Committee for the Abolition of Illegitimate Debt

Even before the tsunami of 26 December 2004 that ravaged its eastern coastline, India was suffering the effects of the powerful neo-liberal wave that has been sweeping the planet for more than thirty years [1]. The huge death toll following the tsunami and the disastrous conditions faced by the survivors are essentially linked to this neo-liberal wave and the “everything for export” model it promotes. But before we examine how this process operates, it will be useful to place things in their historical perspective.

Gandhi’s dashed hopes

When India finally gained its hard-won independence in 1947, Mahatma Gandhi, the father of the nation, cherished the hope that his country would be capable of ensuring the well-being of all its people by following an original line of action. Gandhi believed in endogenic development: drawing on the know-how of Indian producers and the country’s natural resources to satisfy the needs of the domestic market while guaranteeing better living conditions for each and every citizen.

The immense hope of seeing India’s millions achieve lasting freedom gradually faded, overshadowed by a capitalistic, neo-liberal model that was anything but original. Whereas Gandhi’s ideal model was far removed from productivism, it was precisely this system that quickly took root. Whereas the original idea was to rely on the country’s own strengths, the Indian government soon opted to finance development via external debt, a decision that was to place it in the clutches of the World Bank World Bank
WB The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

and the International Monetary Fund IMF
International Monetary Fund Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.

http://imf.org . The capitalist class in power at the time kept the country in a state of subordination to the world’s major industrial powers. There was no real land reform; the class exploitation system was reinforced by continued observance of the caste system; the use of religion through communalism [2] led to repeated pogroms. To these ills can be added a series of ecological disasters and the fact that a major section of the population was kept in permanent economic poverty.

Domination via a neo-liberal, productivist model is never a smooth process: it invariably meets with strong, deep-felt resistance from the people. Indian social movements, for example, were prompt in voicing their opposition to the World Trade Organisation WTO
World Trade Organisation The WTO, founded on 1^st January 1995, replaced the General Agreement on Trade and Tariffs (GATT). The main innovation is that the WTO enjoys the status of an international organization. Its role is to ensure that no member States adopt any kind of protectionism whatsoever, in order to accelerate the liberalization global trading and to facilitate the strategies of the multinationals. It has an international court (the Dispute Settlement Body) which judges any alleged violations of its founding text drawn up in Marrakesh.

from its inception in 1995 - four years, in fact, before the famous demonstrations in Seattle (November 1999). Long battles have also been waged against the plethora of dams being built in the country (more than 4,300), which has led to 42 million people [3] being uprooted. It is also in India that powerful opposition has been organised against transnationals, for example against Union Carbide in Bhopal [4], seed producers Cargill and Monsanto, and the giants Coca Cola and Pepsi Cola. India is also one of the countries where the struggle to regain public control of utilities, such as water, has made the most progress. Having shaken off the colonial yoke, will India now free itself from this new domination?

The World Bank’s biggest “customer”

India is traditionally the World Bank’s biggest “customer”. Today, approximately half of India’s external public debt has been contracted with multilateral financial institutions, the World Bank being the foremost. When the World Bank was created in 1944, Great Britain succeeded in getting India, its colony, into fifth position in terms of voting rights (after - in descending order - the United States, Great Britain, China and France). At the time, the majority required for the adoption of major decisions was 80%. The two great powers of the day had given themselves a de facto right of veto: the United States with 37.20%, and Great Britain (15.40%), which, with the contribution of India (4.94%), had more than the 20% needed for blocking important decisions. From the date of its independence, India took advantage in various ways of its rank as fifth power within the World Bank and the IMF. Its relative influence increased when China, having gone Communist in 1949, lost its rank within the Bretton Woods institutions [5]. During the 1950s and 1960s, India assumed a leadership role among Third World countries, in particular at the Bandoeng (Indonesia) conference in 1955 that led to the creation of the non-aligned movement Non-Aligned Movement
NAM The Non-Aligned Movement is a group of countries who, beginning in the 1950s, promoted a policy of neutrality towards the blocs led by the two superpowers – the USA and the Soviet Union –, who were by then fully engaged in the Cold War. In April 1955, a conference of Asian and African countries was held in Bandoeng (Indonesia) to promote unity and independence for the Third World, decolonization and an end to racial segregation. The initiators were Tito (Yugoslavia), Nasser (Egypt), Nehru (India) and Sukarno (Indonesia). The actual birth of the Non-Aligned Movement occurred in Belgrade in 1961. Other conferences would follow in Cairo (1964), Lusaka (1970), Algiers (1973) and Colombo (1976).
The work of the Non-Aligned Movement, which includes 120 countries, has had limited impact in recent years. . For their own part, the major capitalist powers (the United States and Great Britain leading the western bloc) sought systematically to keep India in their camp, counterbalancing the USSR and China. World Bank management systematically sought to lend India money as a means of influencing its leaders in the right direction. Despite its third world rhetoric, India let itself be drawn into a relationship of dependence as regards the World Bank and the policies it advocated.

