World Bank admits failure

Issue 

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

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