives asked in July
that the loan be cancelled. With only half of the loan disbursed, the World
Bank, itself in need of some face-saving, readily complied.

BY SEAN HEALY

From GLW issue 418