Far from being rewarded for its tractability, in 1971-1972 India lost its status of fifth most powerful member, relinquishing that position to Japan. Today, India has regressed to the rank of secondary power in terms of voting rights within the World Bank, on a par with Canada, China, Italy, Russia and Saudi Arabia. Within the IMF, India ranks only 13^th.

The World Bank’s ill-intentioned projects

If there is a constant pattern in the projects supported by the World Bank in India, it is the determination to maintain and increase India’s dependence on the major powers and their transnational corporations. There is also the desire to keep India’s sympathies squarely with the U.S., whereas for a long period India had drawn closer to the Soviet Union. The first projects supported by the World Bank, starting in 1949, involved the development of a rail network, the purchase of agricultural machinery, deforestation, and development of the Damodar river (which supplies Calcutta’s industrial basin). India spent almost all the amounts it had borrowed to buy machinery from the United States and Great Britain. It is clear that the World Bank loans were combined with this condition. It is also notable that the first loan granted to Indian industry (in 1953) went to an iron and steel subsidiary of a U.S. transnational [6]. The World Bank’s backing of the construction of a long succession of dams began in 1953 (with the building of a dam on the Damodar River).

The World Bank has sent numerous study missions to India, invariably with the aim of persuading the authorities to stop subsidising national companies and developing a powerful industrial public sector. Among these missions, the one led by Bernard Bell [7] in 1964-1965 put forward, among other conclusions, that India gave too high a priority to the welfare state and small farmers [8]. It recommended giving preference to rich farmers who had a vested interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. in increasing agricultural productivity. Priority number one: growth at all costs. From 1967-68, the World Bank, with the support of the Ford Foundation and USAID (the United States international cooperation agency) launched the “green revolution [9]” which, in the medium term, had disastrous consequences: the increased dependence of Indian agriculture on seed, chemical fertilisers and pesticides patented and supplied by transnationals of the world’s most highly industrialised countries, impoverishment of the soil, salinisation of water resources, blocked land reform ...

But the Bell mission’s objectives went further than the framework of agricultural policy. According to World Bank historians: “The Bell mission is especially memorable for the attempt by the Bank, along with the United States in its role of bilateral donor, to encourage the Indian government to consider certain reforms in the area of trade and industrial policy. This episode (1964-1968) can be seen as a precursor [...] of the era that began in 1980 [10].”
We must not forget that the Bell mission managed to persuade the Indian government to agree to a very strong devaluation Devaluation A lowering of the exchange rate of one currency as regards others. (-37%) of the rupee in 1965, together with a rise in interest rates Interest rates When A lends money to B, B repays the amount lent by A (the capital) as well as a supplementary sum known as interest, so that A has an interest in agreeing to this financial operation. The interest is determined by the interest rate, which may be high or low. To take a very simple example: if A borrows 100 million dollars for 10 years at a fixed interest rate of 5%, the first year he will repay a tenth of the capital initially borrowed (10 million dollars) plus 5% of the capital owed, i.e. 5 million dollars, that is a total of 15 million dollars. In the second year, he will again repay 10% of the capital borrowed, but the 5% now only applies to the remaining 90 million dollars still due, i.e. 4.5 million dollars, or a total of 14.5 million dollars. And so on, until the tenth year when he will repay the last 10 million dollars, plus 5% of that remaining 10 million dollars, i.e. 0.5 million dollars, giving a total of 10.5 million dollars. Over 10 years, the total amount repaid will come to 127.5 million dollars. The repayment of the capital is not usually made in equal instalments. In the initial years, the repayment concerns mainly the interest, and the proportion of capital repaid increases over the years. In this case, if repayments are stopped, the capital still due is higher…

The nominal interest rate is the rate at which the loan is contracted. The real interest rate is the nominal rate reduced by the rate of inflation. and the removal of capital outflow controls. The package of measures applied by the government of Indira Gandhi (granddaughter of Nehru, who died in 1964) ended in disaster: reduced export revenues, serious flight of funds, a sharp fall in business.

Meanwhile, the IMF was losing no time ...

Dealings at the IMF followed the same pattern: recommendation of policies geared to maximum opening of the Indian economy to foreign capital and goods. The method used to achieve these ends was to offer substantial loans. Thus in 1981, one year before the Third World debt crisis came to a head, the IMF offered to lend India 6 billion dollars (the largest loan ever granted by the IMF at that time). The Indian government accepted it, even though it had ample exchange reserves. This new loan instantly increased the Indian debt burden by 33%, taking it from 18 billion to 24 billion dollars. The IMF granted this loan in order to persuade India to go a step further down the road of free trade economics. The IMF specialists were reassuring: increasing the debt would pose no problem for the future. In the IMF document justifying the loan, it was stated that the ratio of “debt servicing to export revenues” would not exceed 16% by the end of the 1980s [11]. In fact, the ratio rose to double the figure forecasted: 32% in 1990 (it should be noted that in 1980, just before the loan was made, this ratio stood at 9.4%). It was as if the IMF had lured India into a debt that could never be borne without recourse to further borrowing. It gave the main lenders (the World Bank and the IMF) the leverage Leverage This is the ratio between funds borrowed for investment and the personal funds or equity that backs them up. A company may have borrowed much more than its capitalized value, in which case it is said to be ’highly leveraged’. The more highly a company is leveraged, the higher the risk associated with lending to the company; but higher also are the possible profits that it may realise as compared with its own value. needed to force the Indian government to apply policies in line with the interests of the most industrialised countries.

Major World Bank projects from the 1980s to the present

In the agricultural sector
On the agricultural front, one of the World Bank’s current projects, in India and elsewhere, is the promotion of “land markets”, which involves the progressive phasing out of communal property in favour of private properties. The privatisation of land access is obviously unfavourable to small farmers who must carry an intolerable burden of debt. They are then obliged to resell the land to richer farmers, thus aggravating the problem of land concentration. At present, 63% of agricultural holdings have a surface area of under one hectare, while holdings of over ten hectares are in the hands of just 2% of owners. The “landless”, or those who have less than 0.2 hectares, represent 43% of farming families [12].

At the same time, the World Bank advocates privatisation of water and generalised payment of water rates, which also inflicts hardship on the weakest: the farmers who cannot afford to pay for irrigation water. Finally, the World Bank advocates industrial monoculture Monoculture When one crop alone is cultivated. Many countries of the South have been induced to specialize in the production of a commodity for export (cotton, coffee, cocoa, groundnuts, tobacco, etc.) to procure hard currency for debt repayments. , including in the forestry sector (plantations of eucalyptus).

In the water sector
In its first twenty years of activity, the World Bank supported only a handful of projects in the area of water distribution and treatment. It preferred other types of project: great dams, river development, railways, electrical power, roads, etc. It did not consider water distribution and treatment to be productive sectors. Worse, some of its specialists had come to think that improved water distribution and treatment could have unfortunate side effects: higher demographic growth and overcrowding [13].

Over time, the World Bank has modified its approach and assigned greater importance to the distribution and treatment of water. But it does so by systematically encouraging privatisation of public utilities companies. This policy was set in motion at the start of the 1980s, then took a more aggressive turn from 1993 (absolute priority to private enterprise). Thanks to grassroots resistance, several projects have been slowed down or abandoned. However, the World Bank is far from giving up on its plan to transfer all of the water distribution business to private enterprise, giving preference to a handful of transnationals that dominate the sector worldwide (Ondeo, a Suez subsidiary; Veolia, formerly Vivendi; Saur, formerly owned by the Bouygues group; RWE, an energy major in Germany and its English subsidiary Thames Water, etc.). Twenty years devoted to this policy on a global scale have shown that, as a general rule, increased tariffs hurt the poor; the number of people without access to drinking water, far from decreasing, is stagnating or even growing; the level of investment in renewal of pipelines and extensions to water treatment facilities is far lower than promised. The World Bank Operations Evaluations Department actually published a fairly damning report in which one can read: “It has been proved that it is very difficult to count on the private sector to achieve the reduction of poverty objective and to fix tariffs that do not affect the poor [14].” That is quite a confession. But the World Bank management has turned a deaf ear and persists in its pursuit of privatisation.

In fact, this race to privatise has taken on some especially shocking guises in India: whole stretches of rivers and major waterways have been privatised, some of them tens of miles long [15].

In addition, the World Bank and the Indian authorities have a long tradition of promoting mega-structures, which, apart from constructing the dams themselves, also involve diverting the river’s course, with environmental and social repercussions that are usually negative. One of the latest projects is to divert some of the waters of the Ganges over a distance of several hundred miles towards Delhi in order to supply the Sonia Vihar water treatment plant (owned by Suez) with no less than 635 million litres of water per day, all the infrastructure work being paid for by the Indian government! The communities to be deprived of water by this diversion began organising demonstrations in August 2002 with the rallying cry “The Ganges is not for sale”.

More and more cola, less and less water ...

A factory belonging to the transnational Coca Cola was set up in 1998 in the state of Kerala. Built on a ten-hectare site, the plant employs 370 workers (mostly unqualified women who clean the bottles - a dangerous job involving the handling of chemicals). Average production is 1.2 million bottles per day. Out of the total workforce, 130 employees have a contract of unspecified duration and earn the equivalent of about 1 euro per day (6O rupees for men, 50 rupees for women). The rest of the workforce consists of casual labour, often recommended by local politicians. Qualified management comes from other regions, so as to avoid possible solidarity with the local population. These managers, who are well paid, are employed on a fixed duration basis, have no social security, can be fired at the first signs of solidarity and are quickly replaced. The two trade unions represented in the workplace (one Communist, one Centrist) were generally in favour of the closing of the plant, but didn’t say so publicly for fear of losing union members employed there.

At the start of operations, Coca Cola ran an advertising campaign to convince the local population that there would be important positive consequences for the area, in terms of jobs in particular. In practice, the consequences turned out to be anything but positive. Up to then, the area had had no problems regarding water access and supply. However, to ensure the production of the equivalent of just seven sodas for this Southern India region, the company dug six wells from which it draws, per day, more than one million litres of water, rapidly lowering the water table on which some twenty thousand people depend.

After the plant had been operating six months, the population saw that the water level in their own local wells had dropped. The water had changed colour and was undrinkable: rice cooked in this water gave off an unpleasant smell. Food cooked in this water went off very quickly. The water caused skin allergies, diarrhoea, vomiting, hair loss and eye trouble. Analyses carried out in Indian and British laboratories at the demand of an indignant population showed an abnormally high presence of lead and cadmium. Prolonged consumption of cadmium can in the long term cause emphysema, prostate cancer and kidney cancer. The salinity of the water had increased because of the abnormally low water table. Rice and coconut production dropped drastically (by 75% for coconuts) for lack of water, which is particularly unacceptable given that coconut is naturally rich in proteins and minerals, and makes a far more complete and nourishing drink than Coca Cola’s star beverage.

This situation affects a population of 20,000 people composed almost entirely of dalits or tribals [16]. Their principal work is on the land, either as day-labourers or as small farmers. Their main crops are rice, coconuts and a variety of vegetables. The water deficit caused by Coca Cola affects them directly, and the loss of revenue is substantial. Women are the most seriously affected, since this impairment of water quality obliges them to travel outside the affected area to fetch drinking water - often walking more than a mile, and passing trucks leaving the factory loaded with carbonated drinks. Their usual revenues are cut by half, since during the hours spent fetching water they cannot do paid work.

Fierce grassroots opposition

The situation soon became intolerable and massive demonstrations ensued. On 22 April 2002, a protest march and a symbolic picket line at the factory entrance brought together some 2,000 people, mostly tribals. Since that day, a permanent picket line has been maintained in front of the factory and many different actions have been undertaken, mainly by women, who are more combative because more severely affected (they organised the collection of food to support the occupation; some gave 10 rupees out of their daily wage of 50 rupees to support the struggle). Some very radical demonstrations were violently repressed by the police (corrupted by the influence of Coca Cola): 240 arrests were made during one of them. News of these demonstrations travelled beyond Plachimada: outlying villages joined the cause, schoolchildren came to visit the picketers and organised the boycott of Coca Cola products. Unfortunately it was not the media who popularised the protests: they are effectively under Coca Cola’s influence, being financially dependent on advertising revenues.

The Indian authorities’ subservience to the interests of the transnationals was clearly visible in their policy concerning Coca Cola and Pepsi Cola. Governments of both the left and the right had one single, priority concern: to attract foreign investors. But they demanded no precautionary conditions, not even simple compliance with the laws of the country. For some of the demonstrators, the situation was worse than in the days of the British Raj, when at least the politicians were in the enemy camp.

But the situation is beginning to change thanks to the fierce resistance of the affected communities. Plachimada is only one of several controversial sites. Together, Coca Cola and Pepsi Cola have 90 bottling plants which daily draw over 90 million litres of water for their operations. Excessive groundwater pumping (in Plachimada, the water table has dropped from 45 to 150 metres), contamination of aquifers, disposal of toxic waste (sometimes distributed to the villagers in the form of fertiliser even though it contains a high level of cadmium and lead, both of them carcinogenic substances), the production of unhealthy drinks (sweetener made from corn syrup with a high fructose content), pesticide residues ... all these evils resulting from the production of various carbonated drinks (it takes 9 litres of water to make 1 litre of cola) have been brought to public notice by the farmers and the women of village communities.

The Plachimada panchayat (village council) cancelled the plant’s operating licence but the government of the State of Kerala continued to protect the company (the United States Embassy stepped in to prevent it closing, arguing that it would be a very bad advertisement to other foreign investors, and threatening legal action). As community pressure grew, the Kerala government finally ordered the closing of the Coca Cola plant on 17 February 2004. Another panchayat in the area brought an action against the transnational before the state’s High Court, in the name of the people. On 16 December, the judge ordered Coca Cola to cease extraction. The reasons preceding the ruling are as weighty as the ruling itself: “The doctrine of public trust relies above all on the principle that certain resources, such as the air, sea water and forests are so important for the community in general that it would be entirely unjustifiable to privatise them. These resources are a gift of nature and should be made freely available to every person, whatever his or her status in life. (...) The State as a trustee is under a legal duty to protect the natural resources. These resources meant for public use cannot be converted into private ownership” [17].

Stark statistics

Globally, we can measure the scale of the privatisation wave, all sectors combined, by examining the changes in the relative share Share A unit of ownership interest in a corporation or financial asset, representing one part of the total capital stock. Its owner (a shareholder) is entitled to receive an equal distribution of any profits distributed (a dividend) and to attend shareholder meetings. of state-owned and private companies in the Indian economy. The share of private companies in India’s GDP GDP
Gross Domestic Product Gross Domestic Product is an aggregate measure of total production within a given territory equal to the sum of the gross values added. The measure is notoriously incomplete; for example it does not take into account any activity that does not enter into a commercial exchange. The GDP takes into account both the production of goods and the production of services. Economic growth is defined as the variation of the GDP from one period to another. rose from 3.6% to 12.1% between 1987 and 2002 (in other terms, it has multiplied by 3.5), while the weight of state-owned companies has dropped sharply, from 10.6% to 4.8% during the same period [18]. For several years now, the sector of electricity production and distribution has also been a prey to privatisation [19]. In addition, the World Bank supports highly polluting mining operations, for example a vast expansion project involving 25 coalmines [20].

The liberalisation of the Indian market: a disaster for small tea producers

Let us now take the example of tea production [21]. On the Indian market, tea from Kerala must be sold at a price of 62 to 80 rupees per kilo to give the producers a decent income. Tea from Kenya, Vietnam and China sells at 35 rupees. In 2003, thirteen factories closed down, incurring the loss of 6,000 jobs and income for the same number of families.

The Masco Tea cooperative operates with a credit bank that has advanced money to the planters that supply the factory. It takes 4 to 5 years for the tea plants to be really productive. The Masco Tea factory opened in 2000 with highly efficient equipment and qualified staff. At the same time, the Indian government increased the quota of foreign imports on the Indian market. Tea imported from Kenya, Vietnam and China gained ground - to Kerala’s cost. To make things worse, the occupation of Iraq in March 2003 deprived the Masco Tea factory of its main export market. The bank has had to advance more money to save the small planters. The Masco Tea cooperative faces bankruptcy if prices do not rise quickly. Masco Tea operates with 8,000 cooperative planters, so that closing the factory would be a terrible disaster in human terms. Small planters earn about 50,000 rupees per year (a little under 1,000 euros), medium size planters up to 100,000 rupees and the biggest, up to 150,000 rupees.

The manager of the cooperative believes that the opening up of borders must be halted so as to stem the invasion of cheaper foreign products on the Indian market. Third World countries are waging a fierce battle for market share. All of them lose out in the long term because of relentless price-cutting tactics. Reduced prices mean reduced income for planters, in the tea industry as in so many others. The cooperative manager is pessimistic: he points out that the government is totally entrenched in the neo-liberal process, all the more so in that it receives World Bank loans to pursue this policy.

India’s debt today

India’s external public debt continues to spiral:

Breakdown by type of lender is as follows:

Repayments by India are of course substantial:

In 2002, half the moneys reimbursed by India went to multilateral institutions, a third of the total going to the World Bank:

At the human development level, the profound inequalities suffered by Indian society have devastating consequences:

Coastline management: a review long overdue

Coastlines enjoying the natural protection of mangroves [22] or coral reefs were far less affected by the tsunami than areas without this protection [23]. Coral reefs act as offshore breakwaters while mangroves act as shoreline buffers. But the export- and productivity-focussed model that is prevalent in India has led to the destruction of these barriers in favour of shrimp farming (aquaculture), or the construction of major hotel complexes with direct access to the beaches. Coral reefs are also being destroyed by dynamite fishing, which gives quicker yields but which threatens the marine environment and its species.

In India, two thirds of coastline protected by mangroves has been destroyed over the last three decades. One of the main causes of this devastation is the development of industrial shrimp farming. Every 2 to 5 years, a shrimp farming operation has to move on, a practice that leads to massive and widespread destruction of mangroves. Once a shrimp farming operation has left the area, mangroves do not replenish themselves naturally.

The World Bank and regional government enthusiastically support industrial shrimp farming, 72% of which is in Asia. Shrimp are exported mainly to the United States, Japan and Western Europe where consumption has risen by 300% in 10 years [24].

In the wake of the tsunami ...

Immediately after the drama, the Indian authorities refused international assistance, declaring that India was perfectly equipped to come to the aid of its victims. They added, as did their Thai counterparts, that they did not wish to apply for debt relief. One can well understand that the government of a country of more than a billion inhabitants would wish to affirm it could take care Care Le concept de « care work » (travail de soin) fait référence à un ensemble de pratiques matérielles et psychologiques destinées à apporter une réponse concrète aux besoins des autres et d’une communauté (dont des écosystèmes). On préfère le concept de care à celui de travail « domestique » ou de « reproduction » car il intègre les dimensions émotionnelles et psychologiques (charge mentale, affection, soutien), et il ne se limite pas aux aspects « privés » et gratuit en englobant également les activités rémunérées nécessaires à la reproduction de la vie humaine. of assistance to its victims. But it is clear today that this was just talk, since the presence of the authorities in the field is totally insufficient. The majority of communities concerned have been left to their fate and are not receiving the government support they should rightfully expect. In addition, by not addressing the matter of debt repayment, the Indian government is making itself an accomplice of the World Bank and other lenders who, for years now, have been receiving so-called repayments that are far superior to the amounts lent.

The chart below shows that, taking the last seven years for which we have statistics, six years saw India repaying the World Bank more that the World Bank had lent it. The result is a significant negative net transfer [25] at India’s expense, in other words a veritable capital drain that has inflicted great suffering on the Indian people.

Thoughts on current Indian government policy

The present Indian government was elected in 2004 by a majority of voters who were against the neoliberal policy of the former right-wing government (dominated by the radical right BJP party). The Congress Party, now back in power and supported by the Communists, instead of breaking with a policy rejected by the majority, continues to pursue it.
On the IMF website one can read the conclusions published by its directors on 24 January 2005 in consultation with the Indian government [26]. After a brief expression of sympathy: “Executive directors expressed their sympathies to the Indian people for the tragic loss of life resulting from the recent tsunami”, they declare themselves satisfied with the country’s robust economic health, the result of “more than a decade of reforms”. They continue in the same upbeat key: “Directors welcomed the new government’s ambitious reform agenda”. They urge the government to improve the business climate by deregulating the labour market. They demand a reduction in aid to farmers, particularly by stopping subsidies for fertilisers and power. They ask for trade liberalisation to be accelerated and for privatisation of the power sector to continue. They ask the Indian government to eliminate the 10% limit on voting rights for foreign investors in banking institutions. They ask for oil prices to be allowed to increase freely via the “automatic pricing mechanism”. According to the IMF, capital outflow should be possible without restrictions and the constraints placed upon foreign investors lifted. And to top it all, the IMF recommends that the government give up the idea of using its enormous exchange reserves to finance infrastructure spending. Explanation: although the Central Bank Central Bank The establishment which in a given State is in charge of issuing bank notes and controlling the volume of currency and credit. In France, it is the Banque de France which assumes this role under the auspices of the European Central Bank (see ECB) while in the UK it is the Bank of England.

ECB : http://www.bankofengland.co.uk/Pages/home.aspx of India has more than 129 billion dollars in currency reserves at its disposal, a sum which is higher than India’s external public debt, and although the Indian government quite legitimately proposes to use a part of this sum to pay for imports necessary for building infrastructure, the IMF won’t hear of it. Because by making such a choice, the government would be reducing its need for external debt. Which is precisely what the IMF wishes to avoid: in the IMF’s book, a good student keeps the debt increasing. Only a bad student would draw on his own resources to finance his needs.

Current government policy steers a zigzag course between, on the one hand, the increasingly aggressive demands of the IMF, the World Bank, the transnationals and rich Indians, and on the other hand, the wishes of the people who elected it and its parliamentary base, which demands more solidarity and better protection of public assets. Its preference goes to the first, as shown by the government’s decision to renege in March 2005 on a measure it had already announced. The plan was to levy a tax of 0.1% on every bank withdrawal of more than 10,000 rupees [27]. An unacceptable measure for the rich ...

There is an alternative

A government that really wishes to prioritise satisfaction of human rights in its country would be perfectly entitled to demand the cancellation of its debt to the World Bank (and to its colleagues: the Asian Development Bank and the International Monetary Fund), inasmuch as the money lent has gone to serve projects and policies which are contrary to the interests of its citizens. The World Bank, and the Indian governments that have accepted its policies, must be held responsible, in the eyes of the Indian people, for the damage caused by the various projects undertaken. At best, these projects have reinforced the productivist model and the dependence implied by the global market. At worst, they have done much to worsen the living conditions of the Indian people - for a long time to come. We have not finished measuring all the negative consequences of the policies pursued up to now.

By ceasing to repay the debt, the Indian government could stem the constant drain of resources and invest them in its country.

To come to the aid of the tsunami victims and so many others, to prioritise the needs and the rights of the world’s second most populated country, there must be a complete break with the model adopted and pursued till now. Implementing policies for the redistribution of wealth and for endogenic development is a perfectly feasible alternative for India.

Eric Toussaint is President of CADTM (Committee for the Abolition of Third World Debt), and author of Your Money or your Life. The Tyranny of Global Finance, VAK, Mumbai, 1999; and co-author, with Damien Millet of The Debt Scam, VAK, Mumbai, 2003 and of Who Owes Who? 50 Questions about World Debt, Zed Books, London, 2004.